Out of Control

The city of Provo, Utah, announced today that it will sell its money-losing municipal fiber network, iProvo, to Broadweave Networks, a Jordan, Utah, start-up for $40.6 million. This represents, I believe, the largest sale of a municipal fiber operation to a buyer that plans to maintain and grow it. Lebanon, Ohio, sold is failing muni broadband system to Cincinnati Bell last year for $7 million.

Reason has covered the financial disaster that Provo was becoming in two reports, the latest issued last month. Through the end of its fiscal year last June 30, iProvo had lost $7.4 million, and has been on pace to lose another $2 million this current fiscal year. The system was built in 2005 with a $39.5 million loan backed guaranteed by local taxes.

Nonetheless, the sale comes as something of a surprise. Separate reports from two consulting firms issued the week after the Reason policy study urged continued city funding of iProvo, although they recommended substantial changes in organization and operations. Up to last month, Provo Mayor Lewis Billings was expressing confidence in the system and stated that the city planned to stay the course.

Billings should be commended for his reversal. He’s unloading the system while there is still value to be derived for the city as well as Broadweave. Other cities, particularly Ashland, Ore., have stubbornly held on to losing operations as growing debt drained any net value. They’ve become white elephants.

Moreover, the $40.6 million sale to Broadweave Networks demonstrates that significant investment dollars exist for fiber-optic development. The market for small-city fiber has not failed. If incumbent cable and telephone companies do not meet local demand it is apparent that other companies will step up. And Broadweave is no fly-by-night. It’s an exciting, growing local company funded by Sorenson Capital, one of Utah’s most respected venture capital firms.

That makes it all the more important for cities to pursue policies that encourage telecom infrastructure investment: franchise reform, low taxes and deregulation. These do a much better job at bringing viable broadband service that consumers actually want to buy to cities like Provo, while at the same time nurturing entrepreneurship, capital and job growth. This doesn't happen when government attempts to compete with the private sector through municipally-funded schemes.

Finally, Provo’s decision to privatize coincides with the decision by (so far) 10 of 11 other Utah communities to refinance UTOPIA, the statewide fiber-to-the-home initiative with a new 33-year bond that could end up costing $505 million. It will be interesting to see how government-provided in these cities fare compared to Provo. Chances are residents of Provo, with a private sector provider, will have better choices, better prices, better service and higher take rates in 12 months than any of the UTOPIA cities.

The Senate held hearings on network neutrality yesterday, gathering testimony from FCC Chairman Kevin Martin as well as a few minor Hollywood celebrities.

Martin, who with the FCC has hosted two of its own hearings on Web-based network and applications management so far this year, prudently argued against regulation of the Internet.

Hollywood-types showed up to call for federal prohibitions on the use of network management techniques. Simply put, they don’t want to pay extra for the management services that would be required to make their commercial entertainment services work properly while alleviating the congestion their applications place on more pedestrian Web users.

Patric Verrone, the president of the Writers Guild of America-West, which recently ended a 100-day strike, was among those calling for more Internet regulation. “When your employers are the same companies that control the media, it’s hard to get your message out,” Verrone said. Lost on him, apparently, was the simple fact that the Internet, in all its non-neutral glory, did allow him to get the message out. He testified mostly to the success the guild had with blog postings, e-mail and videos.

Also lost on him was the irony that the writers strike centered on compensation for the added value their work gives studios when it’s used on the Web. Verrone, on the other hand, seeks rules that would coerce service providers to offer Web-based management services--that themselves would add measurable value to the work of his fellow guild members as well as the studios--for free.

If you live in Brunswick County, North Carolina, you just might get fiber-to-the-home courtesy of the U.S. government, as long as that home is in a pricey development adjacent to a golf course.

Like many rural telephone cooperatives, ATMC Inc., Shallotte, N.C., (formerly Atlantic Telephone Management Systems), receives a low-interest loans from the U.S. Department of Agriculture’s Rural Utilities Services agency, which was set up to fund universal broadband service. ATMC’s work, however, illustrates the inherent problems with current federal broadband programs—the company is applying the funding to high-density residential developments where there is already competition from at least two other broadband providers.

