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TechNerd Interviews McGinn

By Glenn Fleishman September 22, 2009


This was originally posted at noon today.

[Editor's Note: From day one of his campaign for mayor, Mike McGinn has been talking about building a citywide broadband network.

At at time when voters are concerned about crime and the recession, many found McGinn's pitch a bit "yuppie."

However, McGinn has not backed away from this platform plank:
"Access to the Internet is access to the economy, access to the community, in some cases access to democracy, access to issues," McGinn told PubliCola's TechNerd this week in an in-depth interview about his broadband ideas. "It's an essential [piece of] infrastructure to compete in a world economy."

We asked Glenn Fleishman, aka TechNerd, to grill McGinn about his high-tech agenda. Here's Fleishman's report.]

It's odd that the Seattle mayoral candidate who has taken a sabbatical from a telecommunications job, Joe Mallahan, isn't the one pushing a city-wide broadband plan. Instead, the ostensibly green office seeker, Mike McGinn, pumps the idea that everyone in the city deserves fiber to the door.

In an interview with TechNerd, McGinn leaned on the city's 2005 recommendations for a city-wide buildout, and a 2007 feasibility study conducted by an outside firm. That study determined that just about $450 million raised in a revenue bond issue, where only proceeds from the service would go to bondholders, and a relatively low subscription rate by residents would allow successful reployment. A good hunk of costs were relative to each subscriber who wanted service, and not incurred until that subscriber was signed up.

The idea of fiber to every home would ensure universal high-speed broadband to anyone who wanted it (at a market price), as opposed to today's situation in Seattle in which some neighborhoods and pieces of neighborhoods have a single provider or networks that can only achieve speeds considered fast 10 years ago. (Qwest service to my home near the Montlake Bridge was, earlier this year, typically 1 Mbps down. I had a similar rate from them in 1997. Comcast, for about the same price, brings me "up to 15 Mbps" service that I've often clocked at 25 Mbps.)

In a recent town hall meeting in Beacon Hill, McGinn said, "Several people were like, it's crazy, I'm trying to do business here—I can't do business because of our Internet connection." Complaints are rife in that neighborhood especially, but you can easily find broadband holes all over the city, where neither cable nor DSL can offer decent speeds.

But is the fact that people can "only" get slow Internet connections enough to float $450 million in bonds, however financed? McGinn says that there are two separate reasons to push for universal availability. "Access to the Internet is access to the economy, access to the community, in some cases access to democracy, access to issues," he says. But it's also about the bottom line: "It's an essential [piece of] infrastructure to compete in a world economy."

Because the network would likely be built by Seattle City Light—just like Tacoma Power created its Click! mixed fiber and coaxial cable network—McGinn noted that there's a potential for incorporating smart electric grid and meter technology for which federal stimulus funds could be available. "There are reasons for Seattle City Light to use a fiber-optic network to start building a smart network for homes," he said.

Installing fiber-optic cabling to every customer who wants one is a bit of the holy grail of the broadband world. A single strand of glass cable can carry gigabits per second using expensive devices on either end. To the home, 50 to 100 Mbps is trivial, and far higher than the typically available rates over DSL or cable.

Fiber also allows the so-called "triple play": One cable bringing high-quality broadband, video (high definition and multiple streams at once), and voice. And fiber is future proofed. Every year, the cost of adapters—ones that convert the optical pulses into locally networkable data—drops, and the speed that the same fiber strand can carry goes up. In lab testing, some researchers have pushed hundreds of gigabits per second over a strand. There will be a lot of room to grow a network faster only by upgrading equipment at the ends.

You won't find many in the telecom world who think that fiber to the home (FTTH, as its known) is a bad idea. Rather, cost is the issue. While Verizon has been running FTTH in its markets, and is very happy with the resulting fees, return on investment, and customer loyalty. Verizon offers FTTH under the name FiOS; it's available in some of the old GTE territory in Oregon and Washington that Verizon absorbed when it was created several years ago. Verizon spends as much as thousands of dollars per house to bring in fiber. (The Seattle feasiblity study puts the cost far lower, typically in the few-hundred dollar range, because of where utility poles and other infrastructure already exist.)

