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Want to read my writing? Check People’s Production House

In order to simplify my life and give the company that pays me the full value of my work and energy, I will now be posting to my blog on the People’s Production House website. RSS feed coming soon.

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EarthLink, enemy of broadband, seeks Philadelphia deal this quarter

EarthLink’s dump of its municipal wireless business is almost complete. It walked away from Alexandria and Arlington, Virginia, in April; handed its Milipitas and Corpus Christi systems over to the municipalities; and is set to shut down wireless service to New Orleans on May 18. That leaves just Anaheim and Philadelphia.

Tourist-rich Anaheim is an anomaly. EarthLink’s one-page contract with the city can’t be much of a burden. But there is most certainly a resolution in the works for Philadelphia.

As I argued in a previous post, I believe the best option for Philadelphia is for EarthLink to pass the system to a nonprofit organization with network management experience. EarthLink was not able to find an interested buyer for its New Orleans system, so there’s still no reason to think that is an option for Philly. But I don’t think anyone in Philadelphia, even in the Nutter administration, wants to see the system simply dismantled. So I believe nonprofit intervention is also the most likely scenario. I believe it will happen this quarter, in time for the MuniWireless conference in Philadelphia.

EarthLink is highly motivated. The walk-aways, shut-offs, and give-backs with the cities listed above all happened in this quarter. EarthLink wants to close out Philadelphia this quarter, too. Losses from these soured deals will be offset by $50.8 million of incomeEarthLink received in April from the sale of its share of Covad to Platinum Equity.

As it dumps its municipal wireless business, EarthLink has found that its strongest profits are to be found not in broadband service but in dial-up. The dial-up customers, while declining, are relatively stable and highly profitable, while new customers are expensive to acquire and quick to exit. This strategy has allowed the company to cut the cost of marketing for new customers. EarthLink has also laid off more than half its work force, outsourcing all of its tech support, which probably has helped it get rid of costly customers.

This streamlining yielded first quarter profits of $57.8 million, a huge turnaround from the $30 million it lost in the last quarter of 2008.

EarthLink now sees potential profits in our stagnant digital divide. CEO Rolla Huff has his eye on the remaining 8.5 million subscribers to AOL dial-up service, which Time Warner has said it wants to slough off, as well as United Online, which owns Juno and NetZero, and Microsoft’s MSN subscribers. EarthLink is the second largest dial-up service provider with 2.6 million customers. Huff estimates the total number of commercial dial-up subscribers to be 15 million to 18 million. Consolidating all of those customers would generate a lot of cash.

EarthLink still has the same problem that motivated it to dive headlong into wireless deployments, as I explained in The Philadelphia Story: without its own infrastructure, its DSL days are numbered. But now, instead of pushing forward to build new infrastructure, it is retreating to the old phone lines that are still protected by common carriage.

In other words, EarthLink, once the harbinger of digital inclusion, is becoming the enemy of broadband.

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Verizon FiOS proposes citywide buildout

Yesterday, Verizon proposed to build a fiber optic network covering all of New York City. The proposal comes just one day after the City’s Department of Information Technology and Telecommunications (DoITT) published notification of the RFP for cable television providers, which is how you know DoITT’s RFP (request for proposals) and Verizon’s proposal were worked out in tandem over months of closed-door negotiations.

Verizon is offering to finish the installation by midyear 2014, provide a public safety INET (institutional network), pay franchise fees equivalent to five percent of gross revenues on cable TV service, channels for public access. As the precise details emerge and once I’ve had a chance to read the RFP, I’ll give you my assessment on the fine points, but that doesn’t sound like enough off the bat given the scope of the deal.

A hearing from the Franchise and Concession Review Committee is forthcoming. I will keep you posted on that. You should plan to attend.

For background and a discussion of the issues at stake, see the article I just published with Gotham Gazette: Fiber Optics: Bringing the Next Big Thing to New York

This is another example of a phenomenon you may have heard or read me describe before: The general policy and market rules of media simply do not apply to New York City. Other cities are having trouble attracting or holding onto a $20 million investment for a wireless network while New York has a company proposing to invest $5 billion over 6 years to build a fiber optic network and become the second (third or fourth if you count satellite) entrant to the video service. Keep in mind that the incumbents are not citywide: Time Warner and Cablevision currently divide the city between them:

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(Click the image to see the map of current franchise areas.)

