A battle brewing in Montana between the rural telco establishment and Bresnan Communications, a Purchase, New York based cable MSO is illustrative of the potential competitive impact of the broadband stimulus program. Bresnan applied for $70 million in funding to build a statewide fiber network in Montana, and received the endorsement of the state’s Governor, Brian Schweitzer. Rural telephone service providers have said ‘not so fast’ and have stepped up a campaign to defeat the proposal.
The Billings Gazette outlines the brewing battle. Associations representing rural telcos throughout the state recently took out full page ads in all major state newspapers opposing the network, which if approved, would be funded by the $7.2 billion broadband stimulus program. The rural telcos argue Bresnan’s network would overbuild their existing fiber networks, doesn’t fit the goals of the stimulus program, and is a waste of taxpayer dollars. Bresnan obviously disagrees with that assessment. The fight is getting downright nasty. “This is clearly a reaction to protect their status as preferred, subsidized providers,” Shawn Beqaj, vice president of communications for Bresnan tells the Billings Gazette.
This Montana dust up highlights some difficult questions for the broadband stimulus program. Should the program focus on bringing broadband to unserved and underserved populations only, or should it fund competition that will conceivably lower prices for rural customers (both consumers and business), who may have limited broadband options? The Governor’s office believes competition should play a role. “We believe, the more the merrier, in terms of reaching the objective of affordable, quality services. Competition is what our interest in this thing has been,” Evan Barrett, the governor’s chief economic adviser told the Billings Gazette.
Similar battles are happening across the country. Indeed, the broadband stimulus program, rightly or wrongly, may fuel some interesting competitive battles, both in policy debates and actual marketplace duels.
I thought the stimulus prgram was meant to 1) create jobs, and 2) get service to unserved and underserved. When did it become a policy tool for stimulating competiton?
Exactly the point being made here in Montana, Tom. Our governor doesn't understand that. And I can safely say Bresnan IS NOT trying to build this network to help it's customers.
Interesting Bresnan tries to throw a shot about "subsidized" carriers as it is applying for STIMULUS funds, presumably some of which would be grants. Maybe their spokesperson should work on their hypocrisy detector.
Nice article. I've not seen much coverage of these implications of broadband stimulus, and it's interesting to see where and how it will shake up rural competition. In my view, the regulators should ensure that competitors such as Bresnan have fair access (for which they would pay a fair price to the IOCs) to the existing fiber in the ground for long haul, and focus the investment dollars on last-mile FTTP build-outs. From a global policy perspective that's a much more efficient use of taxpayer dollars if the goal is universal high-speed access.
BTW, nice picture – but I've been to Montana and it didn't look much like that to me…
The problem is. The locl telco isn,t quilified to recieve fund to build FTTP. The rules are scued and doesn't allow for fair competion.
The problem is that regulators are confusing programs. The stimulus program should fund infrastructure, that absent the stimulus program, would not be there. Stimulating competition should not be considered at all. If regulators want to stimulate competition, they should use market tools to do so – tax breaks, or programs to help stimulate demand.
Bresnan wants to make sure that when I call tech support about horrible download speeds and latency that their own, in-network speed test looks great. Anything else is not their problem.
The stated goals and the implied goals of stimulus are a charged topic to be sure.
I have a set of data points that wasn't created in a vacuum though:
Having come back from recent client visits in Montana I can attest to a common theme — if you talk to any small business owner — the largest type of employer I might add — you'll be hard pressed to find one that sees large corporate operators as having "community interests" in mind to the degree of an independent operator does if there is that option available.
Indeed, it is the small independent operators these business owners WANT to do business with more often. Yet, we find the independent operators relegated to their "footprint" and encircled by under performing providers.
I hope that residents and businesses across the big corporate operator serving areas will keep a mindful eye for the emergence or existence of cross subsidy and predatory pricing in the wake of "stimulus". Having watched rates increased in other states graphed against a line representing adjusted inflation, I think there are a lot of historically over-stimulated executives out there already.