Kris Ward, business development manager, was frank about the cost-vs.-revenue issues of deploying FTTH during a session at the e-NC Authority’s Southeast Information and Communications Technology (ICT) Conference last week. e-NC serves North Carolina by identifying and facilitating opportunities for local and regional telecom development.

“We’re building fiber to high-density areas. We can’t afford to drop fiber just for voice,” Ward said. Of course, this is the criticism leveled at build-out process of larger incumbents, and precisely the reason programs like RUS were created.

But extending FTTH to areas unserved by broadband is not on ATMC’s agenda. Currently, ATMC has built FTTH systems in 22 new developments, some attached to golf courses, and all in areas served by cable TV companies who offer broadband service via cable modem. Although parts of North Carolina are struggling economically, it hard to make the case that Brunswick County, located in the extreme southeast corner of the state is among them, Ward cited U.S. census data that county is the 17th fastest growing in the U.S., fueled by retirees who are moving to the Carolina coast. “Growth is expected for years to come,” Ward said.

Despite that other providers are building broadband networks without government help, Ward said ATMC is using its FTTH network as a competitive differentiator. “FTTH is our selling point.” At the same time, Ward admits “We couldn’t do it without [the RUS loans].

Here are some of the stories on the new Reason Foundation policy brief (.pdf) examining municipal broadband's multi-million dollar failure in Provo, Utah:

Deseret News
Unload iProvo, critic urges
By Jens Dana
Better to privatize iProvo now and end the bleeding than lose another estimated $2 million over the next year, a longtime critic of the city-owned fiber optic network said Wednesday. Steven Titch of the Reason Foundation — a Los Angeles-based think tank that promotes libertarian principles — issued a eight-page policy brief that highlighted what he terms "iProvo's poor performance." Titch, a policy analyst specializing in telecommunications for the Reason Foundation, blasted the city's telecommunication network, saying municipal governments have no place in the high-tech infrastructure business. "They don't do it well," he said. "And iProvo is an example of this." Provo issued $39.5 million in bonds to finance the construction of iProvo. Since its inception, the network has experienced high churn rates among subscribers and relied heavily on subsidies to keep afloat. To date, the project has cost the city $8.4 million, Titch said, and there are projections iProvo will cost another $2 million. He sees only two options. "Provo now faces the dilemma of continuing to fund iProvo with no break-even point in sight," Titch wrote. "Or sell the property and recoup as much of its investment as it can."

The Salt Lake Tribune
Reason Foundation report: Time to sell iProvo
City spokeswoman counters that the document is flawed by misstatements of the network's red ink
By Donald W. Meyers
A libertarian-leaning California think tank has renewed its declaration that iProvo is a financial failure and that it's time for the city to consider selling it to a private telecommunications provider. The Reason Foundation's report says the fiber-optic network has lost approximately $8.4 million in the four years of its operation, and will continue to bleed red ink unless the wholesale provider model is scrapped. "They're still having the same problems they had a few years ago," said Steven Titch, Reason's telecom analyst and author of the report. "They're just getting more expensive."

Daily Herald
Foundation calls for iProvo sell-off
By Joe Pyrah
It's not news that the high-speed network iProvo is losing money at, well, a high speed. But $10 million in the hole is as good a time as any to take a jab at the publicly financed system that provides television, phone and Internet access. "No matter how many times the city tries to move the goalposts for what success means or how many subscribers iProvo needs, it can't get away from the fact that iProvo is a dismal financial failure by any standard," said Steven Titch, a policy analyst with the Reason Foundation. The Los Angeles-based foundation isn't new to the iProvo scene, having released a blistering report in 2006 that the city largely discounted. Reason, which advocates corporate solutions over government efforts, released an updated report on Wednesday. The report stated that iProvo is $10 million in the hole.

iProvo has already posted over $8 million in losses according to a new Reason Foundation policy brief that concludes that Provo is destined to join a list of cities like Ashland, Oregon, and Marietta, Georgia, that have “thrown away millions of dollars on broadband projects that, in the end, failed to deliver any of the promised benefits.”

iProvo’s total losses are likely to exceed $10 million by the end of this fiscal year – and that figure doesn’t include the $39.5 million borrowed to launch the project, most of which still needs to be paid back. The Reason Foundation report says Provo “faces the dilemma of continuing to fund iProvo with no break-even point in sight, or it can sell and recoup as much of its investment as it can.”