The scale is hard to fathom. It’s like $100 per person per year or $300 per household, of which there are about $3.1 million – though that’s not counting businesses. It’s around $3 million per year for each of the city’s 322 square miles – as if all those square miles cost the same or were worth the same.

But the rate the money goes into the city is not the most important number. The important number is how fast it goes out. How much will Verizon make off each person, business, or square mile, and over what time frame? Once they put this infrastructure in place, they are going to hold on tight and make as much money as they can off of it. And anyone who wants to compete at the speed levels Verizon will be offering will have to match their massive investment.

We might only get one shot at building a fully fiber optic network for our city. We should try to get it right.

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Horizontal vs. Hub-and-Spoke Relations, or The Emperor has no Invisible Thread

Michael Maranda posted a comment recently to my testimony before the New York City Broadband Advisory Committee. He asked me to expand on one of my recommendations:

  • Promote horizontal relationships among stakeholders rather than hub-and-spoke relationships that all connect to this committee or to any one person or organization.

The original promise in Philadelphia was to tie the city together with “invisible thread.” That’s what Dianah Neff told National Geographic. It hasn’t happened.

In planning the network and passing it through City Council, Wireless Philadelphia solicited input and testimony from a variety of nonprofit organizations. All of those organizations care about the issue of Internet usage and all work with overlapping constituencies. Yet Wireless Philadelphia did not take any steps to foster relationships among them that would encourage synergistic collaborations.

Instead, WP is forming “Wireless Internet Partnerships” or WIPs, a series of one-one-one relationships between Wireless Philadelphia and individual organizations. I am not aware of any plans to connect these WIPs to each other so the groups can form their own partnerships. At best, maybe we’ll see a WIP cocktail hour.

Ideally, the horizontal relationships would extend beyond the organizational level. I’d like to see local conventions where all of the users of the network could gather, and the people who make up these nonprofits’ constituencies could get to know each other. I think these municipal wireless projects will benefit by emphasizing their local-ness and I think the users/local residents will benefit from having stronger social bonds.

Unfortunately, I don’t think Wireless Philadelphia or Earthlink want their customers to have the capacity for collective action or self-management. Not surprising for a for-profit company with meager customer service. But the nonprofit should be trying to build community, not disempower users.

The problem for Wireless Philadelphia is that the only reason for them to exist is to mediate the relationships between the City and Earthlink, Earthlink and the poor residents of Philadelphia, and the WIPs and Earthlink. If all of those entities could relate directly to each other, they’d quickly realize there is no reason for WP to exist.

I think the system in Minneapolis, where the Minneapolis Digital Inclusion Fund Advisory Committee has just released it’s RFP, is better, but not perfect. There, the people that pushed for digital inclusion funding organized themselves, though the efforts were soon co-opted into an official “Task Force.” The result is a community-advised fund at the Minneapolis Foundation, funded primarily through a revenue-sharing agreement with US Internet, the local network operator.

The participants in that Advisory Committee have horizontal relationships with each other instead of all having separate relationships with a new nonprofit, as in Philadelphia. However, I can’t find any list of the members of the committee online (though I know Peter Fleck is one because he’s blogged about it). That makes me concerned that those relationships won’t grow beyond the Committee’s boundaries.

If they want to push that network further, they are going to be swimming upstream. The process of soliciting grant applications from 501(c)3 organizations is notorious for pitting groups against one another and creating secretive one-to-one relationships between applicants and funders.

Minniapolis Digital Inclusion Advisory Committee should consider setting up something like GiveMeaning.com – not to let people vote for recipients of the Committee’s funds, but to promote awareness of the broad variety of initiatives people in the city are doing and to give those initiatives an avenue to raise additional funds.

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New Threat to Small Publications

If you thought things were bad for small publications, Time Warner is working with the Postal Regulatory Commission (PRC) to raise postal rates for small publications.

The PRC is supposed to be an independent agency, but earlier this year they rejected a postal rate increase plan offered by the U.S. Postal Service. Instead they opted to implement a complicated plan submitted by media giant Time Warner, according to Free Press.

