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Telco Sues Municipality For Laying Their Own Fiber
unreceivedpacket writes "Ars Technica reports that a company called TDS Telecom is attempting to sue the town of Monticello, Minnesota for deploying their own fiber network. Shortly after the town voted to lay the fiber, TDS Telecom filed suit and notified the town that they would be deploying their own fiber network. The telco has recently responded to Ars Technica, saying they only sued to save Monticello from itself, apparently feeling that the municipality is unprepared for the onerous costs of maintaining such a network, and would lack the expertise to do so."
I read TFA and I still have no idea what the legal basis of this claim is. Does anyone have any idea on what grounds they are suing?
On the basis that any suit will cost the town more than it will the telco, if not in dollars then in time. The article explains this quite clearly (make sure you read both relevant Arsicles).
The city decided to lay cable. Bridgewater Telephone interrupts, "Too bad, because that would put you in direct competition with our cable. The word `incumbent' is probably the reason this argument won't work. Bridgewater's cable did not exist at the time of the city's decision and, in fact, it does not exist now. But according to TFA you say you've read, that's the legal basis of the claim.
Since the fiber plant is going to be a monopoly, this is how internet access should be sold: have the part that is going to be a monopoly be regulated, and then allow competition where that is easy.
The only trick is not allowing the people in charge of just the fiber to interact with the data running over that fiber, as the Canadians are discovering with Bell.
If I have nothing to hide, don't search me
Revenue bonds.
The telco is saying that the town would not be able to -even- -think- about building a fiber network if it was taxpayers money footing the bill(many of whom may not utilize the service).
Because bonds are being used, and the business model pays for itself with little financial risk to the town, the telco is saying its an unfair business advantage.
Imagine that... a town with the intellect and means to provide a service the people actually want, and are willing to provide it the way the people actually want it.
suddenoutbreakofcommonsense
I hope the town wins. Hard, and fast.
Except you can't sue the government. Federal and State governments have sovereign immunity: they cannot be sued, except on the basis that they have explicitly allowed.
This doesn't apply to city governments though. Residents of Monticello should be expressing outrage with their state legislatures and getting them to pass legislation that will stop the Telco in their tracks.
Why let a town build a network with taxpayer money when you can build a network with that same money, then charge them again for using it? It's the classic telco business model.
I think you are missing a very key point, here. It's true that telcos were paid government funds to build a significant part of the telephone network. But it's also true that in the vast majority of cases, those parts are the UNPROFITABLE parts.
Let's say you have a water pumping service, doing business in town, and you're making whatever profits you are making. For this example, we'll ignore the fact that most communities have community water. Business is good, you're expanding to cover more and more houses, starting with the most profitable ones first. (densest neighborhoods)
But then de gubbmint comes in and tell you that you have to do a bunch of stuff in order to continue to do business, because of the benefits to the general health of the community or whatever. For example, since you provide water to some houses in your town, now you have to provide water to ALL houses in your town.
Now, it's not as though you wouldn't love to serve all the houses in the town, but some of those houses are over a mile apart! Just the cost to dig the pipes out that far will cost you over $10,000 per house! Since you are charging $50/month for water service, it's going to take almost 20 YEARS before you even break even on the base cost, nevermind the finance charges you'd incur to borrow the money to deliver the service the gubbmint requires!
And you can't charge the homeowners, either - they aren't buying anything, they didn't ask for it, and making them pay would be onerous on them, too.
So, in circumstances like these, it's very typical for the private company (your water company) to ask for funding to assist in the problem areas. It often comes as a sort of deal: Your water company enjoys a monopoly status, subject to various regulations that you have to perform, in exchange for funding to cover the plumbing for the unprofitable areas.
So the net effect goes something like this:
1) Your company is now a monopoly that must turn in a Profits and Loss statement, along with proof of regular water testing to the city council every month or so. You cover 100% of the houses in the community, and you have no effective competition. One of your concessions is that the municipality can levy taxes via your bills. You have to calculate this bill, and turn over the tax money to the city quarterly.