“Provo’s taxpayers are being fleeced,” said Steven Titch, policy analyst at Reason Foundation and author of two reports on iProvo. “The only question is how much of this fiscal recklessness they are willing to take before saying ‘enough.’”

In 2003, iProvo lost $1.3 million in taxpayer money. It posted a $1.4 million loss in 2004, a $1.6 million loss in 2005, another $1.9 million loss in 2006, and in 2007 iProvo was over $2 million in the red. That’s over $8 million in losses, and things don’t look much better for 2008. In January, iProvo posted a net-gain of just 29 subscribers and could be headed for over $2 million in losses again this year.

Full Policy Brief (.pdf)
Reason Foundation’s Municipal Broadband Research and Commentary

From the archives:
Jerry Ellig, former deputy director of the Federal Trade Commission’s Office of Policy Planning, wrote a 2006 Reason Foundation study that concludes cities shouldn’t fool themselves into believing that their experience running water, gas and electricity systems has prepared them for the fast moving Internet world. The full study, A Dynamic Perspective on Government Broadband Initiatives, is here (.pdf).

The FCC-mandated conversion to digital TV broadcasting next February is touching off a battle among cable TV and telephone companies to hook-up so-called “nevers,” consumers, who for whatever reason, have been content to watch over-the-air TV and have never been interested in purchasing cable, so reports cable industry trade Multichannel News.

When the DTV conversion becomes effective Feb. 17, 2009, consumers who have older analog models will have a choice of purchasing a new TV, using a government-provided $40 voucher to purchase a digital signal converter, or sign up with a cable, telco or satellite TV provider.

Naturally, multichannel video service providers are hoping to entice consumers to embrace the last option. AT&T reportedly will offer a bundled package at $44 a month. Comcast is prepping a basic cable tier, with less frills, priced at $15 to $20 a month. Their target: people like Andrew King, a 45-year-old airplane mechanic who watches off-air television in Culpeper, Va., 70 miles from Washington, D.C.

King is satisfied with his free TV experience. He picks up broadcast stations from two markets, Charlottesville, Va., and the nation’s capital. He is unenthusiastic about the prospect of paying a cable, satellite or telephone company for television.

“I’m kind of a cheapskate,” he said wryly, adding he’d sign up for subscription television and then the “rates will shoot sky high.”

King’s objections echo responses cable researchers have long heard from TV viewers they classify as “nevers” or “formers.” This audience of 14 million to 19 million households are viewers who have steadfastly refused to take, or keep, pay television programming. Winning the hearts, minds and pocketbooks of such consumers is a top priority for cable, satellite and telco TV providers during the next year.

“Frankly, this may be the last big chance to gain market share,” said Cox Communications vice president of product marketing David Pugliese.

Regulators and legislators should note, that despite accusations that cable TV is a stagnant duopoly and needs competition from local government to meet all consumer needs, the article lays out four important facts, backed up by market research:

1) There is heated competition for cable customers.
2) Consumers are aware of service provider choices.
3) Video service providers are interested in attracting budget-conscious customers, even those who might pay only $15 to $30 a month.
4) That even when prices drop, there is still a segment of the population who does not desire cable service.

The Justice Department has approved the XM-Sirius merger. The objections were quite absurd, relying on denying that sattellite radio competes with many other forms of broadcast entertainment.

Comcast and BitTorrent have reached an agreement about how the cable company will manage traffic from BitTorrent users.

The deal represents a successful market-based resolution to a network neutrality issue that some said only government regulation could fix. We at Reason note that the government has been trying to "fix" net neutrality since at least 2005. Comcast and BitTorrent settled their differences just five months after reports of Comcast’s throttling down of BitTorrent traffic came to light.