AT&T and Qwest have pursued a cheaper strategy called fiber to the node (FTTN). In this scenario, the companies run fiber close to clusters of houses, and then use advanced flavors of DSL over copper wire that work only over short distances to get far higher speeds. AT&T can bring 25 to 50 Mbps over these short runs, and it costs far less.

Comcast and other cable companies offer something like FTTN, in some cases having bought fiber years ago to neighborhood distribution points. But coaxial cables used originally for television can carry enormously more data than pairs of copper telephone wire, and at far greater distances without losing signal strength. It took until 2009, however, before Comcast and other cable companies were able to deploy a new standard that can offer speeds that match today's fiber-based rates from Verizon.

Meanwhile, unrelated to these efforts, Clearwire, AT&T, and Verizon are building out wireless networks using fourth-generation (4G) technology that will allow somewhere between 4 and 10 Mbps downstream (and 1 to 4 Mbps upstream) when fully deployed. Clearwire's Clear service will come to Seattle next year, an upgrade to its current low-speed offering; and AT&T and Verizon have plans that will bring its flavor to this market most likely by 2011.

So the question that needs to be asked is: Assuming that McGinn gets the nod in November as mayor, the city revises the plan, creates a bond issue, gets the money, and starts building the network—is that network still needed?

Won't private enterprise just fill in the holes that exist today? If there's a pocket full of money and a desire to spend it, like in Beacon Hill, doesn't capitalism become a vacuum cleaner to suck that money away?

That part is hazy. Qwest currently has no interest in building out fiber to the home, and it's had a very slow deployment of its neighborhood fiber. "Qwest doesn't really appear to have the capacity to do it," McGinn said. Telecom firms are all hurting, and Qwest is still suffering from disastrous leadership during the dotcom bubble and terrible decisions made in that period. The company is also the last major Baby Bell left standing that has no wireless phone business, and must rely on shrinking landline and long-distance revenue derived from a 14-state market that includes huge numbers of expensive-to-serve rural customers.

Comcast, while increasing its speeds and offering bundling deals, has an effective monopoly in the parts of Seattle it serves, because Qwest can't match its speeds or services; Qwest doesn't have its own video component of the triple play, but defers to a satellite TV partner. Comcast can only deploy service in the areas of town for which it has a franchise, too. Broadstripe serves the Central District, and it's currently undergoing a reorganization via Chapter 11 bankruptcy. The company says it's sped up its network this year.

That lack of competition "leaves an opening, the need to push it through," McGinn said.

There have been many concerns raised about public entities, especially those with regulatory power over competitors--such as Seattle's cable franchise board that controls access to public rights of way and facilities--entering the broadband market. But most of those concerns imply that the market will solve the problem. However, with no requirement for building out service to all customers, or having the same level of service available, an efficient market won't provide universal coverage.

Public broadband relies, usually, on bondholders getting a specific rate of return rather than shareholders demanding higher rates. Thus, public networks can be designed to be available to every resident and business, even though on average the service recovers costs and ekes out a small return above that (for rainy days or to finance additional efforts).

In Lafayette, Louisiana, the city fought a multi-year battle against incumbent providers for the right to build its own fiber network. It won, and the FTTH network went live for the first phrase of the city--with about a fifth the households of Seattle--in February.

The reason for the fight wasn't about the right to 500 channels, about low prices, or about the city wanting a piece of the action. It was about the city's desire to have 21st century technology in place reaching every person, company, and institution.

In the end, the debate may wind up being something akin to the public option in healthcare. Many Seattle households lack coverage, get substandard coverage, or can't afford coverage. Unlike healthcare, however, the city's goal wouldn't be to spend money, but to conserve money for both residents and itself—and piggyback some municipal purposes on top.

McGinn notes, "We have the capacity to do it and we should." It might be a tough sell in this climate, and the feasibility study has a lot of variables that have changed in two years.

But look at Tacoma. In the mid-1990s, US West could take 18 months—18 months!—to provide a new phone line, and TCI had no interest in upgrading the infrastructure for cable and broadband in the city boundaries, focusing on wealthier suburbs. Does anyone think that the city would be what it is today had the Click! Network not transformed a developing nation infrastructure into what's acknowledged as one of the most-wired cities in the country?
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