2) The city has now satisfied its goal of everybody having 100% availability to clean drinking water. It's paid for costs of plumbing by taking out a bond, secured against a tax raised against people's water bill.
3) Everybody who lives in the community now pays a 5% monthly tax on the water bill to cover the cost of plumbing outlying areas. Financially, it's a raise in your bill if you were already contracted with the water company when it was all private, it still brings benefits such as improved local economy resulting from the improved infrastructure.
I have no problem with your religion until you decide it's reason to deprive others of the truth.
Much of the populated areas of Monticello resemble an industrial park. Whoever is in control of that fiber is in for some serious cash from the plants that have setup shop there. This will be a damn interesting battle, the city will fight this tooth-and-nail.
You were more correct in your first line. If you use TFA link to article about the federal government looking into whether or not municipalalities can build such networks you will see Texas listed as one of the states where it is already blocked by state law. This was a law passed in Texas at the behest of telcos and cablecos who had already lost similar lawsuits or realizing they wouldn't work for them wanted to block such statewide.
One city there, that I am familiar with, won when the cableco ( then owned by AT&T ) sued to prevent the city, who owned its own power company, from getting into the cable tv and internet markets. The city had tired of the cableco and telco kept making excuses for not puting in broadband internet. The cableco threatened to pull out of the city altogether if the city put in broadband internet. The city, who had originally just planned for broadband, sought new bids to include cable tv. The cableco sued and lost so the city began contruction. Before the city completed their construction the cableco and the telco had both suddenly found it feasible to provide service there and had their networks up and running before the city got even the first part of their network up and running.
Before their first year of service was complete Texas had the new law as many other cities were dicussing putting their own networks in too after seeing the success of the above city and others. That city was grandfathered though by having their network up and running. I have no doubt that they would have been without broadband for several more years if they had not decided to put their own network in. Being as it forced the corporations into taking them seriously, there is also competition there now.
"they only sued to save Monticello from itself"... please someone tell me that this is a f@ckin joke.
The town should look up Dalton Utilities, Dalton Ga. for some good legal fodder. Back in the late 90's when I was still there working as an engineer in a carpet mill over the summer, they were deploying fiber while pulling new power lines to the mills, mainly for their power monitoring systems. Thus they had a fiber backbone across most of the city before the dot com boom/bust. Using this as a starting point when the internet took off and people started demanding faster broadband, they started deploying FTTH in 2002.
Tm
Support TBI Research: http://www.raisinhope.org
I worked for the state road authority here in Victoria, Australia. We did a lot of electronics and employed a few talented techs. When we wanted to lay our own fiber for CCTV we sent the techs away to learn how it was done. Its not hard if you have a background in technology. If you don't it should be possible to find a qualified contractor to do it for you.
http://michaelsmith.id.au
And disengenous to say that they are saving the city from themselves. After 10 years, Here's how some citizens get their choices, to the chagrin of Charter.
I live in Big Lake, MN which is just a few miles away from Monticello, MN. The story misses a few things. First of all Monticello approached the Bridgewater to build the fiber network, and Bridgewater decided not to. So Monticello went ahead and decided to do itself. The second thing people should know is that Monticello does not have a normal small town finance system. Monticello Nuclear Generating Plant provides a huge cash influx to the city, allowing it to pursue large projects.
dont_forget
And the neocons say unregulated capitalism isn't destroying our democracy. Eisenhower, how we miss thee...
What you don't realize that every city in the United States is ran like a corporation!
Every city/county/state/school district must publish a Comprehensive Annual Financial Report (CAFR), just like every corporation must publish and Annual Financial Report and send it to their stockholders.
Here is Monticello, MN CAFR. They have $37.8 Million in cash assets alone. Simply google CAFR and any government institution to see how much money they're hiding from you (its in the open but kept separate from their annual budget).