Under the terms of the accord, Comcast will pursue more “agnostic” network management technology that does not target the BitTorrent protocol directly, but, at peak times, prevents a user of any application from hogging too much bandwidth. For its part, BitTorrent acknowledged Comcast’s right to manage its network in order to assure a quality online experience for as many users as possible.

This is significant because BitTorrent is not claiming its rights were violated or that the Comcast violated the FCC’s existing net neutrality guidelines, a charge net neutrality activists, along with at least one member of Congress, made. Instead, BitTorrent sees its issue with Comcast as a conflict in business objectives – something that both were able to work out.

And, as in any agreement, both sides had something to gain. Comcast, of course, is looking to stave off unnecessary and counterproductive regulation. BitTorrent is looking to be seen as the legitimate business it has become, and get away from its association with online piracy, which many of its erstwhile “advocates” were coming close to defending.

Everybody wins in this type of deal. Users get better quality, BitTorrent users are not singled out, Comcast’s property rights are respected. Unfortunately deals like this are precisely what network neutrality legislation such as Snowe-Dorgan would prohibit. Deals like this are also potent testimony as to why bills like Snowe-Dorgan are not needed at all.

…And it’s done.

Citing “unrealistic ambitions and technological ambitions,” The New York Times all but wrote an obituary for big city municipal WiFi last Saturday, acknowledging the problems in Philadelphia, San Francisco, Portland, Ore., Tempe, Ariz., that for years municipal proponents attributed to exaggeration by industry lobbyists if they did not deny them altogether.

The article, by Ian Urbina, is password-protected, but in three paragraphs summed up the universal problem of municipal wireless, long demonstrated in reports from the Reason Foundation, the Heartland Institute and other think tanks where a sound undertstanding of market and technical reality trumped wishful thinking:

In Philadelphia, the agreement was that the city would provide free access to city utility poles for the mounting of routers; in return the Internet service provider would agree to build the infrastructure for 23 free hotspots and to provide inexpensive citywide residential service, including 25,000 special accounts that were even cheaper for lower-income households.

But soon it became clear that dependable reception required more routers than initially predicted, which drastically raised the cost of building the networks. Marketing was also slow to begin, so paid subscribers did not sign up in the numbers that providers initially hoped, Mr. Phillis said.

Prices for Internet service on the broader market also began dropping to a level that, while above what many poor people could afford, was below what municipal Wi-Fi providers were offering, so the companies had to lower their rates even further, making investment in infrastructure even more risky, he said.

In what is becoming an all-to-regular development, another U.S. government agency suffered a breach of confidential information. This time, a laptop containing sensitive medical information on 2,500 patients enrolled in a National Institutes of Health clinical trial was stolen in February. As is par for the course, NIH is only getting around to reporting it now.

In a letter to affected individuals, Andrew Arai, a laboratory chief at the National Heart, Lung and Blood Institute (NHLBI), said the laptop was stolen from the trunk of his car. He told the patients that some personally identifiable information was on the stolen computer, including names, birth dates, hospital medical record numbers and MRI information reports, such as measurements and diagnoses. Social Security numbers, phone numbers, addresses and financial information were not on the laptop, officials said.

We're supposed to find this last part reassuring.

You can almost set you watch by it. Once again, members of Congress is calling for regulation of marketing and customer service rules in the wireless industry.

Here’s a report from Friday’s Chicago Tribune:

The latest draft legislation is a wireless consumer protection act from Rep. Edward Markey (D-Mass.) who proposes, among other items, requiring operators to offer a service plan with no early termination fee and letting consumers cancel their contracts within 30 days without penalty.

Sen. Mark Pryor (D-Ark.) has also floated legislation to set up uniform requirements for wireless customer service.

The cell phone industry, a category that includes service and equipment, generates the most complaints out of the roughly 3,800 industries tracked by the Council of Better Business Bureaus. However, according to BBB data, the wireless industry has a higher rate of resolving consumer complaints than the overall rate for all businesses.

The industry says it's open to light national regulation, though it emphasizes that operators already respond to consumer and competitive pressures.

