Tri-City Broadband Citizen Support for Fiber Optic High Speed Broadband
providing cable TV plus telephone plus high speed Internet to Batavia, Geneva,
and St. Charles Illinois
(Comments were shortened to fit into the 7-minute time allowed,
but this is the full text.)
Thank you for the opportunity to speak here tonight to present
the position of the Fiber For Our Future, pro broadband citizens
Even though I spent six years working for one of the largest telephone
companies in the country, I can’t begin to tell you what the
representatives from SBC and Comcast are thinking at this hour.
But, I can remind you of how they have been acting in recent weeks.
They behave as if we are ignorant or irresponsible depending on
who they are talking to at the moment. In the recent telephone push
surveys conducted by SBC, Comcast and OTHERS, the callers were insulting
at best and at worst they fraudulently represented themselves as
working for city government. Our opponents behave as if our local
elected officials are incompetent. They behave as if we are taking
bread out of their mouths and that their businesses are going to
fail while at the same time proclaiming that they welcome competition.
If they truly do welcome competition, why are they working so hard
to shut this project down before it even begins?
They tell us that we do not know how to run a telecommunications
business. Well, I can tell you that even though I run an Information
Technology Company in the Tri-cities area I won’t say that
I’m qualified to run a telecommunications company either.
But I can tell you some of the things that the Municipalities will
NOT have to do in order to succeed:
- This utility will not have to achieve a net income of $7.47
BILLION last quarter as SBC reported in their quarterly statement.
- Nor will we need to maintain $117 Million in assets like Comcast
reports in their annual report.
- Nor will we need to lose over $3 Billion in investments as
reported by Comcast in that same report.
- According to the Illinois Coalition for Competitive Telecommunications,
SBC – Ameritech paid over $1 Billion in fines and penalties
over a six year period nationwide beginning in 1996. We will not
have to do this.
- We will not have to close our system and prevent our competitors
from gaining access to our customers in order to protect a nearly
17% profit margin.
- We will not have to limit our service offerings because of
lack of capacity.
- We will not have to maintain a base of over 120,000 employees.
- We will not have to worry about being able to provide customer
service for a poorly conducted installation in say, Denver, Colorado.
- We will not have to maintain six different legal staffs to
keep up with franchise agreements in 11,000 plus communities.
So, who stands to benefit from this utility in Batavia?
All of the opponent advertising about this referendum focuses on
the residential services. One of the reasons for that is because
the opponents do not focus on providing broadband solutions to businesses.
Our utility will include ALL businesses. According to Dunn &
Bradstreet and Harte Hanks there are over 4700 small and medium
businesses located in the Tri-cities area. Over 400 of those businesses
are members of the Batavia Chamber of Commerce. Our local Chamber
has endorsed the Tri-Cities Broadband Utility because they believe
as I do that this project represents the best chance for supporting
and encouraging our local business owners. Now, a conservative think-tank
organization based out of Chicago says that the promise of business
incentives rarely works to bring in new business. So, let’s
agree to not talk about bringing in NEW business and instead talk
about those 4700 businesses that are already in the area.
Each of these businesses has an average of 8 employees. Roughly
half of those employees are married. That means that approximately
56,000 people could potentially be affected in a positive way if
these local businesses were able to take advantage of business class
internet and telephone service provided at a much lower cost. Businesses
pay exorbitant rates for these services because those prices are
what the market will bear. A municipal broadband alternative will
provide some viable, local competition. That means the local businesses
that are already here benefit, their employees benefit, their spouses
and children benefit and ultimately, our community benefits. And
despite what the conservative think-tank says, I’m convinced
that more new businesses will choose to locate in Batavia. Their
choice will be indirectly or in some cases directly affected by
the services this utility will provide.
Finally, I would like to address some of the recent arguments against
this city utility raised by our opponents:
- They say that a property tax increase is guaranteed, and will
be over $2,400 per household per year. But according to this City’s
administrative office, the worst case actual number if this utility
is a complete failure would be closer to $145 per year for a home
with an assessed value of $200,000.
- They say that we must obtain 34% of the market share of cable
business, when in fact that number represents what the independent
research says we will probably gain. What they neglect to tell
you is that for residential service, we only need to gain about
6% of the Telephone, about 25% of the Television and about 4%
of the Internet services market to break even. For business customers,
we only need to gain less than 1% of Television, 8% of Telephone,
and less than 4% of Internet business. Those lower percentages
would allow us to be operating in the black by year 7 with a net
profit. That's a worst case scenario.
