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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."
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, then sue the town again if they try to lay their own network thereafter for tortious interference with business practices or other such legal BS (IANAL and don't know what statutes they could use).
Craziness. I hope a judge knocks this down quick, but I'm not optimistic.
It's basically the company telling the town, "Stay the fuck out of our business or it'll cost you dearly. It's our monopoly, dammit."
It's better to vote for what you want and not get it than to vote for what you don't want and get it.
- E. Debs
please someone tell me that this is a f@ckin joke.
Read radical news here
If only we had more good corporate neighbors like this that solved our own problems and did our thinking for us so we don't have to.
Good lookin' out, TDS. Cough.
In a nutshell the telco is suing the city with the justification that they are protecting the city from itself? I think I would have a lot more respect if they just came right out and said they didn't want the city as competition. If you're going to be a greedy soulless corporation then be one for crying out loud. Knock off the fake altruism because no one is buying it. And I recommend they hire a better legal team. Every soulless corporation requires a top notch crack team of lawyers to distort and manipulate the law in their favor. "any utility or other public convenience from which a revenue is or may be derived." I know next to nothing about law but even I can see this is cut and dry. The city raised bonds to provide what is definitely a public convenience, yet the telco sues anyway. Unfortunately I think their tactic is to try and get an injunction then keep the case in court for the next two decades.
How do towns set up a municipal electric service without being sued?
More importantly, how many speeding/parking/jaywalking tickets does this Telco plan to get when passing through town?
I sat down to write a new sig tonight and all I did was make the chair warm.
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).
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.
It was right magnanimous of 'em to sue.
...the future crusty old bastards are already drinking the Kool-Aid.
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.
How is this any different than a town building a road. A solid internet infrastructure is just as important to city/state growth as a the transportation system. It's just simple.
"No fair, I can't compete with the state." is not a good enough reason for me to care about your problem. Things like this would have been used to stop building the Interstate system in late 50s. Reasoning like this has allowed the infrastructure of the US to suffer, because someone companies are magic beings that solve problems and the government just ruins your life.
Burn Hollywood Burn
My boss lives in a town that has had their own utilities for over a century and they have stellar service and prices are lower than the crappy monopolies provide. It started with their own power station and over the years they added phone, cable, and fiber internet services. If they need service they get local people that actually care about fixing their issues and local students can get internships that teach them marketable skills. All this and they pay much *less* than the government granted/privately run monopolies in most surrounding areas. A good example of the non-financial benefits this has provided include the fact that they were one of the few communities to have power during the great NE blackout of 2003. Basically it comes down to the fact that there is a certain cost of building and maintaining the infrastructure, and if you let a monopoly private business run it you have to pay those costs over time plus the profits that are expected by the owners of that company.
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
...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...
So the company loves the city more than the city loves itself?
How ironic! This sounds preposterous to me.
These United States never cease to amaze.
From what I understand, maintaining fiber networks isn't all that hard. In many cases, it's lower maintenance than existing infrastructures.
Switching from copper to fiber is a big deal in heavy manufacturing and especially in electric plants. Most electric plants are heavily wired with copper. Problem is that copper is more prone to interference. When copper fails, it can be quite difficult to isolate the failure. Copper is also several orders of magnitude lighter (weight wise) than copper and a lot less bulky. Vendors usually quote a "50%" cost reduction from copper.
In the building trades, fiber only construction saves a good amount of space and labor. I've read that medium size office buildings can sometimes shave $300,000 off their construction costs.
I can't recall exactly, but I believe most new airplanes are being built with fiber. It's much easier to install and maintain than the copper it replaces. I remember reading years ago that some lab at MIT (I believe) developed a device to allow fiber optic cable to directly replace the copper wiring coming out of the instrument panels. I am afraid I can't remember reading if this was ever implemented.
I'm not an expert, but I think the rational for this lawsuit is rather weak. I don't know what else their town is working on, but I doubt they expect their parks and recreation staff to maintain their fiber network. They'll hire a subcontractor, probably the same people the telcos were going to hire and be done.
Good for them.
Towns already run their own water pipes, sewer pipes, fire alarm systems, roads, etc. What is one more cable?
I call BS if you say running fiber takes more expertise than running water and sewer pipes. Electrons can go uphill of their own accord, water needs help.
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.