Regulations should protect customers from false or intentionally misleading service offers and pricing plans, but legislators should of careful of sweeping rules that address anecdotal problems. With millions of people using their cell phones on daily, sometimes hourly basis, it’s no surprise that service, pricing and quality problems occur. Yet overall, usage continues to grow, prices have declined measurably, companies that have failed to meet competitive standards have been punished by loss of market share. Many Americans are comfortable enough with the reliability of wireless service that it’s the only phone service they use.

The problem with large-scale customer service regulations, such as a “Wireless User’s Bill of Rights,” however well-intended, is that government, not the marketplace, ends up setting the customer service standard. If the law mandates cell phone companies offer a 30-day service cancellation window, or reduce on-hold waiting time to no more than five minutes, that’s the requirement every service provider will meet. Go light on regulation, and competition will force service providers to make quality a differentiator. Pro-rated service contracts, pre-paid phone accounts and more flexible service bundling all emerged due to competition, not regulation, as service providers sought more ways to one-up the other.

The world lost a true visionary yesterday. Arthur C. Clarke, scientist and science fiction writer, never lost his fascination with the possibilities that lay just over the horizon of human evolution. Childhood’s End and "The Sentinel," Clarke's novel and short story that together fused plot and theme into the landmark film 2001: A Space Odyssey, speculated that the current human condition was but an early development phase that was a pre-cursor a wiser and more noble race.

On a more practical level, his brilliance contributed immeasurably to modern telecommunications: combining mathematics, astronomy and gravitational physics, Clarke theorized in a 1945 paper that artificial satellites, if placed approximately 22,000 miles above the Earth, would orbit at exactly the same rate relative to the planet’s rotation, essentially fixing them in space above a single point, where they could then serve as relays for radio signals around the globe.

Peers thought the idea was so outlandish that Clarke never applied for a patent, which he cheekily noted in a later essay, “A Short Pre-History of Comsats, Or How I Lost a Billion Dollars in My Spare Time.”

But the paper helped spark the space race. And thanks to Clarke, you can now send email or make a phone call from any spot in the world. You can navigate your next car trip with a GPS system and watch all the NCAA Tournament games on your DirecTV system.

Clarke’s science fiction rarely took the political directions that contemporaries such as Robert A. Heinlein or Brian Aldiss explored, but a reader can glean from the subtext of his writings that for Clarke, the struggle to transcend material boundaries that limit human potential, be it political, technological or even biological, was central to his thinking.

Obits at Fox News and MSNBC.

Is the Internet addictive? The American Journal of Psychiatry, the publication of the American Psychiatric Association feels strongly enough to give space to one psychologist who favors listing it in the next version (the fifth) of the Diagnostic and Statistical Manual of Mental Disorders (DSM-V).

The editorial, by Dr. Jerald Block, can be found here.

Mike Masnick at Techdirt spied the report, noting that it is not the first time the psychiatric community has attempted to find something pathological in a technology-related activity that people like to spend a great deal of their time doing.

Over the past few years, we've seen so many "calls" to label the use of certain technologies as "addictions" that we've noticed something of a... well... addiction by some to call for new technology addictions. Among the long, long list of possible addictions has been email addiction, web addiction, online porn addiction, video game addiction, internet addiction, and mobile phones or other gadget addictions.

In the past Masnick has not been shy to express the opinion that such dubious calls to classify higher-than-average use of email, video gaming and Internet use as a clinical disorder are merely attempts to expand “therapies” that insurance must cover.

If the fact that some Korean teenagers average 3 hours a day on the Internet (what U.S. teenagers average in front of the TV) amounts to a mental illness, what do we say about those retirees in Florida and Arizona retirees who play one, if not two rounds of golf a day (four to eight hours). The 10 recorded cardio-pulmonary deaths among users in Internet cafes that Block cites does not a social problem make. Going back to the golf example, I’ll wager that the number of players who have had heart attacks while out on the links number far more than 10.

Masnick provides a sounder perspective.

Of course, there are a few problems, including the fact that research has shown little evidence that the internet is really addictive, and almost every story of internet addiction really tends to be about deeper issues that resulted in someone seeking an outlet on the internet (from depression, bad family situations, alcoholism, etc.). Focusing on the "internet" part tends to have people trying to treat a symptom, not the disease. Hopefully, this new push will follow the same path as the one last year to have video games declared an addiction too. It didn't take long for that idea to get shot down.

