It's not just XMission: Qwest hurting other providers too
Salt Lake City Weekly just ran a story on Qwest’s attempts to limit competition and it looks like XMission isn’t alone. The CFO of Fibernet, Lee Livingston, says they have also experienced getting cut off from newer infrastructure and getting their customers poached. Tellingly, the Qwest PR flack tasked with responding refused to dispute the accuracy of the recorded phone call with their rep, instead trying a weak sauce accusation that it had been fabricated or altered. (Hey Qwest? That’s pretty much an admission of guilt and makes you look petty.) Fibernet used to complain to the FCC about these problems and gave up after they got no results.
The short of it is that the new era of competition that was supposed to be ushered in by the Telecommunications Act of 1996 flamed out almost as fast as it arrived. Incumbents have been actively thwarting wholesale customers to lock the market back up while claiming that they still have sufficient competition. Open networks like UTOPIA are the last chance to correct this market imbalance. And yes, it will be expensive and painful. Most mistakes are.
Steve Turley Blows Smoke on iProvo and UTOPIA
Long-time readers of this blog (or those paying attention to iProvo) will recognize the name of Steve Turley. As a member of Provo’s municipal council, he’s been a consistent voice of opposition on all things iProvo since as far back as anyone can remember. You may even recall the recent series of articles in the Daily Herald bringing light to some shady-looking real estate deals and resulting lawsuits that he’s involved in. Today, he had an op-ed in the Deseret News calling on UTOPIA cities to follow Provo’s lead and dump their fiber network. Unfortunately, it would appear that Councilman Turley is about as knowledgeable as he appears ethical.
The biggest surprise is that Turley claimed the sale of iProvo is a success, this in spite of voting against both the sale to Broadweave and Veracity’s subsequent takeover of Broadweave. I have a hard time swallowing Turley’s characterization given that Broadweave spent sixteen months doing a terrible job at running the network (just like I said they would) before Veracity stepped in to save their hide. Even so, Provo had to loan out more money to Veracity to make the deal work. Veracity has done a superb job at turning around operations, but they have also had to cross-subsidize the network from their other operations and may continue to do so for several years. The reality is that this is the best the council could come up with since they did not have the stomach to do what was necessary to run the network successfully as a city department. It is absolutely absurd that Turley thinks he could vote against these outcomes and still be able to claim responsibility for them.
There’s also the wildly inaccurate claim that Provo solicited bids to buy the network. That’s absolutely and patently false. (I’d go so far as to call it utter bulls–t, much like the rest of his arguments.) The sale of the network came as a total surprise to the general public, service providers, industry watchers, and even the entire municipal council. The Mayor himself, the architect of the Broadweave deal, was adamant that a sale wasn’t on the table up until a couple of months before unveiling it. This was during the time that Billings and Broadweave were busy negotiating the terms of the deal. There was no clear RFP for bids, no public bidding process, and a very short period in which to review the terms of the deal. Does that sound like hanging a “For Sale” sign to you.
Turley has also wildly distorted the cost of building iProvo. Most of the main fiber optic rings were built many years before iProvo was even proposed. (I’d say planned, but I’m sure Mayor Billings knew what he was doing the whole time.) Those rings were paid for with federal grants so that the city could monitor traffic and improve air quality. That backbone certainly didn’t come cheap and should be included in the cost of expanding the network to include service to city residents. The $39M figure also does not include the shared cost of the video headend built jointly with UTOPIA. These items could easily add $10M or more to the total cost of the network, something that Turley has intentionally chosen to ignore.
Of course, these are just the factual problems with what he has written; I haven’t even made it to his faulty conclusions yet. Based on the “evidence” Steve Turley has presented, he thinks that UTOPIA cities should follow Provo’s lead and find a private company to buy the network. Unfortunately, that’s ignoring the marketable reality of the network. iProvo is a fully-built network covering an entire municipality. By the last publicly available figures, the network should have had little trouble being self-sufficient with some modest increases in take rates and small rate increases (not to mention better accounting practices). That makes it a very attractive target for acquisition, especially since the network was ready to roll.
UTOPIA, on the other hand, has patchy coverage and needs a lot of significant investment to cover its intended service areas. It’s main asset is the fiber running from Portland to Las Vegas, but even that isn’t valued at enough to pay off the current debts. UTOPIA cities, if they sold today, would still be making most of the payments and getting nothing in return for it. Provo, on the other hand, got someone else to assume the full debt load while walking away from it. Do these sound like similar situations to you? Me neither.
He also characterizes the new $60M bond proposal as additional system debt, just like the Utah “Taxpayers” Association has been doing. This, again, flies in the face of reality. The entirety of the $60M bond would be paid for by system subscribers, not the cities or UTOPIA. Claiming that signing on to this plan creates an additional burden systemwide is uninformed drivel.
In summation, Steve Turley knows about as much about municipal broadband now as he did two years ago. Unfortunately, that knowledge wouldn’t fill a thimble. Councilman, do us all a favor and go back to your home planet. Maybe they’ll be more accepting of your Reality Distortion Field.
