Broadband Communities

AUG-SEP 2014

BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.

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AUGUST/SEPTEMBER 2014 | www.broadbandcommunities.com | BROADBAND COMMUNITIES | 39 revenues began coming in, creating a permanent cash-flow problem. On top of the costs incurred because of the TDS lawsuit, Monticello had to deal with an extremely aggressive countermarketing campaign by Charter. Charter ofered a package of its fastest Internet access and every cable channel for only $60 per month. It charges $145 for such a package in other communities where there is no real competition. Many who are familiar with channel contracts, which are subject to nondisclosure agreements, believe that Charter's costs to deliver that package must exceed $60 per month, meaning that it loses money on every subscriber that takes the deal. Between the delays resulting from the lawsuits by TDS and the price cutting by Charter, FiberNet Monticello failed to hit its financial targets and is in the midst of negotiating with bondholders to take a significant haircut. Meanwhile, the network has borrowed funds from the municipal liquor store fund to continue operating as it changes strategies to become financially viable over the long term. Tough FiberNet's internal balance sheet has been in the red, the citywide impact of FiberNet has clearly been positive. Lower prices by Charter and TDS have resulted in savings to local businesses and households of more than $1 million each year. FiberNet improved the business climate and put Monticello on the map as having some of the best connectivity in the country. Prior to FiberNet, TDS charged more than $40 per month for telephone services, and calls to the Minneapolis/ Saint Paul metro area were long distance. FiberNet began charging $21 and included the metro area in the local calling plan. TDS has since lowered its rates, ensuring that everyone is saving money and seeing benefits from the newly competitive environment. A recent GAO report noted that "following the construction of a fber-to-the-home municipal network in Monticello, Minn., the two other broadband providers in the area made investments in their infrastructure to improve their broadband speeds. One of these providers stated that all of its networks undergo periodic upgrades to improve service, but upgrade schedules can change in order to stay competitive when there is a new service provider in a particular market." v Christopher Mitchell is the director of the Community Broadband Networks Initiative at the Institute for Local Self-Reliance, and Lisa Gonzalez is a research associate. Find out more about the institute at www.ilsr.org and www. muninetworks.org.

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