Digital Cities: Iowa report

Submitted by acohill on Wed, 04/20/2005 - 11:58

Clark McLeod, the CEO of FiberUtilities of Iowa and the head of OpportunityIowa, gave a stunning keynote address at the Digital Cities conference on Tuesday. What follows is a summary of his remarks.

The incumbent telephone and cable companies have monopolized both infrastructure and services, and they will do anything--ANYTHING--to stop threats to those monopolies. Nonetheless, the incumbents are not the enemy. The enemy is the complacency of American communities, who are letting the incumbents win the battle.

OpportunityIowa is a statewide effort to educate citizens and elected leaders about the importance of broadband to the future of the community, and it is trying to address the urgent need to help those citizens and elected leaders understand that broadband is tightly tied to economic development. The project has made over 1000 presentations across the state to educate communities about the issues.

OpportunityIowa has a simple answer to the question of why communities should invest in broadband: To reverse the downward economic trends (fewer and fewer jobs year after year); to build 21st century community infrastructure; and because community broadband is primarily a local problem. One of Iowa's main exports are college graduates, who leave the state and never come back because of the lack of opportunity.

McCleod says that education is the core problem (or the lack of it).

Communities need a fiber utility; it will drive the cost of telecom down. Creating a fiber utility (just the legal entity, not building anything) gets the attention of the incumbents and often has immediate positive results because communities that create these fiber utility entities often get better service quickly, even if they have not spent any money to build out a network. The first step for any community is to create the legal entity that could and would own and manage a community fiber network.

McLeod suggests that the legal entity be created without any commitment to actually spending any money or building any infrastructure. The mistake many communities make is to rush to build something without having an appropriate community legal entity in place.

Creating a fiber utility creates opportunities to educate citizens and leaders about the importance of broadband, and gives control of the economic future of the community to the community (rather than to the telephone and cable company).

McLeod noted that we have less competition today that twenty years ago, even though the 1984 breakup of the phone companies and the '96 telecom deregulation were supposed to create more. The two remaining long distance companies (AT&T and MCI) will be gone by the end of 2005. Thirty public CLECs formed after 1996 are all gone. The incumbents have completely infiltrated state and national legislatures. The FCC has no vision, and still defines broadband as 200 kilobits/second at a time when other countries define it in terms of hundreds of megabits/second.

The vision for Iowa includes:

McLeod went to say that copper won't provide what Iowa wants, and that neither will wireless, noting that the phone companies abandoned their wireless systems twenty years ago because they could not provide the capacity that fiber could. He said although wireless broadband will not go away, that fiber is the first step because it enables pushing wireless out to the edges of communities, which is especially important for rural areas. In other words, where it is possible and practical, always do fiber first because it makes wireless work better.

The cable companies are not likely to make first (last) mile investments in fiber. Cable company debt in Iowa is four times what it would cost to build a new fiber network from scratch.

The fiber utility is now essential infrastructure:

Essential infrastructure, by definition, must be owned or controlled by the community (not private industry). 21st century infrastructure is the most important issue for communities, because it will make or break economic development--communities cannot grow and prosper without community broadband. It is less expensive than building and managing sewer and water systems, so any community can easily take this on.

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