When Competition Threatens, Try Throwing a Tantrum
When Competition Threatens, Try Throwing a Tantrum
Posted 10/28/2009 at 12:32pm
| by Bart Salisbury
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There’s a definite object lesson here, but I’m not sure what it is. It could be that competition is a good thing. It also could be that monopolies don’t take kindly to threats to their turf. What is obvious, however, is if you need your local cable provider to do something you got to be prepared to poke them in the eye (preferably with a sharp stick).
The suburban hamlet of Monticello, Minnesota, just outside of Minneapolis, had a hankering for fiber optic cable for all its residents. The town approached it’s regional telco, TDS Telecommunications, with the request and was rebuffed. TDS didn’t see the need to make such an investment in Monticello now or any time in the foreseeable future. In response, the citizens of Monticello passed a referendum to build their own fiber optic system, which would compete with TDS’s cable service to the town.
That didn’t sit well with TDS, which promptly sued Monticello. Minnesota law sides with the city in this case, and as the lawsuit progressed through the courts the city kept winning. TDS’s intent wasn’t to block Monticello’s efforts, only to delay them. While the lawsuit was underway the city was prevented from starting construction. TDS, however, wasn’t, and began to install its own fiber optic system. When completed, TDS crowed about the technological improvements it rendered in Monticello, saying “TDS is working incredibly hard to deliver the faster speeds customers want.”
TDS wasn’t done there. It also openly questioned Monticello’s decision to build it’s own fiber optic system: “In view of TDS' development of a robust broadband platform in Monticello during the past year, it is questionable whether or not the City's feasibility study supporting its own fiber project, which was premised on no broadband competitors and on which the revenue bond purchasers relied when they secured the bonds more than a year ago, is still accurate, and whether the city fiber project is feasible today.” Way to stay classy TDS.
So why all the rigmarole, why didn’t TDS just build a fiber optic system when first asked by Monticello? Nate Anderson, of Ars Technica, reports TDS’s director of legislative and public relations said TDS wasn’t “really, really sure” the residents of Monticello wanted fiber optic. (TDS hasn’t heard of market research?) Passage of the referendum is what changed their minds. That, and the fact TDS would have a fiber optic competitor.
Anderson suggests the object lesson to be for municipalities to build their own cable networks. (Or, at the very least, inject competition into the system). Everyone in Monticello got their broadband speeds doubled: from 25Mbps to 50Mbps, without seeing a rise in rates. Similarly, the town of Lafeyette, Louisiana has managed to keep cable rates down because it offers competition to Cox Cable. And, if you are jonesing for real broadband, the city of Wilson, North Carolina has a municipal system that offers 100Mbps (while Time Warner Cable is still knuckle-dragging at 10Mbps).
Image Credit: Gen Pren/flickr
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astar
October 29, 2009 at 9:15am
I live in a rural area served by a local telephone coop. The town is about 600 people. I pay about $80 for fiber internet access. For that I get about 20mbs download and 5mps upload. They first used fiber about 20 years ago to connect to a neighboring town. About 18 years ago, they started putting copper wires in conduit. About 4 years ago, they started putting fiber to the home. Obviously, 50mps download is better, but I sort of figure that when there is a demand for it, the speed will go up. I guess it could go all the way up to 100mbs without a really big hardware problem.
I have a static ip. I can run servers ( though I use hosted dedicated servers in dallas and san deigo. I have no bandwith cap.
Their url is smt-net.com, but it is mainly a brochure site.
Somehow I think if the telephone company was a big for-profit concern, I would get fibre approximately never.
I used to live near Tacoma Wa. Thiis might be the second or third largest city in the state. The local city owned utility put in internet and cable service years ago. The incumbent did not like it at all. Where they refused to upgrade their infrastructure before this, when the city came in, they spend a lot of money on infrastructure.
The city always planned to service the surrounding area, but this is going slow. The problem is when the city goes into a new area, they get lots of customers, but the incumbent comes along behind with lots of short term deals and takes the customers away.
