When it comes to high-speed broadband, meeting demand isn’t always in the incumbent's business model -- so Connecticut is taking matters into its own hands.
As the nation grows restless with the broadband industry’s market stranglehold, Connecticut is joining the hundreds of other jurisdictions that have taken matters into their own hands. Mayors from three Connecticut cities – New Haven, West Hartford and Stamford – announced Sept. 15 that their communities will band together, and have asked others to join in an effort to develop a gigabit network for business and public consumption.
A joint Request for Qualifications (RFQ) was published to gather information that will shape what the state’s high-speed Internet infrastructure might someday look like. There is a clear need for faster and cheaper Internet service in the state, and a clear failure by the incumbent providers to deliver that service, said Connecticut Consumer Counsel Elin Katz.
The state began its project through a listening tour, still ongoing, to establish the extent and nature of demand for broadband access in the state. “We heard that speeds are either too low, it’s either very difficult to obtain, takes way too long, or even if you can get it, the prices are extraordinary,” Katz said.
There are two anecdotes that represent the state’s broadband problems, Katz said, which relate to price and availability. In one anecdote Katz explained that the New Haven, Conn., branch of a French aerospace company needed a gigabit connection, which it requested from AT&T. And despite a promise that it would be delivered in six weeks, it took much longer, Katz said. “The IT guy was practically in tears by the end, and they went to AT&T and said, ‘How many zeroes do we put on the check?’ Money was no impediment, and it still took nine and a half months.” The lesson, Katz said, is that meeting demand isn’t always in the incumbent's business model.
Another local business reported that it negotiated a broadband provider down from $10,000 a month to $3,000 a month for gigabit service, Katz said. The purpose of the two anecdotes, she said, is that there’s a lot of room for improvement, and Connecticut communities can do better.
How the state’s network will work, who will build it, and who will operate it will be determined by the feedback the communities receive through the RFQ. Questions from interested parties were due by Oct. 15, and responses are due by Nov. 18. After that, the state will have the first outline of what the network might look like, Katz said. Though state officials don't yet know what the network will be, exactly, they know what they don't want it to be.
The state looked at municipal broadband projects from around the country – successful projects like the oft-cited Chattanooga, Tenn., gigabit network operated by EPB, and failures like the Utah Telecommunication Open Infrastructure Agency network (UTOPIA). Connecticut is pursuing private-sector partners and asking other communities to join so everyone can determine an economy of scale that will allow the state to offer uniform access, Katz said.
“If you have an open access model, hopefully you can reach out to low-income populations and bring the benefit to them, and give consumers choices. That’s what’s ideal about it,” Katz said. “We’re also trying to avoid an ‘If you build it they will come’ mindset. The one thing that’s become very clear to us is there’s a lot of consumer education involved.”
The ongoing national broadband debate is politicized, but one thing that both politically liberal- and conservative-minded participants generally agree on is that Internet access is becoming an indispensable tool for anyone who wants to be a contributing member of society. The political disagreement tends to revolve around an approach to the problem, but in 2014, Internet access is scarcely framed by anyone in the discussion as a luxury. Some prefer the federal government would officially declare broadband a utility, forcing businesses to meet universal service requirements, while others prefer to either allow the market to serve public demand or promote market growth through partnerships like the ones Connecticut is now driving.
Addressing one of the main points of political contention, Connecticut intends to adopt a model that brings broadband service to everyone. Those opposed to municipal broadband projects sometimes point out that it can be difficult to build a profitable network while serving affluent areas as well as poor ones, and that creates potential for economic failure and taxpayer burden. The profitable gigabit network in Chattanooga, Tenn., is not a typical case, but its president, Harold DePriest, is an outspoken proponent of the serve-everyone model.
“Our sales are pretty uniform all the way across our system,” DePriest said in June. “I think the way to serve people is to have a product that’s reasonably priced that they actually want to buy and use. I think it is that simple.”
