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Political Animal

Market Metaphors

By Brian Morton | Posted 11/4/2009

The town of Monticello, Minn., sits at the northern end of the Mississippi River, about an hour's drive northwest of Minneapolis. It's a picturesque place, home to a little more than 10,000 people, according to 2006 census information.

Back in 2007, the town thought that if it had a fiber-optic network, it might better attract business to the area, and so it went to the local telco and asked what plans the company--Monticello had a single provider for local phone service, TDS/Bridgewater--had for providing FiOS services in the future. The telco responded with the equivalent of "We're not getting around to that any time in the near future" and went on its merry way.

After a referendum that got 74 percent of the vote, the city went ahead and began raising money for the project via a bond issue. Right about that time, TDS/Bridgewater slapped the city with a lawsuit, claiming Monticello has no right to "enter into direct competition with incumbent commercial providers of telephone, internet, and cable television services." The technology news web site Ars Technica looked through the lawsuit and said, "It makes almost no argument; instead, the company simply quotes a short bit of Minnesota law and essentially says, 'See, it's illegal!' without offering an explanation."

But it didn't take long to figure out what TDS/Bridgewater was up to. At the same time the telco was fighting to shut down the city-owned FiOS network, it sent in nine crews to start building--of course--its own fiber network to the town's homes. As the city had to grind out through the appeals process, the bonds on hold, TDS/Bridgewater had the playing field to itself in order to put itself into a game where originally it didn't even care to have a stake.

In June 2008, the city went ahead with the bond sale, raising more than $26 million from private investors. Three months later, a judge for the Minnesota District Court threw out the TDS/Bridgewater lawsuit and the city finished work on a fiber backbone. Then, the telco appealed to the state court of appeals. Over the winter, the city completed physical construction work, and by March 2009, the main technical operation (the "head-end," in telco terms), was finished, right as the state court of appeals heard oral argument. Last June, as the city began its marketing campaign for the locally owned and operated fiber network, the court of appeals rejects the TDS/Bridgewater argument--and then the telco appealed to the state supreme court for review.

The phone company put out a press release all but taunting the city, while its crews were feverishly working to beat the city project in delivering fiber services to the town's residents. The release said, in part:

In view of TDS' development of a robust broadband platform in Monticello during the past year, it is questionable whether or not the City's feasibility study supporting its own fiber project, which was premised on no broadband competitors and on which the revenue bond purchasers relied when they secured the bonds more than a year ago, is still accurate, and whether the city fiber project is feasible today.

At the end of June, the Minnesota Supreme Court denied the request for review. Fast forward to last week, when TDS crowed that all the clients to its new fiber network will see a doubling of broadband speed at no cost, up to 50Mbps.

So now, a small town of just over 10,000 residents nestled far out in the wintery hills of Minnesota is one of the few places in America served by not only one, but two high-speed fiber-optic networks. What does this tell us about competition and the marketplace?

Well, for starters, it might be worthy of attention from the city of Baltimore, where Verizon has taken its sweet time getting around to providing the city with high-speed broadband services to anyplace other than the wealthiest of neighborhoods.

But on a larger scale, the whole sorry imbroglio could be seen as a metaphor for the national health-care debate, where the public is the citizens of Monticello, and the health-care insurance industry is the telco, which is more than happy to rake in profits while ignoring the wishes of the customers. Once the public is fed up, they begin to take matters into their own hands--only to see a frightened and angry corporate entity lash out via press release and the courts (or in this case, the obstinate lawmakers bought off by the industry) and trying to slow or stop change at all costs.

Consider tiny Wilson, N.C., which has a fiber-optic network faster than anywhere else in the state. Ars Technica reported that when Wilson rolled out its own "Greenlight" network, Time Warner Cable headed straight to the legislature trying to put the brakes on the town's project. And when the cable company was asked why it hadn't upgraded its own network, it told a local tech news web site that it hadn't heard anyone asking for it.

To paraphrase an old saying, you can't tell anyone something when their livelihood depends on them not hearing it. We are at the critical stages of a time when a public option for health-care reform is vitally necessary. And the people standing in the way, most especially in the U.S. Senate, are banking their futures on suddenly being struck deaf.

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