Why Boston Lacks Both Fiber And Broadband Internet Competition

In response to residents' complaints about high cable prices, the Boston City Council held a hearing on Wednesday, October 14, seeking more service options for its residents and businesses. Councilor Matt O'Malley sponsored the matter (Docket Number 1430) on September 2, 2015, a resolution requiring regulators to encourage service providers to offer fiber television and Internet services. All 12 council members co-signed the resolution. Council Chairman Tim McCarthy led the hearing, and representatives from Verizon, a provider of high-speed fiber and mobile services, testified during the session.

The hearing highlights the current state of Boston's broadband infrastructure, the lack of competition, the major reasons why, and the uncertainty of the corporate marketplace. Boston residents want improved Internet services, and currently have only a single option for high-speed Internet services: cable providers (e.g., Comcast or RCN) offering television, Internet, and phone services.

Earlier this year, the Federal Communication Commission (FCC) increased its benchmark of minimum broadband speeds to 25 megabits download and 3 megabits upload. So, Digital Subscriber Line (DSL) Internet services, which many Boston residents use and which typically offer 3 megabits per second download speeds, no longer meet the FCC broadband speed benchmark.

Councilor O'Malley explained:

"... one of the most prevalent questions was, 'my cable bill is too high. How can we have more access?' We hear it all the time, no matter which neighborhoods we visit... this is an issue we deal with each and every day. This is something we deal with several times each day. It's an issue we can 't answer why we don't have more options, specifically Verizon FiOS in the City of Boston..."

O'Malley stated that he and his council members understand that the issue isn't about only choice, but also about economic growth and supporting residents' lives with quality, state-of-the-art services:

... fiber optic services, commonly known as Verizon FiOS, is the most reliable and best way to transmit data to businesses and residents. It would allow Boston to remain competitive in the business, education, and science, and technology sectors. Broadband Internet access is no longer a luxury. It is a necessity... residents and businesses in Boston neighborhoods do not have access to some of the same services that residents in more affluent neighborhoods do, and this practice deepens the digital divide. Competition from fiber optic technology could drive down the cost for consumers..."

Jascha Franklin-Hodge, the Chief Information Officer for Boston's Department of Innovation and Technology, testified:

"... the issue is incredibly important... Mayor Walsh and I believe that broadband is essential for Boston's long-term health and prosperity... connectivity at home is essential to avoiding the 'homework gap'... Broadband connects residents to job opportunities, training, and education programs... broadband is essential to life in the 20th century, just as electricity and the telephone were in the 20th... the state of Boston's broadband infrastructure is poor. The cost of broadband is too high for many to afford, and in many neighborhoods, the services and Internet speeds residents and businesses need simply aren't available... In most cases, our largest cable provider faces no competition in broadband service, giving them a de facto monopoly... Verizon offers Internet and telephone services in a small section of north Dorchester. This is a remnant of an early FiOS build-out that never expanded beyond this one neighborhood. Verizon has begun to provide FiOS to a handful of newer buildings in the Seaport district. The have not expressed any commitment to expand to the rest of the city..."

The City isn't waiting. Franklin-Hodge explained the city's lobbying and partnership efforts to bring broadband to more residents and businesses. Yet, these activities are not enough since the city still needs competitive broadband.

"We would welcome Verizon FiOS services in the city. Because of Verizon's status as utility, they have legal and financial advantages to build in Boston. Verizon has a substantial base of existing infrastructure and qualified personnel that would support a build-out... The Mayor's administration has an open invitation to Verizon and any other broadband provider to build here. We pledge to streamline the process and remove the red tape..."

Franklin-Hodge emphasized the city's priority for an equitable broadband build-out, and not for a provider to "cherry pick" by providing broadband only to affluent neighborhoods or businesses -- which would intensify the digital divide.

"The City of Boston cannot force Verizon to provide FiOS service here, nor can we force Comcast to lower prices, or get Google to build a new network here..."

Peter Bowman, Verizon's Vice President of Government Affairs, emphasized the company's strategy to focus on wireless and not wired lines:

"... During the past five years, Verizon has invested over $155 million in our networks here in the City of Boston. We've run more than 7,000 miles of fiber in Boston... we serve over 2,400 buildings today with fiber... Boston was one of the first East Coast test beds when we rolled out Verizon 4G LTE... in Massachusetts since 2000, our landline business has shrunk from 4 million access lines to less than 2 million... responding to huge changes in consumer behavior and demand in the past decade, Verizon has invested over $4 billion in its wireless network in New England... while we appreciate your interest in establishing more video and broadband competition within the city, Verizon does not have current plans to extend the FiOS network beyond those municipalities where we already have a television franchise. We continue to be focused to build out where we already have contractual obligations..."

Council members voiced their residents' frustrations at seeing repeated Verizon FiOS advertisements on television while being unable to get the service. The panel discussed leasing city-owned fiber conduits, and other cities (e.g., Baltimore) were Verizon didn't build out FiOS citywide. There was discussion about why Verizon is building out FiOS in some cities: Philadelphia, New York, and Washington, DC. Bowen mentioned only that those build-outs were part of Verizon's initial plan.

The panelists mentioned the estimated cost to build out fiber services citywide in Boston at more than $500 million. Bowman did not mention nor describe the cost-benefit analysis by Verizon. Surely, the company performed one since this is how well-run businesses operate. Nor did the Verizon representatives share a list of specific streets with Verizon FiOS already installed. If the cost-benefit analysis was truly tilted against a build-out, then one would assume that Bowman would have mentioned it in detail. Perhaps, other issues are at work.