The U.S. Supreme Court, taking its first major case of broadcast indecency in 30 years, will hear an FCC appeal of a Second U.S. Circuit Court of Appeals ruling that nullified the agency’s enforcement regime regarding “fleeting expletives,” AP is reporting.

The case stems from an FCC claim that broadcasts of entertainment awards shows in 2002 and 2003 were indecent because of profanity uttered by U2 Lead singer Bono, Cher and Nicole Richie. Although no fines were issued, the FCC’s policy reserves the right to levy financial penalties in the future.

At issue is whether the passing use of language that might be objectionable to some viewers constitutes indecency under FCC guidelines. The Second Circuit Court sidestepped the content issue by citing procedural irregularities, namely that the FCC policy was invalid because the agency had changed it without adequate explanation. The case stemmed from Bono’s ad-libbed, apparently unscripted, exclamation, “f***ing brilliant!” during the NBC broadcast of the 2003 Golden Globes Awards show. The same FCC case also cited the Fox network over similar language by Cher and Richie during the 2002 and 2003 Billboard Music Awards.

Despite the FCC’s contention that it received hundreds of thousands of complaints over the language, the Second Circuit “was skeptical that the commission can provide a reasoned explanation for its fleeting expletive regime that would pass constitutional muster,” AP reporter Mark Sherman wrote.

Although the Supreme Court won’t hear the case until the fall, it will be interesting to see how it plays out. When it comes to regulating content, the FCC is fighting for relevance. FCC Chairman Kevin Martin has made no secret of his desire to police premium cable content (think The Sopranos, The Wire and The L Word) for “indecency,” not to mention Web content, and he might try to leverage a court decision in this regard (assuming he keeps his post in 2009). Yet Martin has often been subjective. In the past he has given an official past to broadcast airings of Saving Private Ryan, the Steven Spielberg war film that contains a fair amount of (scripted) profanity.

That tendency to pick-and-chose has reduced Martin’s legal arguments to the notion that the government needs to be watching out for public taste. At the same time, he did a fine job bolstering the First Amendment argument against banning profanity speech by choosing to use examples of it—mostly for shock effect—in his official comment on the Second Court’s decision.

Stating, as Solicitor General Paul Clement did, that the Second Circuit put the FCC “in an untenable position,” powerless to stop the airing of expletives even when children are watching, presupposes that it’s the FCC’s business to decide what children should be watching. Hence, the Second Court did at least address the correct constitutional questions the FCC action raised, and, for my part came, down on the right side—rules can’t be vague and subjective.

Rep. Edward Markey (D-MA) introduced yesterday what many say is a “watered down” version of his network neutrality legislation from last year. Apparently some of the more sweeping calls for regulation are toned down, but there is still a lot in the bill subject to interpretation.

Telecom journalist Carol Wilson’s expresses some concerns at Telephony OnLine:

Finally, Markey wants to protect free speech and the “open marketplace of ideas” by “adopting and enforcing baseline protections to guard against unreasonable discriminatory favoritism for, or degradation of, content by network operators based upon its source, ownership, or destination on the Internet.”

Again, on the surface, this seems hard to protest -- unless offering a premium service is defined as discriminatory.

The fundamental freedom that network operators need to have going forward is the right to package and deliver their services in a way that meets market demands. We are all being bombarded by data that shows video traffic is driving up demand for bandwidth, a reality that will require both investment in infrastructure and a new service structure.

If what Markey is proposed can be used to prohibit network operators from offering premium services to both content delivery networks and to end users, then this latest Net neutrality push is no better than previous efforts. The difficulty for service providers is determining how best to interpret the “Mom and apple pie” nature of the bill’s language and how best to explain the technical challenges of their own future.

Government still tends to view the broadband usage problem in the U.S. as a paucity of infrastructure. The California Broadband Task Force (CBTF) blundered in the same policy direction in its recommendation last month that the state issue “broadband bonds” to fund infrastructure development in all parts of the state.

