back to article Funnily enough, small-town broadband cheaper than big cable packages, say Harvard eggheads

A study in the US has found that, where they're still allowed, municipally-owned broadband networks are likely to deliver customers a better value than what the cable giants offer. The research (PDF), conducted by Harvard University's Berkman Klein Center for Internet and Society, found that over a four-year period, homes that …

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Holmes

The lower cost is probably due to the fact that muni systems don't need to make obscene profits to "return shareholder value" and payout huge C-suite bonuses?

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I read the PDF, and nowhere does it talk about average downtimes or speed of local repairs. Could be good, could be bad, but we are left wondering. Further, there is no mention about whether or not these muni networks utilize muni resources unavailable to private ISPs, such as existing utility truck fleets. Those points are never raised at all. I guess none of the studied cities ever use city trucks for their broadband services. I guess. Seems a bit sketchy for a "study."

Finally, they admit that only the bottom tier plans show cheaper rates via muni service vs private service.

So if one wants decent speed and capacity, one will not benefit from public broadband, and may pay more.

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Boffin

"The lower cost is probably due to the fact that muni systems don't need to make obscene profits to "return shareholder value" and payout huge C-suite bonuses?"

You can tell yourself that, but you'd be wrong. Those are relatively small beer, compared to the running costs, financing costs and depreciation of any infrastructure network. The key driver of cost in either public or private sector is (a) whether you're competent at designing, building, financing and operating such networks, and (b) whether you have good asset utilisation.

If we differentiate between "excess shareholder returns" and the cost of capital that even a municipality should be accounting on commercial assets, then as a general rule the greater efficiency and focus of a commercial outfit will outweigh the director's and Wall Street's incremental greed. If cities want a finger in the pie, they'd mostly be better off forming a corporation to own the assets (giving them a lot of control, and possibly access to cheap municipal financing), and then contracting out all design, build and operation.

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"I guess none of the studied cities ever use city trucks for their broadband services."

I may be showing my ignorance here about how broadband services work in the US, but what do trucks have to do with anything? Are you talking about repair/maintenance vehicles? Ultimately, what does that have to do with the price of municipal broadband?

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Cost assignment

" Further, there is no mention about whether or not these muni networks utilize muni resources unavailable to private ISPs, such as existing utility truck fleets."

I would be really surprised if the cities don't clearly differentiate the costs in their budgets. Because in today's environment of governments always having fewer dollars than services they are expected to provide, they are going to want things crystal clear if they have to go to the citizens for a tax increase.

As an example, the small city I live in has a public works department that handles streets, sewers, and trash. And they break down every expense, including labor hours, between those services. So for example, we might have 2.4 full time employees (FTEs) for trash service. And you can bet when they work overtime helping to plow streets that OT is billed to Streets.

And we have funding for each of those services. Each one has it's own budget that must be balanced. As a result, I don't see any municipality incorrectly reporting costs to make muni-broadband more attractive. Not when they'd be passing those costs to services that citizens hold in much higher regard as essential. (Police, Fire, streets) They don't even combine expenses between water and sewer, and we get those on the same bill.

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"I may be showing my ignorance here about how broadband services work in the US, but what do trucks have to do with anything? Are you talking about repair/maintenance vehicles? Ultimately, what does that have to do with the price of municipal broadband?"

Most cities have large networks of cables that physically connect all the broadband customers to the providers. This cabling has many expensive fittings and the whole lot is mostly outdoors in the weather. It degrades, a lot.

Then there's lightning, uncouth birds, wayward kites, and cable piracy, all of which degrade the infrastructure as well. And to fix it all one needs a dedicated force of workers, who require large work trucks to do the job properly.

I'm curious tho; How is it done where you live? City-wide wi-fi?

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Anonymous Coward

If we differentiate between "excess shareholder returns" and the cost of capital that even a municipality should be accounting on commercial assets, then as a general rule the greater efficiency and focus of a commercial outfit will outweigh the director's and Wall Street's incremental greed.

You're forgetting that the corporate broadband providers are monopolies or duopolies and obliged, required, and exist to create profits.

If cities want a finger in the pie, they'd mostly be better off forming a corporation to own the assets (giving them a lot of control, and possibly access to cheap municipal financing), and then contracting out all design, build and operation.

And you completely miss the point that muni systems are by governments created to serve the people, not create profits

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And since governments don't need to turn a profit, they tend to be much less efficient and much more expensive at practically everything, which is why so many governments have privatized their services.

Yet we are to believe in this one case the trend is reversed? I doubt it. Instead I suspect this "study" has to do with the current corporate drive (Google, Facebook, Twitter et al) to institute Web Socialism by Any Means Necessary.

The way my earlier post about the PDF was massively downvoted shows just how effective such mind control methods can be on supposedly smart techies. Oh well, at least the lemmings are no longer in charge in the US...

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Anonymous Coward

Don't want to believe

So this evidence doesn't chime with your existing beliefs so can be safely dismissed and ignored?

