John Locke Foundation’s tech analysis: Epic fail
In a report bashing a city-owned broadband utility, the conservative John Locke Foundation reveals a stunning level of ignorance about technology.
“Wilson’s Fiber-Optic Boondoggle,” written by research director Michael Sanera and intern Katie Bethune, criticizes Wilson, N.C.’s $28 million investment in a fiber-optic network that makes high-speed Internet, cable TV and phone service to every resident and business in the city. The utility project, called Greenlight, is funded by bonds which under the city’s business plan are expected to be repaid through subscription revenue.
JLF leads with the critique that the technology “could be obsolete before it’s paid for.”
Come again?
“WiMax wireless Internet technology is rapidly leapfrogging fiber-optic cable technology, making it obsolete.”
To anyone who actually follows Internet technology, that statement is a howler.
Fiber is far and away the most advanced technology available for connecting to the Internet. It offers effectively unlimited capacity and speed. WiMax is the next generation of wireless technology, reaching further and moving data faster than the WiFi most of us use now — but nowhere near as fast as fiber. And every wireless system has to connect up to some kind of backbone. WiMax works best if connected to a fiber network.
It’s expensive to run fiber through city streets and connect every home and business. That’s why most private companies aren’t willing to do it unless they’re assured of making a hefty profit on the investment, and a city must be more densely populated than Wilson for that profit to be high enough. Even in the Triangle, companies like AT&T, Embarq and Time Warner prefer to stick with the copper and coax lines they’ve already got in the ground.
The JLF report cites no sources for its embarrassing tech analysis, except a footnote to a brief article in the Washington Times that reads like a press release for Sprint’s acquisition of wireless company Clearwire. That piece talks about WiMax surpassing the WiFi technology most of us use — but it makes no mention of fiber.
I showed the JLF report to Jim Baller, a Washington, D.C., attorney who’s widely respected as an expert on broadband technology. He recently convened a broad coalition of industry and public interest groups who hope to shape a national strategy for deploying broadband technology.
“The John Locke Foundation’s suggestion that WiMax will render Wilson’s fiber system obsolete is just absurd,” Baller said by e-mail. “The Foundation should understand this — and perhaps does. To be sure, WiMax offers mobility, and fiber does not. But as any expert will tell you, no wireless technology, including WiMax, has anywhere near the capacity of a fiber-to-the-home system. As applications become increasingly bandwidth-rich, fiber will be able to accommodate them, and wireless won’t. At the same time, we will increasingly want to be as mobile as possible. In Japan, South Korea, and other leading broadband nations, fiber and wireless extend and complement each other. That’s where we’re heading too.”
The Indy published this story about Wilson’s municipal Internet utility when it launched last summer that explains how and why the city went into the ISP business.
Residential customers in Wilson get a minimum of 10 megabits per second — faster than any commercial service available in the Triangle — for $35 a month, and business subscribers can get speeds up to 1,000 mbps.
Even the JLF report touts WiMax speeds of only 10 mbps. So much for “leapfrogging” fiber.
The report claims that Greenlight’s prices are “about the same as Time Warner’s” while including a chart that shows Greenlight’s Internet service is more than $10 cheaper per month than Time Warner’s. And while cable prices are comparable, the report leaves out the fact that Time Warner has not raised its prices in Wilson this year, while hiking basic cable rates 20 or 30 percent in nearly every town and city the Triangle, according to this report by Catharine Rice and Bob Sepe of Action Audits. At the time Greenlight launched, a Time Warner spokesperson admitted that the company increased speeds in Wilson without raising prices “because of the competitive environment.” Even residents who don’t subscribe to Greenlight are saving money because of it.
All this WiMax stuff is just new wrapping on the same package of industry spin Bethune published on the JLF site back in August shortly after Greenlight launched. The heart of her critique is that Wilson is taking an expensive risk, and if the city’s initiative fails financially, taxpayers could be left holding the bag. That’s a legitimate point.
But her report rests its argument on paragraph after paragraph of speculation rather than telling us how the project’s actually performing — after all, the thing’s been live for more than six months now, and information about it is public. Wilson’s Assistant City Manager Dathan Shows said neither Bethune nor Sanera has contacted any Wilson officials since the city manager sent a set of factual corrections to them in August. (Did I mention Sanera is the foundation’s research director?)
If they’d asked, the authors would have found out the Greenlight network has already been built out to the entire city — the latest JLF report says it’s slated for 2010. They could have also asked for the number of subscribers, as well as actual and projected revenue numbers, some of which is here (with the city’s spin, of course) and in a presentation (PPT) Shows just made to Wilson’s city council.
But Bethune and Sanera don’t seem all that interested in giving an honest economic assessment of Greenlight. The telecom and cable industries pulled out all the stops to try to keep Wilson from launching this service, lobbying for a bill that would have made city-owned Internet utilities effectively illegal. The industry lost that battle, but hasn’t disarmed. It appears the John Locke Foundation is fighting right alongside Time Warner.
Sanera and Bethune call Greenlight “corporate welfare” because the city hopes the network will attract new businesses. In fact, their report is just corporate spin.
8 Comments
[...] John Locke Foundation’s tech analysis: Epic fail [...]
— Yesh.com :: Brian Russell » Exposing the lies of Telco shills 19 January 2009
Great find!
As someone that works in both fiber -and- wireless development for rural broadband initiatives it is disappointing to see JLF get this so incredibly, well, wrong.