How much does it cost to lay, install and Admin a fibre network for the city?? Say $30 million (rough, plucked out of thin air made up figure). TDS come along, and being the concerned citizens decide that the Fibre network is too much for the city so they sue them for $28 million. City settles for $15 million. So now TDS has been given a $15 million discount on setting up the Fibre network... = Profit....
Laters Sol "Have you found the secrets of the universe? Asked Zebade "I'm sure I left them here somewhere"
I recall, decades ago, when Ann Arbor was about to repave Division street - the main north-south drag for the core city. They were going to do it up properly so it would last.
They'd had a lot of trouble with utilities tearing up the roads to work on their underground stuff, then not restoring them adequately. (In southern Michigan winters this resulted in frost heaves that soon tore the road back open, resulting in the need for more repairs - sometimes over and over. By which time the information about which utility had torn it up originally had been lost.)
They couldn't really ban them from digging up the street to work on their stuff.
So they passed a new ordinance that would result in a MAJOR cost for any company that tore up the street AFTER it was redone, for a decade or so, and gave 'em some large number of months to get their underground installations fixed up and upgraded before the repaving. (I think they imposed some "fee" - read "fine" or "tax" - but don't know the details.)
That street was dug up all summer as the several utility companies rebuilt everything under it and installed new conduit and manholes for future expansion. (Better to get it in now, while there's no special issues on doing the work, than take the chance that the city's post-repaving gotchas would stick in court - or cost more in court fees to get them struck.)
And that road surface stayed pristine for years.
Now it seems to me that, if this telco wants to play hardball, this municipality could find similar stuff to do to them. B-)
Granted that the courts might eventually strike down whatever the city does as unfair competition, too. But it would still cost the telco more money to get that to happen - and tit-for-tat is well recognized as a very successful strategy.
Downside is it needs to be done in a way that doesn't end up stalling both projects while the citizens sit on their thumbs waiting for an internet connection.
= = = =
Also: Didn't a federal court just strike early-termination fees for cell phone providers? Might be possible to go after that if the telco does a long-term contract lockin to try to keep the citizens on their net once the delayed city net is live.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
The Telco's have no rights to force people to buy their goods.
I might add that CABLE TV SUCKS too. There is no variety or quality.
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.
We don't need more legislation. We need the judicial branch (ie, the court the suit is going into) to do it's job. Whether that would lie in the town or the telco's favor, I won't side - but this is not something legislation should fix.
For large sets, this will be our guide even unto death, for the LORD will work for each type of data it is applied to...
And who are you?? Fucking George Carlin?
If the guy wants to be a namby pamby who can't say what he means, then leave him alone.
Don't piss off The Angry Economist
Fiber to the home is what is known as a natural monopoly, there is an (essentially) fixed cost for deploying and maintaining such a utility and it is extremely inefficient and cost-ineffective to have multiple providers of the same service. The most efficient way to address this is to do exactly what the city set out to do, have a government run entity maintain the physical plant and allow competing private business to provide products over that plant. If you allow a monopoly private business to maintain the plant you simply increase the subscribers costs by the profit of the private business (baring any economies of scale enjoyed by the company operating a business larger than the incorporated area, but history has shown this is generally minimal and far overshadowed by the profit costs)
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
Sure it should. If there is a law that makes what the city government is doing illegal, the legislature can repeal the law.
Where I live you have to have a telecommunications carrier license to provide telecommunications services across property boundaries. I used to work for the state road authority and we laid fibre along freeways because we owned all the land. I could get in trouble over this for letting neighbors use my wifi.
Maybe the municipality needs to get a license to lay the cable? They might be okay along road alignments they control but they may be crossing property boundaries at some point.
http://michaelsmith.id.au
You don't have unregulated capitalism. That would actually be a good thing. While there is a government there is no unregulated capitalism. without a government this wouldn't even be an issue.
Indeed, the problem is not capitalism, but corporatism. Corporations are artificial entities created, supported, and given special privileges by government. Capitalism, on the other hand, encourages vigorous competition and everyone is on an equal playing field. With capitalism, everyone wins... with corporatism, a few win and everyone else loses big time.
this is a town trying to build out infrastructure to support its residents; it's certainly something within their purview. Personally, I think this is a better setup than letting the telco own the lines, since there's no incentive to gouge, and this sort of thing can work out just fine.
