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Franklin, Kentucky Expands Fiber Pilot Partnership with Recent RDOF Wins

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Franklin, Kentucky’s (pop. 8,400) electric utility is gearing up for an expansion of its partnership with Warren Rural Electric Cooperative Corporation (WRECC) with the help of $2.3 million from the recent FCC Rural Digital Opportunity Fund (RDOF). The new partnership will allow Franklin EPB to add new service to roughly 250 locations adjacent to a current project in the area.

The expansion project will add subscribers in the northeast region of Simpson County and nearby parts of the city of Franklin in the south-central part of the state, where the two entities are operating a two-area fiber pilot.

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Tennessee Co-op Expands In Kentucky

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A Tennessee communications cooperative will soon bring fiber connectivity to Kentucky’s Warren County. North Central Telephone Cooperative (NCTC) will offer high-quality Internet access via gigabit (1,000 Megabits per second) connectivity via its North Central Communications, Inc., subsidiary.

Starting With New Construction

NCTC will start in a new subdivision and has already installed fiber prior to new home construction. The cooperative will also offer services in a nearby apartment complex. NCTC will make Internet access along with video service available to the new homes that are not yet built. They intend to expand to other multi-dwelling units and subdivisions in the area and hope to develop a larger regional footprint.

In order to accomplish their goal, NCTC is enlisting the help of other local entities:

“We’re talking to Warren Rural Electric Cooperative and Bowling Green Municipal Utilities, trying to implement your vision that everyone in Warren County is served by broadband eventually,” said [Nancy White, NCTC CEO]. “We all have the same vision to provide broadband to as many people as want it.”

Not A Stranger To Kentucky

Approximately 120,000 people live in Warren County with a little more than half making their homes in the county seat of Bowling Green. The population has increased steadily by double digits since 2000. It’s located in the south central area of the state and also home to Southcentral Kentucky Community and Technical College and Western Kentucky University.

On September 8th, the Warren County Fiscal Court approved a non-exclusive franchise agreement to allow NCTC to serve people in the county. NCTC is already serving subscribers in Allen County as part of the Kentucky Wired project. Warren County adjacent on the northwest border of Allen County. 

“They’ve been in Allen County for quite some time, and I have nothing but good things to say about them,” Allen County Judge-Executive Johnny Hobdy said. “They have continued to upgrade and bring service to parts of our county that hadn’t been served. I think Warren County will be satisfied with their service.”

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Seattle, Gigabit Squared, the Challenge of Private Sector Cable Competition

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This the second in a series of posts exploring lessons learned from the Seattle Gigabit Squared project, which now appears unlikely to be built. The first post is available here and focuses on the benefits massive cable companies already have as well as the limits of conduit and fiber in spurring new competition. This post focuses on business challenges an entity like Gigabit Squared would face in building the network it envisioned. I am not representing that this is what Gigabit Squared faced but these issues arise with any new provider in that circumstance. I aim to explain why the private sector has not and generally will not provide competition to companies Comcast and Time Warner Cable. Gigabit Squared planned to deliver voice, television, and Internet access to subscribers. Voice can be a bit of hassle due to the many regulatory requirements and Internet access is comparatively simple. But television, that is a headache. I've been told by some munis that 90% of the problems and difficulties they experience is with television services. Before you can deliver ESPN, the Family Channel, or Comedy Central, you have to come to agreement with big channel owners like Disney, Viacom, and others. Even massive companies like Comcast have to pay the channel owners more each year despite its over 10 million subscribers, so you can imagine how difficult it can be for a small firm to negotiate these contracts. Some channel owners may only negotiate with a provider after it has a few thousand subscribers - but getting a few thousand subscribers without good content is a challenge. Many small firms (including most munis) join a buyer cooperative called the National Cable Television Cooperative (NCTC) that has many of the contracts available. But even with that substantial help, building a channel lineup is incredibly difficult and the new competitor will almost certainly be paying more for the same channels as a competitor like Comcast or Time Warner Cable.
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Lafayette Dealing with Expected Headaches