- They neglect to tell you that the citizen surveys conducted
last year for the feasibility study revealed that 71% of the citizens
of Batavia responded favorably to the question “If it was
available, would you be interested in a broadband/combined service?”
Meaning telephone, TV, and Internet together.
- They say that government should stay out of private business.
I agree. I don’t want Washington or Springfield to meddle
in my business and I don’t want them to compete with me.
Their resources would make it a very unfair competition! But I
believe that local government is a different situation completely.
In this case, it is the local government that is David and the
monopolistic companies who control the market that are Goliath.
My local elected officials and city staff are my neighbors. They
truly represent me. If I have a problem with any aspect of this
city utility, it will be much easier to get someone’s ear
here locally and get my problem resolved. Plus, the city has been
successfully operating an electric/water utility for over 100
years. And you know what has happened with that example of local
government competing with large, privately owned utility companies?
We have lower electric rates and better service than any of our
neighbors who have to use ComEd. That is exactly how the broadband
utility will be structured. The city utility doesn’t need
to make profits – they just have to break even. They will
provide superior services at lower prices. And the money STAYS
IN THE COMMUNITY.
- They also say that by the end of this year 100% of the residents
of the Tri Cities will have broadband access available to them
from Comcast, so we don’t need the city utility. What they
fail to explain is the numerous and vast differences in the type
of “broadband” Comcast is installing as compared to
a fiber-to-the-home network. Much higher bandwidth for Internet,
download and upload speeds for Internet, bandwidth for television,
security, and reliability are just some of the advantages of a
fiber-to-the-home network. Plus, with the city utility, the money
you pay for services STAYS IN THE COMMUNITY.
- They say we don’t have any idea how to run a telecommunications
company. They imply that we are not smart enough, sophisticated
enough, or informed enough to know what we are doing. This is
an insult to every one of the dedicated professionals in our three
cities who have spent the last two years researching and performing
due diligence. There is a huge pool of highly qualified, talented
professionals in our community who are eminently capable of completing
the planning, implementation and operation of this utility. I
don’t think they are planning on having the meter readers
run this utility or having the water department staff handling
They also cite a number of communities who have implemented some
form of a municipal broadband utility that have supposedly failed:
- Tacoma, Washington is one that has been mentioned and this is
news to the folks in Tacoma, whose municipal broadband utility
is operating in the black and has not resulted in a tax hike.
What has happened in Tacoma is that they are not reaching their
projected market share as quickly as they want to. But the utility
is alive and well and making money.
- Coldwater, Michigan, again, being cited as an example of a
failing municipal utility is news to the folks in Coldwater! Their
broadband utility is a screaming success. The Coldwater Communications
Manager for the Board of Public Utilities wrote to us and said,
“I just want to set the record straight. We are not losing
money. We are actually operating in the black. We currently have
65% of the homes in Coldwater that have cable television service.
We also have 50% of those customers receiving High Speed Internet
- Hillsdale, Michigan, From the city of Hillsdale: “Hillsdale’s
broadband utility did not fail as it was never constructed.”
They had voter approval, but were never able to get affordable
financing. When they went to their voters to ask for permission
to issue general obligation bonds, they were defeated by the incumbent
- Glasgow, Kentucky – The superintendent of Glasgow's Electric
Plant Board said “The truth is our project is an overwhelming
economic success. For nearly fifteen years now our project has
delivered the lowest cable rates in North America.” In fact,
Glasgow issued bonds in April 2001 to buy out Comcast’s
system. “They packed up and left town.”
- Paragould, Arkansas – The Chief Financial Officer of
City Light Water & Cable in Paragould said their municipal
cable utility operates separately from their city and “it
has been operating in the black since 1998 when we bought the
competing cable company, Cablevision, Inc. Taxpayers like having
their own system. The rates charged are much lower than private
companies – we only need profit enough to pay debt, and
maintain and upgrade the system.”
- And there are several more along the same lines. The point
is, there are many successful municipal utilities across the country
that are providing cable TV, telephone, Internet and some combinations
of the three services. None of the municipal utilities has failed
and none have resulted in higher taxes. And the demographics for
these communities range from rural communities like Spencer, Iowa,
a city of over 11,000 to Tacoma, Washington a city of 194,900.
If our opposition is incorrect and misleading on all of these points,
is there anything that they are saying that we should believe? I
am gambling. Gambling on the integrity, honesty, accountability
and due diligence of our city officials and city staff. Looks like
a sure bet to me!