So do your own take. My take is free enterprise ideology is junk. Capitalism can do very well in introducing new tech into the productive process, but let them run wild and you get a quadrillion dollars of derivative debt, all on someones books as assets. These are about as good assets as a mortgage on a burned down house. And all these assets demand payment, out of your skin.
Thoren
October 29, 2009 at 9:03am
Speaking from inside knowledge of TDS, they could give a frak about delivering services the public would want. Their sole interest is in maintaining a competition-free monopolistic environment so they can continue to overcharge and under-deliver on services, like most moderately sized ILEC telcos.
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Xander: "Ugh, OK, you know what? I think we need to zap our PRAM... with a cup of joe."
Ilander
October 29, 2009 at 4:24am
Doesn't seem too much like socialism to me...looks like it got a monopolistic corporation to finally act in a way that benefited consumers more than it's own bottom line.
Looks like I'll be linking this story to some friends...
mesiah
October 28, 2009 at 7:42pm
I would have taken the telco to court in an attempt to force them to install fiber, If I lost I would use that case to build my own system on block them from building their own. Its time we teach these companies a lesson. They are here to serve the people, not monopolize our utilities and force us to bend to their will.
michaelnomad
October 29, 2009 at 7:54am
If they had taken the telco to court and won, then the residents would have almost surely be paying more. At the very least there would have been one more fee attached to thier bill to "cover costs and blah, blah, blah."
squarebab
October 28, 2009 at 3:41pm
I think the above news post should be entirely focused on the fact that a city (town?) of about fifteen thousand people HAS TWO FRIGGIN' FIBER OPTIC NETWORKS!!!!!!!!, while most of America doesn't even have one!!!!! That's the real story here.
squarebab
October 28, 2009 at 3:33pm
So the fishy smell was coming from whomever didn't do their research. It could get even stinkier if the article was written in bad faith. Conspiracy theorists, I await your responses.
squarebab
October 28, 2009 at 3:34pm
The city of Monticello briefly halted plans, but only because they wished to wait for the outcome of the bond sale, not because of the lawsuit. They were working on their fiber optic system, of which the backbone was completed in October of 2008, entirely unhindered by the lawsuit. Now the city has two competeing fiber optic systems in place. I got my information from Monticello's own website here: http://www.fibernetmonticello.com/aboutus.cfm which includes a .pdf link that explains how FibernetMonticello came into being here: http://www.fibernetmonticello.com/PDF/HISTORY%20OF%20FIBERNET%20MONTICELLO.pdf.
squarebab
October 28, 2009 at 3:14pm
If the city of Monticello was in the right, why didn't they push ahead with their fiber optic system despite the on going court battle? And if they really were legally prevented from building a system, why didn't they counter-sue to prevent TDS from building their own network until this thing was finally settled in court? Something smells fishy in Monticello.
DOOMHAMMA
October 28, 2009 at 3:34pm
When reading the article, I figured that the end result was what the residents wanted anyway. They just forced TDS to do what they wanted.
Honestly, I am about to try this with Verizon at this point. I get advertisements for "Demand FiOS!", and I do, but am told that we will get it in the "near future." Never.
Dexter243
October 28, 2009 at 2:44pm
Nutcracklng snack
bi old grats thats the way to kick them in the balls
dag1992
October 28, 2009 at 1:18pm
It's a pretty sad day when the telcos feel the need to sue a town that wants to provide a service the telcos just won't offer. We need reform very badly to take down such monopolies that only hurt the consumer.
nekollx
October 28, 2009 at 1:16pm
"Monticello are poopy heads"
------------------------------
Coming soon to Lulu.com --Tokusatsu Heroes--
Five teenagers, one alien ghost, a robot, and the fate of the world.
bosunj
October 28, 2009 at 12:46pm
Yet another example of that uniquely Duhmerican't form of capitalism.
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