If you have something that you dont want anyone to know, maybe you shouldnt be doing it in the first place -Eric Schmidt
Expect to see the telecom draw out this lawsuit as long as they can possibly take it (think SCO here) and deploy their own network in the meantime
It would be a win-win for the town, they approached Bridgewater first and Bridgewater did not want to do it according to the article. This basically forced the town to vote on the funds.
And Monticello did first approach Bridgewater, asking it to deploy fiber in the town; the answer was no.
DING DING DING! WE HAVE A WINNER!
See, that's the thing that people don't seem to get: these telcos got the tax dollars, but aren't being subject to regulations, which is the entire problem!
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
I Live in Monticello, Mn. and have been following this for some time. I'm fully in favor of this and believe it's in the best interest of the community. It'll benefit home users, but it's even more critical to attract big business and help grow the town.
Just a couple of things I want to set straight.
First, Monticello is being sued by Blackwater Communications (TDS) for using bonds to pay for the city fiber network. They can't stop the city from putting it in, but they're trying to make it painful. Originally it was to pay for itself and not cause additional taxes. The mayor has now openly said it may take taxes to do it, but the city will see it through.
Second is that several years ago, TDS, as well as the local cable co. were approached by the city to partner in this effort. Both flat out said no.
Third, only after the city was about to break ground did TDS decide to put in there own fiber network. Which by the way, I don't believe is truly fiber all the way to the wall. Seeing that the cities network fails is the only way to control pricing as the city had already stated what services would cost and trust me, it blew TDS out of the water!
Fourth, TDS has also begun a misleading campaign calling local residents, including myself, telling them about how the cities network will be under par and how business services are superior. Funny, cause I work in IT and am pretty technical; BS always smells! It's all about what "Joe Schmoe" doesn't know and how they usually believe what they are told. Oh ya, and the idiots accidentally called the mayor pitching the bull; oops! They've also started blanketing the neighborhoods with 1-year free broadband offers. Read the fine print cause if you bite your screwed! It's another way to lock things up by removing potential customers for the cities network. I get these adds in the mail literally every couple of days. I'm so sick of it I'm considering calling them and telling them not to mail me.
Personally I can't stand TDS anymore and won't even consider using them for anything EVER again. My land line with them has been dropped, my internet switched to cable (until the cities fiber is available), I use my cell and Skype. This is a prime example of corporate greed hurting the community!
That's pretty much how it works in sweden. The state railroad company (among others) have laid down a fiber grid, and private companies rent the bandwidth and supply the last bit of wire to hook up the homes.
If you're among the lucky ones who got hooked up by "Bredbandsbolaget" or "Utfors" you can usually get a 100mbit tp connection. Or more.
Notice that I indicated leasing pipe space to the water vendor (and other, similar products). Some communities own their own water company and/or power company.
Actually in the US most places own their own water system, whether it be city or county. Only about 1 in 20 people get their water from the private sector. Atlanta, GA was one of the first cities in the US to privatize water, when they sold the water system to United Water. United Water is now owned by France based Suez, the world's largest private water company. However the deal went bad, because of poor management Atlanta retook control of the water system.
Falcon
Should there be a Law?
Look up "the wikipedia" on what, exactly? You're being a bit vague. Gas? Electricity? Or should I just look for the entry on "bad stuff"? As for risk, are you somehow under the impression that gas lines and electrical lines are somehow safer when they can't be regularly inspected or maintained? Make no mistake, gas lines and electrical lines do fail, and they do so more frequently and at higher cost and risk when they are hard to reach and are more of a danger to the community when they're hard to repair. Do you think that it's safe to have to dig up streets where a gas main is broken open?
What seems "kinda stupid" to you is considered far safer by silly folks like electrical engineers, civil engineers, facilities managers, and building code regulators. But now that you've explained it to us all in such convincing detail I'm sure that they'll change their minds.
If, perhaps, you just haven't thought it through, as it happens, I've written a little overview on the subject. I wasn't planning to linking to it in this thread but in the face of your devastating and profound critique I thought that maybe you could use just a few more facts to help refine your admittedly already deeply wise understanding.
It's all about the information. And what we do with it.