CHICAGO – Following its first defeat a year ago thanks to heavy incumbent lobbying, Chicagoland suburbans have yet another clear opportunity to take the lead in applying technology with a new model for network services to the end user, writes adjunct Northwestern professor James Carlini.

© 2004 ePrairie

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The Tri-City Broadband initiative from three western Chicago suburbs is again trying to pass a referendum in the November election to provide municipal fiber to its residences and businesses. Batavia, Geneva and St. Charles will vote once more if citizen group Fiber For Our Future can list it on the ballot.

Comcast and SBC will again come out to squash this initiative because it sets a scary precedent for them: the permanent loss of subscribers for telephone, television and Internet services. It also opens the door for others to follow in other cities.

Got Fiber?
Fiber For Our Future wants to see this broadband initiative pass. Annie Collins, the chairwoman of this group, stated in a recent Kane County Chronicle issue: "We’re doing this because every resident and business has been victimized by two arrogant businesses. They have used their money and marketing machines to lie to residents and mislead the voters of the Tri-Cities."

“We deserve this,” Collins said in reference to the fiber infrastructure. Her comparison of existing and proposed infrastructures is interesting. Paying $8 for a gallon of milk that’s typically $1 per gallon does not make sense. Why would you pay the premium on a commodity? Would you pay it because the $8 version is still delivered by a guy on a wagon with a reliable horse?

Maybe a better analogy is one where you go from Chicago to San Francisco in a covered wagon versus flying in a Boeing 777. The ticket for the four-hour plane flight is $119. The cost in time and money in the covered wagon is weeks (not to mention the perilous problems “along the trail”).

The traditional “transportation company” doesn’t fully understand the benefits of the airplane and has everyone buffaloed that its horse-and-buggy approach is the way to go. “It was, it is and always will be” is the mantra that they promote until they get their act together to offer their next-generation transportation platform (a railroad).

The problem that most subscribers have is that they don’t realize that the Boeing 777 has been around for several years. It’s not an unproven concept. The fear that SBC and Comcast want to promote is one where the covered wagon train is the tried and true approach.

Take it or Leave it to Beaver
It sounds like SBC and Comcast were really shaken the first time this referendum was offered in April 2003. If they weren’t, why did they spend so much money defeating it?

They came out with big money and the referendum didn’t pass because they flooded local newspapers with negative ads. It’s funny how they skimp on service and aren’t responsive, yet when it comes to fighting a competitive service, money and resources flow like Niagara Falls.

Since then, service has increased both in the offering of DSL services from SBC and service in general from Comcast.

This is a strong departure from their usual monopolistic view of a “take it or leave it” marketing approach where quality of service isn’t part of their working vocabulary. Maybe more suburbs should seek a referendum for developing or granting a competitive service because it does have a direct impact on the level of service they will receive.

There have been many complaints to villages in the Fox Valley area (northwest of Chicago) on the quality and cost of cable services from Comcast.

Standard cable service with one premium channel soared in a year from $48.47 a month to $64.99 a month (you had to switch to digital cable in order to get a movie channel). If you tried to stay with analog cable, the programming selection was so bad you wound up watching “Leave It To Beaver” for $51 a month as they stripped off anything worth watching (including The History Channel). They forced the upgrade.

A Web site in nearby Chicago municipality Dundee has a separate section that deals with poor cable service and has prompted new meetings with Comcast. Some residents have been so turned off by the bad service and recent price increases that they have literally turned off the Comcast service and have gotten a dish instead.

Once you do go to satellite service, Comcast sends you a $300 offer to get rid of your dish. What a lame marketing strategy: do nothing to retain loyal customers and then try to win them back with some cash after you tell them that the increases to monthly service and the cutting of programming is policy that cannot be changed.

They also cut out their senior rates. If you had them before, you retained them, but anyone now turning 65 is stuck with the same high rate.

In the Kane County Chronicle article, Comcast had some more observations: “Comcast also has increased its services to residents in the area since last year's vote,” Comcast spokeswoman Patricia Andrews-Keenan said about the question of whether creating such a utility is the best use of local funds. "Is there really a need to duplicate those types of things? Is that the best use of the municipality? Shouldn't they be providing service for the elderly or education?"

Real Motivation or Real Greed?
I love how these spokespeople always have the people in mind. It seems like all these PR people go to the same school of civil cajoling. Hopefully, the people voting on the Tri-City Broadband referendum will be smart and disregard Comcast’s whining.

When you really look at what she said, it is clear that Andrews-Keenan is oblivious of the Telecom Act of 1996, which promoted competition in the Telecom area. “Is there really a need to duplicate those types of things?” Does that sound like someone still immersed in a monopoly mindset? Ours is good enough. We don’t need competition.

Diverse competition is what makes the industry move forward rather than monopolies with antiquated business models. Comcast’s gold-plated buggy whips are not what the consumer wants to buy any more.

This is Big News Somewhere Else
Lots of people on the west coast are watching what’s happening here. We have more attention being focused on the Tri-City initiative from west coast media than our own Chicago media. That’s because Chicago just doesn’t get it yet. Many solid technology initiatives get overlooked in favor of some political scandal, painted cow exhibit or some other fluff news piece. But that’s another column.

There should be a lot more media coverage as this is cutting-edge stuff. It’s not so much with the applying of the technology (which is proven). The issue is going from a 19th century business model for monopoly communications to more of a 21st century approach using municipal fiber infrastructure that can be used by any content provider.

The applications are endless with new capabilities for home services, telemedicine, high-speed video and so many other new services. It’s not as risky as some of the PR people try to paint it to be. Once the infrastructure is in place, it can be used by any carrier wanting access. This opens up competition. They will pay access fees.

It may become a profit center for municipalities just like a water treatment plant or other asset that generates money. Worst case, if no one subscribes, the municipal infrastructure can be sold to an interested party. Comcast, SBC, AT&T and many others would jump at this because it would be state-of-the-art fiber and not 70-year-old copper.

If they did the calculations again, they would find that the infrastructure costs would be cheaper due to large price drops for certain optical components and the industry itself, which has about 10 times more supply than demand. If an infrastructure project like this was put out to bid, local hotels would be full of fiber-optic companies and construction firms.

“Wagons ho” has to be replaced with “please note the cabin exits” and “all aboard” is not good enough when “beam me up, Scotty” is already a proven, 30-year phrase.

Carlinism: Municipal network infrastructures and rights of way are a public asset that should be better understood by politicians, the media and especially the tax payer.

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James Carlini will be speaking at a National Regulatory Services Conference in Bonita Springs, Fla. on understanding technology issues when automating SEC compliance functions. The conference will be held from April 13 to 16. More information can be found here.
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James Carlini is an adjunct professor at Northwestern University. He is also president of Carlini & Associates. Carlini can be reached at carlini@northwestern.edu or 773-370-1888.