Free UTOPIA!

American Fork, which has been operating its own independent municipal broadband service since 2002, has agreed to lease and sell portions of its beleaugered AFConnect service to PacketFront Inc. The city will retain ownership of the fiber network but will place operations in the hands of the Swedish company with stipulations that they maintain the contracts with current vendors. It already sold a portion of the fiber capacity to UTOPIA back in December.

What does this mean for American Fork residents? PacketFront plans to drop $8M on upgrading the network to support phone and TV service, something the city couldn't find the funding to do. As opposed to sell off the network entirely, the city council chose to make a deal that lets them keep a vested interest in the network without having to shell out for the expensive upgrades.

This is an important lesson for cities who want to strike it out on their own. By opting out of UTOPIA, American Fork shrugged off the benefits of pooled risk and got stuck in a situation where they needed significant capital improvements to make the system profitable, but because it wasn't profitable, they didn't have the capital. It wasn't very forward thinking of the city to not roll out "triple play" service and now they have to pay the price for it.

(See full article.)

The town of Wilson, N.C. is currently mulling doing its own municipal fiber project. It has already built 30 miles of the network to link together city agencies and the city-owned utilities and sees the promise in a high-speed network throughout the town. Their major roadblock is that state law prohibits government from competing with private business. The solution they should be looking at is a UTOPIA-style model which has already been signed off on by the state's courts.

The most interesting part of the article, however, is citing a study done by Carnegie Mellon University and MIT showing the benefits of broadband. Communities with a high broadband penetration rate experienced job growth that was a full percent higher, larger increases in the number of businesses in their city (especially technology companies), and had property values grow up to 6 percent within a year of broadband availability. Yes, Virginia, the project doesn't need to directly break even to be considered an overall economic success.

(See full article.)

While Broadband over Power Lines (BPL) isn't a new concept, it certainly isn't widely deployed. Power companies aren't keen on making major capital investments to support high-speed connections to their customers, yet those same lines reach 47 million underserved Americans who have no other broadband choices. Some of them are turning to leasing their lines to providers as a way to cash in without all of the risk.

While I can see that another major player in the land-based broadband market could help stir up competition, I can't help but think that the power companies will do exclusive contracts with a single provider, a provider that will most likely be a name we've already heard of like Earthlink or AT&T. If that ends up being the case, it'll be just another monopolist in the market providing only token competition without much in the way of true competition. This is especially so if BPL can't deliver equivalent or superior speeds when compared to cable and DSL offerings. I fear this will be another "me too" technology that won't solve our duopoly problems.

Again, it becomes more and more clear that our best alternatives lie in municipal fiber projects like UTOPIA that provide open access to a wide range of competitors at superior speeds and competitive pricing.

(See full article.)