Payson Bunts, Delays Voting on Joining the UIA
Unsurprisingly, Payson is hand-wringing over joining the new Utah Infrastruture Agency over financial concerns. On Wednesday, the city council opted to put off making a decision until August 4 as they worried openly both about the cost and how much say they would have in the new agency. Payson is about 30% connected and city leaders feel like if they don’t join, they won’t see any new construction.
And really, that’s true. The UTOPIA money well is empty and until the system is operating in the black, there will be nothing with which to build. The UIA is an attempt to solve this lack of capital while not putting the cities themselves on the hook for more money. Given the tone that Payson is using, it sounds to me like they either don’t understand the proposal before them or are operating purely on deer-in-headlights fear.
It’s not surprising to see that Payson’s city council members haven’t developed any new intestinal fortitude since they tucked tail and made a calculated vote against the new bond two years ago. I personally feel like they’re repeating the mistakes of American Fork, jumping in with a lot of initial enthusiasm and not having the wherewithal to see the vision through. Any elected official who operates with that kind of short-sighted eye towards instant gratification can’t be counted on in tough times. To be blunt, they’re cowards, afraid to do what is necessary and acting in shameless self-interest.
Grow a pair already, Payson. I’m sure you’re wearing thin on the rest of the cities too.
The Smoking Gun: Qwest Caught Admitting That FTTN Eliminates Competition
Incumbent telcos haven’t exactly been thrilled at having to offer their lines at wholesale rates to competing ISPs, especially since landline revenues have been sliding into a ditch. While AT&T and Verizon can keep most of that revenue with a wireless division, Qwest has no such option and has struggled with making enough money to either reduce its staggering debt load or upgrade its network. Instead of offering, say, good service or a product that people want to buy, they instead figured out that rolling out FTTN would let them claim to no longer have a copper plant to share. Of course, they don’t admit so much in public, instead insisting that other ISPs are just too incompetent (heh) to handle their shiny new pipes.
Well, Xmission has called them on it with a recording of a Qwest agent saying flat-out that the point of FTTN has been to eliminate competition and bring all of those customers in-house. It’s pretty damning evidence that Qwest doesn’t want to compete based on the products and services they offer, but rather on locking out competition. Is it any wonder that we have fewer ISPs today than we did in 1997 and that the few remaining ones are on UTOPIA as a means of survival?
Utah Taxpayers Association Holding an Anti-UTOPIA Rally
Not content to pen astroturf editorials and send deceptive last-minute postcards, the Utah “Taxpayers” Association has plans to hold an anti-UTOPIA rally in Orem on July 13. The BBQ/carnival (heh) will be in Orem City Park, 300 E Center St, from 5-7PM. I’d encourage UTOPIA supporters to show up in a counter-protest to correct what will undoubtedly be a series of half-truths, hyperbole, and plain old-fashioned lying. And, unlike my challenge to a throw-down that went unanswered, they can’t exactly run away from you if you call them on it.
As always, be respectful and don’t act like a jerk. You aren’t going to win anyone over with an attitude. I’d like to be there myself, but I’ll be out of town on business.
ALERT: Qwest Lobbyist Eric Isom Running for Utah House District 15
I’ve just found out that Qwest government affairs lobbyist Eric Isom is a candidate for Utah State Respresentative in District 15. You may remember him from numerous city council and legislative hearings where he spoke in opposition to UTOPIA and would frequently pull legislators and city council members aside for one-on-one conversations. There are three other Republicans vying for the nomination in that district and several Democratic opponents. I can’t state clearly enough how disastrous it would be for municipal broadband projects in the state to have an unofficial mouthpiece of Qwest elected to a state office. Isom has said that he will either resign from Qwest or transfer to a non-lobbying position, but I doubt that it would diminish the influence that it would have on his votes or proposed legislation.
House District 15 encompasses the western half of Kaysville along with significant portions of Layton and Syracuse. If you live in this district, it is critical that you talk to state delegates and attend the state convention to oppose his run for office. Let’s make this fight a top priority for anyone supporting UTOPIA!
Dispelling the Rumors: Prime Time Isn't Going Under
I’ve had several people now express concern over recent bankruptcy filings in other states by Prime Time Communications. More than a few people seem to be dedicated to fear-mongering that the entire company is about to fold. Unfortunately for the rumor mill, that’s entirely untrue. Here’s what’s really happening.
When a construction company starts a new housing development, the first thing they do is file a brand new LLC to isolate it from the rest of the company operations. This is to help prevent any liability from one project spilling over into other projects. In case one development fails miserably, the parent company can fold the single LLC without damaging the rest of the company. It’s pretty standard (and smart) practice.
Prime Time Communications does the same thing. When they contract to provide service to a new greenfield community, they isolate the operations into an LLC in case the housing project doesn’t quite pan out. Unless you’ve been living under a rock for the last two plus years, you know that the housing market is, uh, “underperforming” (read: it crashed). Naturally, some of the projects that Prime Time was working on were in that mix. Rather than continue to incur losses on housing projects that had failed, the parent company chose to fold those LLCs through the bankruptcy process. So far, this has had no effect on the parent company or on any of the unrelated LLCs, including the one that provides service on UTOPIA.
