Tuesday, May 06, 2008

iProvo to go private

Long-time followers of Lafayette fiber will recall the supportive visits from Mayor Billings of Provo, Utah during our fiber fight. Sadly, Provo will be losing its publicly-owned network if the current plan goes through. If the city council approves the sale it will be bought by Broadweave and run as a closed, private network much like Cox, Comcast, Qwest, or AT&T. Broadweave has, to date, specialized in fiber networks in new, upscale, gated communities. The silver lining on this dark cloud is that the people of Provo seem to be getting off pretty much even financially. The purchaser, Broadweave, will being paying slightly more than bonded cost of the network. And, the people have a fiber-optic network in place that no private provider would have ever built. Of course this was not what the people of Provo hoped for: they wanted two things: to own their own system and to have a rich variety of providers running over the common infrastructure. In Provo, at least, these two desires turned out to be incompatible.

I'm sure the full story is more complex (and would be happy to be further enlightened) but from this edge of the continent it looks like the misgivings Mayor Billings voiced in Lafayette during one of his visits has proven all too wise. Back then he had a blunt response to a question comparing LUS's decision act as a utility and offer retail services directly and Provo's "open network" practice of instead relying on private retailers to market all the services that used the network's wholesale infrastructure. He said that Lafayette's model was the stronger one. Utah's legislature, however, had forbidden communities to offer retail services and so that option was not open to his city.

There is a story behind that state policy: Qwest--the Bell phone system for that region--had eyed Provo's acquisition of a local cable company and rushed to the state legislature to outlaw the very idea that the people should "compete" in the telecommunications business with their venerable monopoly. A last minute compromise to its law whose original intent was to simply outlaw all public competition was to allow cities to build networks but then to forbid them to run them as utilities--offering services themselves like water or electricity. Resourcefully, the communities made lemons into lemonade: the cities and their community activists found virtue in the "open" network idea that had been their last defense against a total ban and touted the advantages of increased competition and the lower prices and increased efficiency that would (surely) follow.

But Mayor Billings was right: it is the weaker model. It is never a good idea to allow your competitors to dictate your business plan. As history has repeatedly demonstrated there is a reason why all cable companies and all telephone companies have fought for vertically integrated networks and reserved its basic functions for themselves: it reliably pays the bill. The public wholesale and private retail model forces those that take the risk and do the work of building an expensive, sophisticated network to rely on outside, private providers who have done neither to generate enough profit to pay for the network and to provide a nice profit for themselves. Having an extra profit-making business in the flow of cash necessarily, all things being equal, means charging higher prices. And, in Provo's case at least, it also meant that the reputation of the network depended upon the quality of service that the for-profit face of the network offered the community. The private firms, while surely good folks, simply did not have the experience or the resources necessary. The Provo network initially had trouble securing providers and only one out-of-town provider was found (HomeNet). It struggled, did (generously) a mediocre job, was unable to get the sorts of adoption rates that public telecom utilities in places like Burlington, VT or Bristol, VA have quickly and easily achieved. When it went bankrupt Provo was forced to quickly bring on board two new providers and simply gave each half of HomeNet's meager pie. Subscribers had no voice in who they went to and were frozen in place for a period of months while the new operators took over restructured services. Not surprisingly Provo's citizens who experienced this chaos started dropping off even as new users came on board. This "churn" lead to slow growth and limited the pool of customers available to the replacement providers further limiting their ability to improve their offerings.

As we succinctly say down here: "Not good."

Or at least not good for the community. It suited Qwest fine, I am sure. Their state law worked. Just more slowly than they might have originally hoped.

A community-owned network needs to be a utility. It needs to be run on the same stable, sensible, local basis that other community networks are run. When the community can see that it is their network, can see the lower prices and superior service that come with a utility orientation it quickly gains subscribers — as it has in Bristol and Burlington. iProvo's troubles are a case study in the worst that can happen when a community-owned network loses that connection to its community.

I am increasingly glad that Lafayette has not gotten caught in this trap. As bad as the (un)Fair Competition Act is at least it did not force us to put an artificial barrier between our network and our citizens.

For more on this story see the short articles in the Salt Lake paper, the Provo paper and the post at the Free Utopia blog. No doubt there will be fuller stories when the morning paper comes out. (Free Utopia also posted an excellent set of suggestions to iProvo recently...that is really worth the read. It's too bad Provo didn't act on them.)

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