After Bowman asserted that Verizon never planned to build out FiOS citywide, Councilor Michael Flaherty shared a different account of history:

"... Peter Bowman said that -- I think your statement was that Verizon was not pushing for FiOS several years ago. I wanted to dispute that... I led an effort in the council to block the telecom tax that the previous administration was pushing to thwart your compny's efforts, and the efforts of hard working men and women in I.B. Local 2222. So, you made a statement that you were not pursuing FiOS. I want to dispute that. I said you guys were in fact pushing for FiOS here. You talked about the aging infrastructure. Not you specifically, but your company was pushing for FiOS; pushing and complaining about the aging infrastructure. We here in the Council were working with Verizon as well as the hard working men and women to make FiOS a reality. the previous administration couldn't get out of their own way to block that. they did it for a number of reasons -- political retribution to 2222 and they couldn't get their answers around it. The primary problem was the telecom tax, which this body blocked. As we know, the telecom tax would have been tens of millions that would have been passed along to consumers. We stood with the residents and tax payers to block it. When it didn't happen, the previous administration increased their efforts to thwart any opportunity to put in FiOS... Those are the facts. I had a front row seat to the discussions..."

So, who to blame? The city or Verizon? To me, there is enough blame for both. There's a new city administration in place. Bury the hatchets. It's long overdue, and time to move forward.

So far, the telecommunications giant made a business decision to provide only wireless (and not fiber wireline) high-speed Internet services citywide in Boston, despite a clear, unified interest by local government, consumers, and businesses. Consider yourself one of the lucky few, if your business or residence already has Verizon FiOS. The situation highlights the fact that, in order to maximize profits for shareholders, corporate providers will always cherry-pick and provide services to a limited, affluent few, and not to everyone.

I am happy that I attended this hearing. There didn't seem to be any local news media coverage. The poor acoustics of the council's meeting room made it difficult at times to hear the speakers, so it is great that the video is available online afterwards. And, I would have missed Flaherty's explanation if I hadn't attended.

Maybe another provider will step in. Maybe not. During the question-and answer portion of the hearing, Franklin-Hodge mentioned one available option: municipal broadband. This worldwide study found that municipal broadband networks provide consumers with the best value (e.g., highest speeds at the lowest prices via wired lines). Thankfully, Massachusetts is not one of the 19 states with laws that prevent local towns and cities from forming their own municipal broadband networks. That municipal broadband network could be formed as a traditional corporation, private-public partnership, or a B-corporation. It's time to get going and upgrade the city's broadband infrastructure.

Does this situation bother you? I hope that it does. If so, contact your elected officials today and tell them you want fiber broadband now; municipal broadband, too

If the FCC isn't going to act, then maybe the Justice Department will investigate and stop what appears to be gentleman's agreements by the large, corporate telecommunications providers not to compete, to keep broadband prices high.

Boston strong? No so much with broadband Internet access. What are your opinions?

Comments

[Chanson de Roland]

It seems that Municipal broadband is an idea worth pursuing. Boston is a rich and successful city, for which $500 million is something that it can afford to finance, provided that it can find a competent contractor to wired Boston with fiber optic cable, which shouldn't be hard to do, and the price of subscriptions for that broadband service for its residents and business can be offered at prices that they will pay, which also should be likely, given the high prices that its residents and businesses are currently paying for much less speed, current prices which would easily purchase much faster broadband in Western and Northern Europe and in many other places in the world.

And Massachusetts does not even have to rely on the FCC's new rules that preempt state laws that forbid community broadband, a.k.a., municipal broadband. See https://www.fcc.gov/document/fcc-preempts-laws-restricting-community-broadband-nctn, where an FCC order preempted such laws in North Carolina and Tennessee. The terms of that FCC order and the authority on which it is based, though applied to North Carolina and Tennessee, appears to be applicable to all states. Yet Massachusetts doesn't have any such restrictions on community broadband, so that it is not a problem.

Boston, therefore, need only determine whether community broadband is in the best interests of her people, which she apparently already has done, and then determine whether community broadband in Boston is economically viable, which, as I wrote, supra, seems quite likely. And since deploying fiber optic cable is well understood and technically easy to do, Boston should find that deploying community broadband is snap compared to the Big Dig. And, of course, given advances in technology, Boston might want to inquire into the legality and feasibility of a hybrid project that combines both fiber optic wire with wireless broadband, perhaps using WiFi bandwidth, into one unified and technologically advanced network.

But, in any event and whether all fibre cable broadband or fibre and wireless broadband, community broadband may well be Boston's best option and would allow Boston Strong to lead the rest of the nation, including California, in showing how to do community broadband for a major city in a way that provides the fastest and best broadband service to people and firms at the best value. Now, that would be an example of Boston's strength not only in enduring and recovering from a tragedy but in excelling in creating an innovative and world-leading communications network.

And I understand that Boston has schools up there, an outfit called the Massachusetts Institute of Technology, and another place called Harvard, which might be able to help by supplying some legal, business, and engineering talent to do studies, design the network, consult in building the network, develop business plans for revenues from subscriptions to operate, maintain, and continually upgrade its community broadband network. But, if Boston, MIT, and Harvard can't, then perhaps Los Angeles, UCLA, Stanford, and Berkeley can.