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No matter how much community broadband advocates prepare the community and elected officials for the expected difficulty of building a successful local project, in the midst of the deployment, times are tough. A local paper in Lafayette claims "LUS Fiber [is] at a crossroads" but starts with an admission that these problems were forecast and expected:
Competitors will pay less for programming than you do, and in turn play hard ball by lowering rates for customers. Good luck keeping up with technological advances, expansion needs and growth costs; it's a risky proposition for a public entity used to maintaining rather than adapting. Your opportunities will be limited because you can't provide services outside the city limits. You'll be criticized for offering programming such as adult movies, and you'll be told you really should be focusing on your core business: running power, water and wastewater plants.
Terry Huval delivered that message in 2000, long before Lafayette committed to building their community fiber network -- a network that delivers some of the fastest speeds in the nation at the lowest rates and has already delivered hundreds of jobs. Nonetheless, LUS Fiber is behind the take rate goals they had set in the business plan. The expenses are higher than forecast because Lafayette was unfairly denied entry to a coop that secures lowers rates for television contracts for members. The only discernible reason for rejecting Lafayette is that Cox joined the coop after Lafayette committed to building its network. There is little doubt that Cox was influential in denying Lafayette's application, likely increasing LUS Fiber expenses for offering cable channels by more than 20%. This is just one of the many ways that the telecommunications market is rigged to benefit incumbents at the expense of all of us -- residents and small businesses alike. We will not have real choices in competition until government policy treats telecom like the essential infrastructure it is. Mike Stagg, a long time supporter of the network is quoted in the article, challenging LUS Fiber to improve its marketing:
Can they do better? Probably so. Part of it is the fact that, just from a mindset standpoint, LUS is a utility and utilities generally do not compete," Stagg said.
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Update in Lafayette v. NCTC Legal Battle

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LUS has asked the court in Kansas to dismiss a lawsuit against it by NCTC (I previously explained this situation here). Down in Louisiana, a local paper is continuing to cover it and John at Lafayette Pro Fiber has explained the situation as well, with more context about the NCTC. Once this lawsuit is dismissed, we'll hope for a ruling from the FCC that the NCTC cannot simply discriminate against some municipalities based on the private company incumbents doing business there.
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LUS Files Complaint: Cox and NCTC Limit Competition

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Lafayette Utilities System has filed a complaint with the FCC following what seems to be a rather arbitrary decision by the National Cable Television Cooperative (NCTC) to deny Lafayette as a member. This is a crucial issue for communities that want to build fiber-optic networks, so we will dig in and offer an in-depth explanation. It all starts with the business model. Fiber-optic networks are fantastically expensive and are expected to be financed entirely with revenues from subscribers. Though communities typically want fiber-optic networks for the broadband capacity, they find themselves having to offer cable television services also to ensure they will attract enough subscribers to make the debt payments on the network. Unfortunately, cable television services are the most difficult and expensive part of the triple-play (broadband, telephone, cable tv). A community network has to sign deals with different content providers in order to put together its channel lineup. Even a community network with 100,000 subscribers has little power over the companies with channels like ESPN, the Disney Channel, Discovery, MTV, Food Network, and others. Thus, it will have to pay more for those channels than massive networks like Comcast that have many millions of subscribers and therefore a stronger negotiating position. LUS has noted that video programming is the "largest single on-going cost" it incurs in the network. Enter the NCTC. By forming a cooperative, many small providers (public and private) were able to gain negotiating power over content owners and even hardware manufacturers to cut costs to members by buying in bulk. In recent years, the size of NCTC rivaled that of major national providers like Charter and Cox cable. All three parties stood to gain by bringing Cox and Charter into NCTC in 2009. The addition grew NCTC significantly -- only Comcast has more subscribers currently. The advantages of NCTC are quite significant and worth reiterating because it is a reminder of the ways in which massive private companies have the playing field tilted in their direction. Without access to NCTC, communities have to pay more for the same content and equipment (NCTC savings may start at 15%-20%.
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