May 2014

Fans -- those completely entranced people who tweet and share and talk about their favorite TV shows and films and books and whatever else they care intensely about -- are increasingly far more valuable to networks and other content creators than just accreting big audiences, said Mary Meeker, the long-time Internet investment analyst. Meeker gave a brisk and broad-ranging rundown of major Internet trends as the opening speech at the 2014 Code Conference, the rebranded confab in Palos Verdes, California for Walt Mossberg and Kara Swisher’s new tech-news site Re/Code.

“Fans trump audiences,” Meeker said, crediting the observation to Netflix CEO Reed Hastings, who will speak before the show closes. “An audience changes the channel when the show is over. A fan base shares, comments, creates content” when the show is done, magnifying the show’s reach and engagement with existing and potential new audiences. That engagement with highly connected and passionate fans will become all the more important as more tablets and other smartphones are sold.

This report provides detailed accounts of planning carried out in connection with community fiber networks in Washington (DC), San Francisco, and Seattle.

It includes information about existing fiber assets that the cities identified, funding mechanisms that were considered, and roadblocks that were encountered. Our hope is that this report will be helpful to other cities that are considering launching fiber optic networks. The cities profiled in this report have each approached the question of community fiber differently.

• Washington, DC made concessions and arrangements that allowed it to build a robust public-safety-quality fiber network, but limitations on the use of that network have made it unavailable to residents and businesses. Additionally, prices charged non-profits for use of the network are currently too high to be competitive with incumbent products.
• San Francisco has been highly innovative in expanding fiber to public housing, aggressively leasing dark fiber to community anchor institutions such as libraries and schools, and ensuring free public Wi-Fi, but has not yet cracked the nut of alternative community residential or business fiber access.
• Seattle has had an extensive city fiber loop in place since 1986, but regulations limiting use of poles and approvals for cabinets have slowed the rollout of competitive last-mile service. Seattle’s recent negative experience with Gigabit Squared (which was unable to execute on its last-mile promises and subsequently vanished from the scene) casts a shadow. Seattle’s current mayor appears to be determined to ameliorate both the regulatory burdens and the information asymmetries that have dogged the city.

Judging by three separate announcements recently, gigabit broadband certainly seems to be catching on in smaller markets. TDS Telecom said that it has made gigabit Internet service available in Hollis (NH). And Comporium, which earlier announced plans for gigabit service in Rock Hill (SC) released additional details about those plans.

Comporium said its gigabit service will be available in a re-development zone planned for the former textile town. And in a pre-briefing about the announcement, Comporium public relations director Paul Kutz told Telecompetitor that the company expects to turn up its first gigabit customers around June 1.

The TDS and Comporium small market gigabit announcements come on the heels of an announcement from Bolt Fiber Optic Services, which said it plans to offer gigabit Internet service in northeastern Oklahoma.

Comcast offered Internet Essentials shortly before its last big acquisition, when it bought NBC Universal in 2011.

To ease federal approvals of the transaction, the company promised that it would offer low-priced Internet connections and computers to low-income families. But the Federal Communications Commission, which approved the merger, didn’t set any participation requirements, or metrics to define success.

Now the cable and broadband giant, wants to buy Time Warner Cable, and again in an attempt to show regulators the deal is in the public interest, is offering to extend the program indefinitely and offer it to all Time Warner's customers too. The deal, if approved, will give Comcast control of about 40 percent of US Internet users.

The program makes for good public relations, but its real impact on the persistent problem of low-broadband adoption rates among the poor is negligible and is a weak substitute for a national strategy, advocates say. Of the 7.2 million low-income people in Comcast’s service area, only 2.6 million are eligible for Internet Essentials, according to data compiled by the Center for Public Integrity.

The program requires the participant’s household to include a child who is eligible for the federal school lunch program. Of that 2.6 million, only 300,000, or 12 percent, have signed up since Internet Essentials was launched in 2011. The low participation rate suggests that relying on merger conditions to make private companies provide what has become an essential tool to participate in society may not be the best approach to bridge the digital divide.