Wednesday, November 04, 2009

It’s All In How You Market It: Loosing the Case for Competition

A few years back, I was working with Longmont Power and Communications (LPC) to take advantage of the fiber ring and FTTH capabilities that they have.  Longmont, Colorado is a city with a population of 100,000 just north of Boulder.  They are in an economic transition into a knowledge-based community.  Their tax base is eroding as retail shops close up to make way for the big-box stores.  Providing the community with low-cost broadband services from more than just the two incumbents would give the town a much needed economic shot in the arm.

LPC and other departments in the city saw the value in trying to utilize these virtually stranded assets unfortunately state law prevented them from taking advantage of them.  The only way to get around this law was to let the voters decide if the city should get into the telecommunications business.  At that time the political will was not there because they were embarking on another ill-fated venture for municipal Wi-Fi and the newly elected mayor was a Qwest-lifer.  I moved on.

Several months ago, RidgeviewTel in Longmont thought that they could utilize the city’s assets to provide broadband services to the community.  Much like before, they were not asking for the city to actually sell the services, but lease access to the existing fiber network so they could provide the services.  They went through the effort to have Question 2C placed on the ballot for yesterday’s election.

Big telecom and cable caught wind of the effort and started a very effective marketing campaign backed by a conservative grassroots organization.  They accurately brought up the past attempts of the city’s failed ventures, but they failed to mention that the city ended up with some very valuable assets without any taxpayer expenditures.  Also, this group failed to mention that the city is not going to be the service provider just lease the infrastructure of which will generate revenue.  They painted a picture of another government takeover of the private sector like is being proposed for healthcare. 

The voter’s bought the cleverly marketed campaign and overwhelmingly defeated the measure by 12%.  What they also bought was a loss of a third and possibly more service providers in the city that could offer a variety of voice, video, and data services in competition to Qwest and Comcast.  The City was not proposing government provided services to compete with the incumbents.  They were just going to provide non-discriminatory access to infrastructure for another company.  The secondary benefit would have been to taxpayers in the revenue that RidgeviewTel would have paid to lease the bandwidth on the network.

Although this ballot question seemed counterintuitive to voters because it asked them to let the government do something which sounds like the domain of private enterprise, it was really a vote towards keeping the status quo for a duopoly. 

The battle in Longmont will be a battle we will see time-and-time again as the federal government disperses the stimulus money to small telecom companies wanting to build broadband networks.  Some of these networks are based on a public/private partnership like was being proposed in Longmont.  My only hope is that voters in other communities are not swayed by the tactics used in Longmont.

In subsequent articles I will discuss the value of the public/private partnership as a business model for building broadband open access last-mile networks.