Now someone out there seems to have an agenda in mind to confuse the facts and omit some of these critical parts of the story. If it’s you, knock it off. FUD doesn’t help anyone.
UTA Threatening to Sue UTOPIA and Brigham City
Hot off of their misinformation campaign to residents, the Utah Taxpayers Association is now rattling their legal sabers at UTOPIA and Brigham City over the Special Assessment Area (SAA). The UTA is claiming that participants were deprived of due process because the terms were not explained properly and that there wasn’t a public hearing. These claims, however, are a matter of pure fiction. Many of the comments I’ve read indicate that the terms were explained and paper copies of the agreement provided via mail by the city. The initial meeting held in November to form the SAA was a public hearing and was well-attended.
What’s interesting, however, is that it was Qwest that initially filed FOIA requests with Brigham City to see the terms of the SAA, yet the UTA is the one making legal threats. My suspicion is that, after getting their butts kicked in court, Qwest wants to use the UTA as their proxy in these fights. The UTA refuses to disclose how much money individual members contribute or what influence any members exercise, ironic considering that they are protesting that there hasn’t been enough sunshine in the process.
The most galling part isn’t the lying and misrepresentation. At this point, it appears to be par for the course. No, what irks me the most is the UTA characterization of Brigham City residents as simple-minded fools just waiting to be duped by the first slick salesman that appears on their doorstep. I’ve met many residents and city employees from Brigham and I can tell you with complete certainty that they’re no dummies. They go to city council meetings, read the papers, and get informed on issues in a way that I wish their urban counterparts would consider trying out. (Seriously, I’ve found rural voters to be some of the sharpest tacks out there, especially when it comes to local politics.) How the UTA thinks it can simultaneously insult the intelligence of and purport to represent taxpayers is beyond me.
Utah Taxpayers Association Uses Fear, Uncertainty, and Doubt Ahead of Brigham City Vote
The City Council in Brigham City will be holding a final vote on the UTOPIA SAA on Thursday December 10 at 7PM. This vote will determine if the SAA will move forward or not. Ahead of this, the Utah Taxpayers Association has decided to start up a campaign of disinformation to try and get residents against it. The following mailer was sent out to all residents of Brigham City (no doubt at a considerable cost to the UTA).
UTA Postcard Side A
UTA Postcard Side B
In their usual style, it purposefully misrepresents the SAA and plays loose with the facts. Here’s a few highlights.
- Before UTOPIA came to town, private companies would not invest in Brigham City. Both Comcast and Qwest refused to provide broadband service to residents despite repeated requests from the city to do so. After Brigham City joined UTOPIA, both companies started to roll out services. Chasing away private capital indeed.
- Sure, your house could be sold at a foreclosure sale if you fail to pay your part of the opt-in SAA. The same thing happens when you fail to pay your property taxes, your mortgage, or any other expense associated with owning a house or taking a loan out against it. Yet, for some reason, the UTA doesn’t seem to think those items are unfair. Nice spin, guys, but not paying your bills will, surprise, result in consequences. No duh.
- The UTA has purposefully inflated and misrepresented the city’s share of the expenses associated with the SAA. Brigham City has chosen to pay to hook up all city buildings with UTOPIA service. That accounts for well over half of the money the UTA is talking about and provides a legitimate service to the city. It is also entirely unknown what costs, if any, the city will have to carry for the bond to go through. This is because it depends entirely upon the number of people who sign up. Unless the UTA has some kind of magic crystal ball that I don’t (which I seriously doubt), they’re just making crap up. Again.
- The UTA is actually calling it a negative point that you’re paying $25 and don’t get service included at that price. I hate to break this to them, but there isn’t a provider on earth that would provide even a single part of a triple play for just $25/mo., at least not without line subsidies (like Qwest and the USF). This is just a nonsensical argument. It’s like complaining that the taxes you pay for roads don’t include a car.
- The UTA also points out that the money from the sale of your home will be used to pay off the costs of the SAA. Again, duh? What, does someone expect that the bond magically disappears because you sold your house? It’s another nonsense argument.
The flier is nothing more than a pathetic attempt to derail a project with significant community involvement and backing. The UTA isn’t looking out for taxpayers; they’re covering for their members. Let Brigham City’s residents spend their money how they want to, m-kay?
Et tu, Frontier? Incumbent Caught Sabotaging Installs in Tremonton
Hey Frontier? Remember how a Comcast contractor got that company some very unwanted public attention for screwing up installs? That means that your guys should try and avoid to do the same thing. I’ve gotten a report that several UTOPIA customers in Tremonton recently had their ATA for phone service hosed after a Frontier tech reconnected service without the customer’s authorization. The voltage from the line caused problems both making and receiving calls and required replacement equipment. The evidence? Previously disconnected lines from the ILEC had been reconnected to the building wiring after UTOPIA attached its line to the building wiring. That’s a piece of the NTI that only the phone company has access to.
Not only am I pretty sure that this kind of behavior is illegal, it’s also dangerous. What if these customers had needed to call emergency responders? You guys have much more important things to concentrate on anyway (like your impending bankruptcy after buying up those rural Verizon lines).