"We returned the General to El Salvador, or maybe Guatemala, it's difficult to tell from 10,000 feet"
Sorry, wrong. The *federal* government should do as little as possible. Regulate interstate commerce, defend our borders and coin money, specifically.
This is a perfect example of something a *local* government should do, if the local populace votes and approves of it.
Comment removed based on user account deletion
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
*spits on ground in disgust*
In related news, armies of telco lawyers have been spotted approaching Burlington, VT.
Seriously, Burlington may be grandfathered in, but newcommers will not be so lucky. We have a similar success story in Tacoma, WA. These anecdotes undermine the telcos claim that they seek to 'save municipalities from themselves'. So it is important for the telcos to stomp these out wherever they might crop up.
Have gnu, will travel.
...would be to build as just a foundational infrastructure. It would be fiber all the way from each home and business to the various connection points. These would be buildings, not little pedestals. These fibers would then be leased out to any company wanting to provide services over them. There would be 4 actual optical fibers to each home and business (more for special cases), so it would be possible for "light up" providers to offer only one type of service, and customers could get their phone, TV, and internet, from different providers if they so choose. Or people and businesses could lease them directly to have a very high speed point to point service wherever they want.
It's not competing against the telco ... it's providing them with a fiber based infrastructure they can use. It's not competing against cable TV ... it's providing them with a fiber based infrastructure they can use. It's not competing against broadband services ... it's providing them with a fiber based infrastructure they can use.
It's just a road. The city and state generally build roads and let people use them. The directions the telcos and cable TV companies are trying to go is the equivalent to not only them building the road, but also them building all the vehicles and allowing no other vehicles on the road, and them restricting what parts of town people are allowed to even go to.
Cities often provide public transportation. So some basic default services is not out of the question, anyway. But it might get structured so it is not a major competition. For example, it might provide connectivity only within the city itself and not to the world internet. It might carry only over-the-air TV stations, and not all those satellite based national channels.
I'd bet a lot of business would love to jump in and provide services over an infrastructure they don't have to pay all that up front cost to build. Whether it's paid for by leasing the fibers, or by taxes, is something the city would have to decide.
now we need to go OSS in diesel cars
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
I'm a resident of Monticello, and I'm shaking my head at what is going on. The city has spent over $1 million to research etc. whether the city will be better off with fiber. Meanwhile TDS has gone ahead and is laying fiber throughout the town.
The question is. Would TDS have done this if the city hadn't pushed their buttons? The town's population is only 11,000. Yes, just eleven thousand!
As an aside, the company TDS hired to drill/lay the fiber has proved their ineptness, cutting numerous telephone cables (whole areas of the city cut off, and at least once penetrated a main gas feed.
I agree that government should play a role in infrastructure but if they're going to do it at all, then they should spend the additional money to make those channels as large as possible. If they need an eighteen inch channel, then maybe they should do a twenty-four inch one, and so on. If they're planning to spend the money to dig up streets, create utility vaults, and so forth, then let them spend the money to do it right the first time and create a right of way that will then be available for other services. The more space they put in now, the less money they'll have to spend later on and the easier it gets to do maintenance without digging up the streets again.
If it were up to me, municipalities all over the place would be putting in precast, modular component tunnels under major streets that would be big enough to stand inside and to carry telecom lines, electrical lines, gas lines, and so on, all on top of water and sewage lines. This would cut monopoly power waaay down and massively decrease the cost, likelihood, and problems related to breakdowns, not to mention make things like greywater processing much more practical.
It's all about the information. And what we do with it.
The problem with that is a "local" community has a lot of trouble dealing with an "International" corporation that has a lot more money. Especially when it's the federal government who signs away legal rights the community has to the highest bidder. So many people talk the talk of smaller federal govt. but don't acknowledge the greater protection of individual rights that would be needed for it to work. Though that isn't really the case with this lawsuit.
In this case, you are not only correct in the way intended but also in the way the typo implies (unregulated corporations act like the old-style feudal Lords in their Manors).
