RETHINKING

THE INTERNETCan Municipal

Governments Be the

Broadband Utilities of

Tomorrow?

Tony Batalla, Head of IT, City of San Leandro

US Ranks 14th in Broadband Speed…

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And has a LARGE Digital Divide…

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And Pays MUCH MORE for Less…

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Tony Batalla, Rethinking the Internet 5

Unleash lightning fast speeds

Close the Digital Divide

Lower Prices for Everyone…

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Is the Internet…

Vital public infrastructure

Just like our Roads and Sewers?

Consumer Market is Ready

• Pent up consumer demand for change

Regulatory/Political Landscape is (Almost) Ready

• FCC “Net Neutrality” Ruling

• Lessons Learned from MUNI Wi-Fi

It’s Happening Already

• Chattanooga, TN

• Provo, UT

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Govt’s As Internet Utilities of Tomorrow

Anton D. Batalla

IT Manager, City of San Leandro

Involved in Lit San Leandro Project, “SL-

WiFiber” Downtown Wi-Fi

Prior: IT Mgr for global biotech firm

System Engineer at heart

MBA from UCLA Anderson

BS from USF

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Who Am I?

The Consumer

Market is Ready

(For Something)

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Rise of the Oligopolies

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Broadband speed positively

correlated with number of providers

Source: Wallsten, 2010

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People Really, Really Hate ISPsSector 2014

Energy Utilities 76.4

Health Care & Social Assistance 77.6

Information/ISP 71.2

Transportation73.8

Accommodation & Food Services 78.5

Manufacturing/Durable Goods81.2

Manufacturing/Nondurable Goods 79.5

Finance & Insurance 75.1

Retail Trade76.8

Public Administration/Government 65.1

E-Commerce 81.7

Source: American Customer Satisfaction Index

Key Take-Aways:

• Comcast 10th Least

Reputable Brand in US

• MSN Annual Survey

Comcast 2nd Highest “poor

service” rating

• Not one ISP ranked higher

than 70 (2015)

• ISPs are lowest ranked

“business” industry

The

Regulatory/Political

Landscape is

(Almost)

Ready

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Haven’t Politian's Failed Before?

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Important Lessons from Muni Wi-Fi

Cities planned city-wide systems

• Fraser: Regulatory, Technical, Economic

Cities partnered with for-profit providers

• Ad-based Revenue Models

• Pay for “Premium” level

Telecoms fought back

• Residential access is a threat

• Ramped up Lobbying Efforts

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• Feb, 2015 FCC Ruling in favor of Net Neutrality…

• Also Overruled Anti Broadband State Laws

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The Internet is Open…Kind of

Types of Laws:

• Administrative

Hurdles

• No Direct Sale

• Referendum

• Pop Caps

• Feasibility Studies

• RFPs

• Excessive Taxes

Source: BroadbandNow.com

It’s Already

Happening

(Results are…Mixed)

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Case Study: Chattanooga EPB

Source: Institute for Self Reliance / Benton Foundation

Key Learnings:

• Started slow

• Built a 10-year Plan

(2007)

• Engaged Leaders (with

80-90% support)

• Worst case scenario: $2-

3 month increase

• $220 million bond 25 yr

bond @ 4.5% interest

• Clear pricing strategy

• >30% take rate

• Net positive income

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Case Study: iProvo, Failure in UT

Source: Davidson and Santorelli

Key Learnings:

• Sold to Google Fiber for $1 in 2013

• $39.5m loss for tax payers (revenue

bond)

• Competed with a “wholesale model” due

to state legislation

• Public-private partnership with

HomeNet, who went bankrupt in 2005

• Low take rate, high churn rate

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>450 Networks and Counting…

Source: Eric James, Muninetworks.org

Plan, plan, plan!