And like DePriest, Katz looks to the rural electric cooperative launched as part of President Franklin D. Roosevelt 1930s New Deal for a historical parallel. Government intervention that brought electrical infrastructure to rural farmers improved quality of life and spurred economic growth dramatically in the proceeding decades. “It turned out to be right that you can still make profit on farmers or low-income people, you just have to find a way to get the infrastructure out to them,” Katz said. “That’s why I think it’s appropriate once again for government to step into the utility space and say, 'How are we going to get the infrastructure out to everyone?'”
The political debate gets pushed aside when the state starts looking at options, said Katz. “As an elected official, I am only trying to figure out from a pragmatic point what we can do,” she said. “We’re going to need to get this sooner or later. This is the direction the world is moving, but if you don’t start making your decisions now, you’re not going to have it for the next decade.”
Internet access is expected, and like roadway infrastructure, it’s important enough that it shouldn’t be placed entirely in the hands of capitalists, said CT Broadband Policy Coordinator William Vallee. “These businesses have a quarter-by-quarter business plan. Meanwhile, Elin Katz is sitting here and she’s a public official, and her business plan is more in the 20- to 30-year zone. So there’s a disconnect.” said Vallee. “And supply is terrible. It’s either at extremely high cost or you can’t get it at all. Economics dictate that if supply and demand are out of whack, just like everything else in nature, eventually it will equalize."
Though Connecticut’s broadband project is still early in development, a fiber buildout that will serve at least three cities is certain to be expensive by any measure. Nearly everyone in the state has an emotional, personal or financial stake in seeing the project go well, but there are pitfalls that could lead the state and its future partners to failure or mediocrity, as it has in several well-publicized cases across the nation.
“I watch with a sort of nervous excitement,” said Christopher Mitchell, director of the Telecommunications as Commons Initiative at The Institute for Local Self-Reliance. "It’s exciting to see these cities working together and recognizing that they have a need. But I get nervous because I feel like they’re going to get responses to their RFQ, and the easiest thing to do will be for some ISPs to commit to only building out some areas of town. And I think that’s dangerous fundamentally.”
One school of thought is that building in affluent neighborhoods first and then later building everywhere else makes financial sense because it allows mistakes to be avoided through incremental development, and it gives the project stability by allowing the network to generate income before committing to a wider customer base. The problem with that type of model, particularly in Connecticut’s case, Mitchell said, is that after the most profitable areas become occupied by a broadband provider, no one wants the challenge of serving everyone else because it’s hard to do.
“The analogy that I often use is arguing that in the case of health care, you’ll start by ensuring the healthiest people, and then maybe eventually we’ll figure out a business model for serving the terminally ill patients,” Mitchell said. “We know that that’s impossible. There’s no business model when you segment the market in that way.”
Notions of communities working together are inspirational, but they can also conjure other visions, like those of UTOPIA’s network, which generated for its member cities hundreds of millions in debt without a completion date in sight after more than a decade of construction. But, Mitchell says, that kind of failure isn’t a threat in Connecticut.
“Everyone will continue to make mistakes from time to time, but I don’t think anyone will make the kind of mistakes that UTOPIA made,” he said. “The ability of other cities to join in, I think, is tremendous. Aggregating larger numbers of people and businesses is a key to making these networks work, so starting with these core cities and having other cities able to join in the process is a very good approach.”
In recent history, many communities have launched successful municipal broadband projects, Mitchell said, including a dozen in Minnesota (PDF). The city of Windom, population 4,577, launched a fiber-to-the-home (FTTH) network so popular and successful that eight neighboring rural communities managed to convince the federal government to fund an expansion of that network to their communities. According to a report published by Mitchell’s organization, the network doesn’t just provide citizens with high-speed Internet, it also saves the city of Windom at least $400,000 annually.
“I think we’re on a path that Internet access will be considered something everyone will have access to in your home. I think that’s inevitable," Mitchell said. "What worries me is that there are some routes to getting there that are less expensive and more reasonable than others. I’m definitely not opposed to [Connecticut’s project], I’m just cautious.”