— Jay Cuthrell 22 January 2009
Fiona Morgan’s criticism of our report on Wilson’s fiber-optic cable gamble with taxpayer funds distorts our report. Our statement about WiMax wireless Internet technology did not claim that it was faster than fiber-optic cable. Our argument is that Internet users make trade-offs among a variety of features, primarily speed versus mobility. People with laptop computers demand mobility. They don’t want to be tied to a cable. Witness the tremendous increase in the number of computer users who access the Internet via a mobile broadband card. Many of these people in Wilson will sacrifice the higher speed for increased mobility leaving the Wilson fiber-optic system with fewer subscribers.
Admittedly, fiber-optic cable currently is faster than WiMax technology, but making predictions about future high-tech advances is hazardous. Ken Olsen, founder of Digital Equipment Corporation is quoted in 1977 as stating, “There is no reason why anyone would want a computer in the home.” Wilson is risking taxpayer funds in a high-tech area where WiMax or some currently unknown technology may outstrip it in the future. Risk in the rapidly changing high-tech economy should be borne by willing private sector investors not captive taxpayers.
We were surprised that Indy’s technical criticism of our report was based on a statement by a Washington, DC lobbyist. In fact, Mr. Baller lobbies for a coalition that includes the City of Wilson. It seems he, as any good lawyer/lobbyist would, is representing his client. By the way, why is Wilson a member of a coalition that lobbies for federal funds for cities to expand fiber-optic cable given the city’s claim that subscribers will pay for the system?
Finally, one should look at Wilson’s public utility record. The city’s monopoly electric utility engages in price gouging by charging customers 5 to 6 cents per kilowatt hour more than the Progress or Duke Energy.
We hope that Wilson’s fiber system is a success and that the system will be paid for entirely by the users, rather than subsidies from taxpayers and electric utility users as has happened in so many other cities. If the latter occurs, city government will be using its powers to take money from lower income citizens to benefit higher income citizens.
— Michael Sanera & Katie Bethune 23 January 2009
As someone who has run an Internet company for almost 11 years, I would much prefer fiber, and I would much prefer it be public, and I would gladly pay higher taxes to see it happen.
I appreciate that JLF is not making a comment about WiMax vs fiber technology wise. However, one wonders what JLF’s position would have been about the Internet in general, which was started with public funding. (Since JLF generally opposes increased government spending, I can make a guess). Or the research money spent on the race to the moon, which resulted in technologies that drove the growth of the computer and microprocessor industries for decades.
Large works like the Internet or fiber to the home or even the telephone system or the interstate highway system are well-suited for government funding, and can ultimately result in a stronger economy. Individual companies, especially those that are run on quarter-to-quarter results, don’t have the long time frames necessary to embark on these large projects. And yet, please don’t tell Silicon Valley or RTP (or the people employed there) that the public money spent on early Internet development was a waste of government funds.
The city of Wilson is trying to make an investment in their future. With any investment, of course there are risks. Just because we can’t predict the future doesn’t mean we should try to prepare for it.
As for WiMax, Sprint/Nextel already tried to cover the Triangle area in WiMax and decided to abandon a project already in progress (I was one of their customers). If Wilson is trying to attract high-tech firms to the area, having a city covered in fiber is preferable to WiMax, since businesses prefer higher speeds over mobility.
And lastly, who would I trust more to give me a fair price, the city of Wilson, or Time Warner or any other telecom firm? I’ll let you guess on that one.
— Patrick Chu 23 January 2009
Correction: the line on the previous post should read:
“Just because we can’t predict the future doesn’t mean we *SHOULDN’T* try to prepare for it.”
I regret the error.
— Patrick Chu 23 January 2009
In reply to Patrick Chu regarding the initial development of the Internet– this may have been done under the auspice of military funding (as was the atom bomb!), but it certainly would have been done even without the government funding it. And what developments in the moon race were more important to computers than the transistor, developed by John Bardeen and his team at the private Bell Labs? The same space tech we use to the moon can be done more quickly and efficiently in the private sector, as the X-Prize has shown us.
The government was content to leave this thing called the “internet” as just a tool to connect military bases; it was private, commercial enterprises and universities that took the Internet and began using it for better purposes, for civilian communications. As a military-only communication tool, the Internet wouldn’t have really helped people in Wilson, NC, would it?
The government didn’t make the Internet for Silicon Valley or RTP; private, commercial entrepreneurs in both those places used it for things the public wants.
Mr. Chu, since you would “gladly pay higher taxes to make it happen,” I assume you’re willingly sending in double your taxes this year to help the state of NC and the federal government in their respective budget crunches?
— Libertarian Girl 4 February 2009
Doesn’t everyone know Al Gore invented the Internet?
— Enigma 11 February 2009
@Michael Sanera & Katie Bethune of JLF
I’m sorry but you are still getting it wrong. In addition, your quotes and assertions that attempt a defense of your report do not help your argument.
Fiber deployment is the absolute best investment dollar spend if it is available and feasible. The future of wireless backhaul is built upon a solid and stable fiber backbone. Indeed, those elements that provide mobility are islands alone without a high capacity network to join these assets. This is the heart of the matter and the most solid argument for fiber use when it is available.
As you seen prone to crude analogy by including a quote from a relic of the silicon fabrication and computing world… the mobility argument would go something like this: you wish for horse shoes yet have no horse to ride.
It would be advisable for you to stick to the rivers that you are used to and away from matters involving matters relating to broadband and Internet transport technology. Else, please ask and gain input from multiple sources on the true impact and 3/5/7 year view on fiber assets in a municipal environment.
In fact, please feel free to contact me and I’d be more than happy to introduce you to successful models, operators, and municipalities that took similar steps outside of NC.
Lastly, as you have access to your own website, please provide the URL showing a pro forma model of how the rich shall steal from the poor in your latter paragraphs. I look forward to seeing that.
— Jay Cuthrell 5 March 2009