Leverage existing investments

Engaged Managers &

community leaders

An electric utility helps

Public needs a voice

It’s politicized…

Ultimately, not for everyone

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Closing Thoughts

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Unleash lightning fast speeds

Close the Digital Divide

Lower Prices for Everyone…

Tony Batalla, Rethinking the Internet 23

Is the Internet…

Vital public infrastructure

Just like our Roads and Sewers?

Further Reading: • http://www.bbc.com/news/magazine-24528383• https://www.newamerica.org/oti/the-cost-of-connectivity-2014/• http://fiberforall.org/how-americas-broadband-ranks-and-why-adopting-fiber-is-essential/• http://works.bepress.com/cgi/viewcontent.cgi?article=1105&context=scott_wallsten• http://www.stern.nyu.edu/networks/telco96.html• https://www.utexas.edu/lbj/rhodesprp/01_02/divide/dereg.htm• http://www.technologyreview.com/view/421084/wheres-all-the-free-wi-fi-we-were-promised/• file://ch-fp03/user$/TBatalla/My%20Documents/misac%20preso/SSRN-id1682088.pdf• http://www.economist.com/blogs/babbage/2013/07/wireless-networks• http://www.slate.com/articles/technology/technology/2007/09/wheres_my_free_wifi.html• http://www.bloomberg.com/bw/stories/2007-05-20/municipal-wi-fi-a-failure-to-communicate• http://archive.wired.com/techbiz/it/news/2007/09/muni_wifi?currentPage=all• http://www.fiercewireless.com/tech/story/muni-wi-fi-20-time-cities-are-getting-smarter/2014-12-08• http://www.theamericanconsumer.org/2011/05/municipal-wi-fi-a-proven-failure/• http://bgr.com/2013/05/21/american-isp-customer-satisfaction-rankings/• http://knowledge.wharton.upenn.edu/article/what-the-fcc-net-neutrality-ruling-means-for-businesses/• http://www.newyorker.com/business/currency/fcc-municipal-broadband-ruling-matters-net-neutrality• http://www.newsweek.com/fcc-passes-new-rules-net-neutrality-and-municipal-broadband-309715• http://www.theverge.com/2015/2/26/8114205/fcc-decision-municipal-broadband-internet• http://www.inc.com/john-brandon/the-internet-is-now-officially-a-utility.html• http://broadbandnow.com/report/municipal-broadband-roadblocks/• http://ilsr.org/wp-content/uploads/2012/04/muni-bb-speed-light.pdf• http://www.ci.sandy.or.us/History-of-SandyNet/• http://www.nyls.edu/advanced-communications-law-and-policy-institute/wp-content/uploads/sites/169/2013/08/ACLP-%E2%80%93-Provo-Case-Study-

%E2%80%93-June-2014.pdf• http://www.npr.org/sections/alltechconsidered/2015/01/17/377757372/as-cities-push-for-their-own-broadband-cable-firms-say-not-so-fast• http://utahvalley360.com/2014/04/26/google-fiber-solves-provos-epic-fail/• http://americansforprosperity.org/article/evidence-shows-government-has-no-place-in-the-broadband-market• http://utahpoliticohub.com/municipal-broadband-is-a-failed-model-i-told-you-so-the-hub-debate/• http://www.govtech.com/network/Now-10-Years-Old-Utahs-UTOPIA-Tries-to-Beat-the-Odds.html• http://www.fiercetelecom.com/special-reports/municipal-broadband-contenders-san-leandro-calif• http://murray.seattle.gov/broadband/#sthash.3wTQkWjL.dpbs• http://www.seattle.gov/broadband/broadband-study• http://www.geekwire.com/2015/seattle-officials-municipal-broadband-too-risky-and-expensive-for-city-to-build-alone/• http://www.seattletimes.com/seattle-news/politics/cost-of-municipal-broadband-for-seattle-less-than-estimated/• http://www.thestranger.com/news/feature/2015/06/10/22360308/city-officials-reject-creating-a-municipal-broadband-network-to-compete-with-comcast

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Q&A