It's a small world and it smells funny; I'd buy another if it wasn't for the money; Take back what I paid (SoM)
Be careful not to blindly generalize. This is local governance enacting the will of its constituency in response to the initial refusal of a private company to install fiber. In other words, government wasn't competing with private business. So this isn't a case of government stifling the free market; this is an example of a company stifling THE market.
a series of tubes /
made of many fiber strands /
stymied by lawsuit
If this were just about fiber to private homes, then maybe I would agree with you. But first of all, this system is planned to start out with fiber for schools and other municipal users. Secondly, what about commercial users? 25 million for 12,000 private homes is Sarah Palin territory. Huge debt for minimal gain. But since Monticello is home to quite a few office parks, we're talking about, at the least, several hundred business users, each of whom should and hopefully would bear some of the tax burden of this as well as getting much of the gain.
Now, if we're thinking about this as a business, which is a distortion but I'll run with it, it's normal for telecom companies to spend as much as a couple thousand dollars to acquire business customers. So if we assume five hundred businesses, then we're talking about just acquiring that business being worth about a million of that money. If we assume 700 children of school age who would use that service, well, buying computers for that many kids would last nowhere near as long and would cost over a million bucks, all things considered.
It all comes down to numbers, though, doesn't it? Do we compare this to a sewage system, which will deliver value for a hundred years or more, or do we compare it to a wireless network which will need to be rebuilt every five years or so?
How many years of service would this proposal provide?
How much of this money goes for short-term equipment like routers and how much for long-term infrastructure like fiber and putting in channels?
Who will own that city-provided infrastructure?
How many customers will use this?
Of what types?
Will they billed for this and if so, how?
I don't know. And afaict, neither do you. You've got interesting and useful things to say about the contract type and such, for which I thank you. But as for total net value, unless you've got answers to most or all of the questions above, you might want to get off your high horse a bit and cut them a little more slack.
It's all about the information. And what we do with it.
You don't have unregulated capitalism. That would actually be a good thing. While there is a government there is no unregulated capitalism. without a government this wouldn't even be an issue.
sorry, wrong.
I live in the southeast.
Whenever a hurricane hits the gas prices shoot up a buck because the republicans killed off the regulations on oil speculation, and refuse to punish oil cos when they go-a-gouging.
The last time we had "unregulated capitalism", snake oil salesmen made people wary of medication, meat was as hazardous as nuclear waste, and we had a stock market crash that put 30% of the populace into hoovervilles.
The correct answer is "proper regulation".. the kind that places big business and the government at loggerheads.
When big business and government fight each other making no gains, the little guy wins.
VLC FOR MAC IS DYING! IF YOU DEVELOP, PLEASE SAVE IT!!
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!
I was referring to the speech he gave at the end of his final term as President, in which he warned of the danger to democracy posed by the "disastrous rise of misplaced power" in the military-industrial complex.
Your point? How corporations keep their books is not the characteristic that makes them a threat to democracy.
If you don't regulate companies so that they can't take advantage of people and things, they will act in manors which destroy the middle class (the foundation of a good economy).
Can you support your assertion that the middle class is the "foundation of a good economy"? I'm not necessarily expressing disagreement; it just sounds like one of those random statements about macroeconomics that people so often throw out without really knowing what they're talking about.
And of course companies will try to take advantage of people. And people will try to take advantage of companies. That's precisely how capitalism works: "it is not from the benevolence of the butcher the brewer, or the baker that we expect our dinner, but from their regard to their own interest", as Adam Smith wrote.
Yes, there will be cases of fraud or abuse. But here's the rub: you are implicitly assuming that allowing elected officials to stick their noses in everything will help alleviate this problem, without causing more problems than it solves. Suffice it to say that is a matter of some debate.
There is more to economics than Ron Paul.
In your first sentence, you are saying that a True Scotsman's capitalism would have prevented the collapse.
You have a minority view of the causes of the Great Depression.
There is no evidence at all for your statements about the New Deal (dogma notwithstanding).
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?
When the Gallup poll in 1939 asked, 'Do you think the attitude of the Roosevelt administration toward business is delaying business recovery?' the American people responded 'yes' by a margin of more than two-to-one.
It's a leading question. You could ask a lot of questions in the form of "Do you think $politician's $policy is worsening $problem?" and get a positive response. If there's any doubt or controversy people will be inclined to say yes. A more honest survey would list the item and ask how the person felt about it, on a negative to positive scale.
The business community felt even more strongly so.
Shocking! Who could imagine that the business community would take negative views towards regulation?
"Taken as a whole, government policies of the New Deal served to lengthen and deepen the Great Depression."
Another leading question. The people running these surveys either have an agenda or are inept at trying to remove bias.