As Robert McChesney explains, “Under the plan, smaller periodicals will be hit with a much larger increase than the big magazines, as much as 30 percent. Some of the largest circulation magazines will face hikes of less than 10 percent.”

The IPA used to be the engine of response to these challenges. Fortunately, Free Press has picked up that slack:

For individuals: Send a Letter to Congress and the Postal Service

For publications: Sign the Letter to the Postal Board of Governors

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New Venue for March 30 Broadband Advisory Committee hearing

The New York City Broadband Advisory Committee that we discussed in the New York’s Wireless Future panel is holding its first public hearing in the Bronx on Friday, March 30.

There has been a change in venue: The March 30th public hearing will now be held in the Gould Memorial Library Auditorium on the campus of Bronx Community College, University Ave. at W. 181st Street, from 10 am to Noon. (Get directions.)

The room holds something like 500 people. They’re expecting at least 200. Council Member Gale Brewer’s office (she’s the prime mover behind the BAC) is distributing a flyer, available as a pdf download. They’ve also set up a blog.

In order to promote awareness of the Committee and the hearing and to spark imagination of what that future could look like, Wakeup Call is producing a series on municipal broadband. Listen to me preview the series on this past Monday’s show.

That radio appearance finally motivated me to start up a podcast, which will include the entire series as well as the hearing. You can subscribe to the podcast here. And you can find the audio files in the sidebar of the blog.
Here is the list of BAC members, the first of which were appointed by the City Council while the second batch was appointed by the Mayor.

Council appointees:

  • David Birdsell, Dean, Baruch College Graduate School of Public Affairs, City University of New York
  • Neil Pariser, Senior Vice President, South Bronx Overall Economic Development Corporation (SoBRO)
  • Andrew Rasiej, Founder of Personal Democracy Forum and MOUSE
  • Jose Rodriguez, President and Founder, Hispanic Information and Telecommunications Network (HITN)
  • Elisabeth Stock, President and Co-Founder, Computers for Youth (CFY)
  • Nicholas Thompson, Senior Editor, WIRED Magazine
  • David Wicks, Founding Partner, Alwyn Group, Former Cablevision executive

Mayoral appointees:

  • Mitchel Ahlbaum, General Counsel and Deputy Commissioner for Telecommunications Services, New York City Department of Information Technologies and Telecommunications (DoITT)
  • Shaun M. Belle, President and CEO, Mount Hope Housing Company
  • Thomas Dunne, Vice President of Public Affairs, Policy and Communications, Verizon New York
  • Avi Duvdevani, Chief Information Officer / Deputy General Manager, New York City Housing Authority (NYCHA)
  • John J. Gilbert III, Executive Vice President / Chief Operating Officer, Rudin Management Company
  • Wendy Lader, Vice President Telecommunications Policy, New York City Economic Development Corporation (NYCEDC)
  • Howard Szarfarc, President, Time Warner Cable of New York and New Jersey
  • Anthony Townsend, Research Director, Institute for the Future

I’ll have more commentary on the makeup of the BAC in the near future, but it’s obviously a mixed bag with a lot of people heavily invested in the status quo. That doesn’t mean we should boycott it, but it does mean that we have to be clear that it cannot be the final arbiter of our communications future.

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Audio of “New York’s Wireless Future” now online

We recorded the “New York’s Wireless Future” panel at the 2007 NYC Grassroots Media Conference. You can listen to it on the People’s Production House site.

These local broadband projects are so critical because we have no national broadband strategy. France, Holland, South Korea, and Japan have all blown past the US in connection speeds and prices because they have made broadband construction a national priority and have developed strategies to get the job done.

As a result, decisions about local investment in broadband infrastructure – all of these local muniwireless battles – will determine the way we communicate for the next 100 years. Because we have no national broadband strategy, these decisions are being made at the local level, by mayors and city councils, and that is where we need to act.

So I encourage everyone in New York to attend the first public hearing of the NYC Broadband Advisory Committee on March 30, from 9 AM – 11 AM, in the rotunda of Bronx Borough Hall, 851 Grand Concourse.

Here’s the full announcement…

Read the rest of this entry »

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