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Cable companies wouldn't be lobbying so hard...

...if they didn't know that municipal networks, run as a public service, were a threat to their crappy-as-possible shareholder-first monopolies. "It's unfair to compete with the public-funded sector!" they sob, after taking billions of dollars of taxpayer subsidies to expand broadband access but frequently doing fuckall instead.

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Facepalm

Re: expand broadband access but frequently doing fuckall instead.

I think it is the reverse. They go to great lengths to

- make Muni BB illegal at the state level

- sabotage Muni infrasctucture

- pay off local politicians

So BAU for US Corps then.

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Re: Cable companies wouldn't be lobbying so hard...

"if they didn't know that municipal networks, run as a public service, were a threat to their crappy-as-possible shareholder-first monopolies"

The thing is, it's really nothing to do with them being run as a public service. The profits from things like broadband, and similarly for other utilities as well as fuel and other necessary things, are actually pretty small - usually around 1-2% at best. The important word there is "monopoly". They're not expensive because of shareholders, they're expensive because there's no competition. They're not worried that the public sector can do things cheaper, they're worried that absolutely anyone could do it cheaper. The only reason municipal networks are usually the ones involved is simply that they're the only ones with the power to take on the big cable networks - a decent size city or county has both the budget and the authority (until overruled by the state) to get something done in the way a private startup doesn't. Otherwise, it takes someone on the scale of Google to try to butt in, and few companies that size have any interest in actually doing so.

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The answer of course is obvious, the FCC should require municipalities to raise their prices so that Big Cable can complete. But, I suppose subsidizing Big Cable also works...

Someone, of the CEOs children!

Requiring them to drive around the same sport vehicle two years in a row is barbaric!

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Anonymous Coward

The answer of course is obvious, the FCC should require municipalities to raise their prices so that Big Cable can complete. But, I suppose subsidizing Big Cable also works...

Aw geez.... you mean the "Free Market" is not Free and we actually can't allow non-profits to compete with for-profit entities?

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JLV
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Happy

this reminds me

of the country whose lawmakers passed a law banning its government from using its purchasing power to obtain lower prices from drug manufacturers.

Yup, free market all around, as long it pays for nice campaign donations.

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Unhappy

"In general we found..making comprehensive pricing comparisons..extraordinarily difficult,"

"The US Federal Communications Commission (FCC) does not disseminate pricing data or track broadband availability by address. Additionally, service offerings follow no standard speed tiers or definitions (such as the specifics of video or phone service bundles)."

So that'll be "Sweet" Pai earning his money then.

US Big Cable remind of the UK Banks when they were asked about their views on allowing Credit Unions to relax membership conditions. Keep in mind both have ignored the areas where these services have grown for decades IOW the can't be a**sed to support the area themselves, but they don't want the area supporting itself.

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Why can't we have more of this?

Because everything in America is a scam and Mammon is god.

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I recently had an opportunity to look into the budgeting process for our port authority. They use non-GAAP numbers. No accounting for deterioration of physical assets. No accounting for code compliance (which they weren't super keen on doing at all). Cash flow only. So no, don't assume anything about what the munis are doing to have their numbers low.

Every business wants to have a monopoly for itself and wide open competition for its supplies. That allows them maximum profit. The cable companies have taken over the ISP business because of their sweatheart deals with the munis. Strip them of that, and maybe I won't break out in derisive laughter if you mention "free market" in relationship to the ISPs.

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Holmes

He told I could stream live video, so I put my TV in the creek.

Having been privy to the inner workings of a rural ISP once upon a time, I have to say that of course small town broadband is cheaper. Farmer Joe is the only neighbor for miles, and his primary concern is the GPS tracking of his tractors during the day. His one wire goes straight to the center hub (which is conveniently adjacent), where "refurbished" (dusted-off) equipment bought dirt cheap when a big town ISP upgraded is maintained by one whole employee, Bob, who also happens to be the head (and only employee of) Customer Care, the finance department, and advertising. (He's be considered the owner too, but it's technically a profit-share.) No overhead. What lines are run are never close to peak use, and require no balancing operation.

Meanwhile in Centre Citry you have insane spider-webs of cabling and more route paths than you can map. Load planning is a game of darts because everything is always maxed whenever prime-time telly gets everyone streaking in HD or 4K all at the same time. And the moment a slowdown glitches the stream in just one apartment complex you have dozens of complainers calling up, on their VoIP. And there are mynocks chewing on the power cables again.

Rural broadband is easy. City networking requires serious hardware and manpower. For some things, economy of scale works great. ISPs, not so much.

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The data is more telling than the analysis. On average, the 27 community networks were $10/month cheaper but 7 Mbps slower than their commercial rivals. And community networks do offer teaser rates; Longmont, CO, for example, offers a lifetime low rate to early adopters.

See http://hightechforum.org for a look at the data.

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