Writing for the Pacific Research Institute, Daniel R. Ballon immediately found the flaw:

According to the CBTF’s final report, a full 96 percent of households have access to high-speed Internet services, but only 56 percent opt to subscribe. This gap indicates a lack of broadband demand, not a lack of infrastructure. This demand correlates strongly with household income. Instead of increasing the affordability of available commercial services, "broadband bonds" will displace existing services with inefficient government-run versions.

This strategy would be akin to replacing grocery stores with a chain of state-run commissaries. Government bureaucrats cannot possibly micromanage a rapidly evolving technology such as high-speed Internet. Unlike roads and similar capital improvements, broadband networks require constant upgrades to serve the changing needs of consumers.

In the past four years, Verizon has built more than 7,000 miles of high-speed capable infrastructure in California. How does this compare to the government’s record of upgrading transportation infrastructure? More than a decade after the legislature introduced plans for a high-speed train system connecting San Diego and Sacramento, lawmakers have yet to finalize the 700-mile route, much less begin the projected 15-20 year construction process. The CBTF’s plan dwarfs this train proposal.

Technically, universal access exists in the U.S. Satellite service is available everywhere. Admittedly, it’s clunky, but terrestrial-based wireless alternatives are on the rise, that may not deliver 100 Mb/s, stand to deliver 30 to 40 Mb/s. And for the record, few U.S. households are using 100 Mb/s of bandwidth right now, even if they are among the 2 million that the Fiber-to-the-Home Council estimates are connected directly by fiber.

This may be heresy, but there is no “right” to fiber. Living in rural areas has trade-offs. Fresh air, cheap real estate and elbow room are great and I bet you can still get a good cup of coffee in town, it just may not be Starbucks or Seattle’s Best (and some think that’s a good idea). Companies like Zayo Bandwidth and Bend Broadband are showing that commercial carriers can reach rural customers. California should let them and others go for it rather than funnel subsidies to technologies that are costly and inefficient for the purpose.

A growing number of laptop seizures by U.S. Customs from U.S. citizens entering the U.S., predominantly at airports, has concerned enough companies that they are now requiring employees to wipe their hard drives before traveling abroad. At least two multinationals, one American, one Dutch, have told employees not to carry confidential information on laptops when they travel overseas, according to the Washington Post.

The fact that corporations are instituting policies to protect themselves should signal how abusive this practice has become.

It what could amount to a case of illegal search and seizure, Customs agents are ordering employees of U.S. companies, be they U.S. citizens or foreign nationals, predominantly of Asian and Middle Eastern backgrounds, to surrender cell phones, BlackBerry devices, iPods and laptop computers when re-entering the country.

Customs agents will then copy phonebooks and calling information from phones, and browser and email data from the laptops. The Post reports that border agents have demanded users provide passwords to open hard drives – the information of which is often confidential. (What the Post does not report is that, should the laptop contain confidential financial information about the company, the password disclosure itself could be a felony under Sarbanes-Oxley Act, so the hapless employee is stuck between being arrested for not cooperating with Customs agents or opening himself and his entire company’s executive management to jail time).

Broadband doesn’t get much play out on the campaign trail, but just about every other issue in the headlines – health care, immigration, the war on terror, education, environment – have a broadband, or at very least an IT, component.
How well the telecom and IT sector is able to respond depends on the degree of freedom it is given to innovate and invest. As to be expected, the Republican candidates are more amenable than Democrats to allowing market forces to work.

Still, the GOP frontrunners have not been shy about proposing federal government solutions in areas where the market seems to be doing quite well on its own. Republicans in general, beginning with President George W. Bush, over two years.seem enamored with a centrally-planned, centrally-operated health information system – a government-run repository for the health records of all citizens. Sure, it will make portability of records easier, but the government will know everything about your medical history. Private sector solutions are emerging that stand to be more private and directly under control of the consumer.

Both John McCain and Mitt Romney have made proposals that follow Bush’s lines, which that National Taxpayers Union pegs at $169 million in its first year. Mike Huckabee also has an extensive health IT proposal, which the NTU pegs at $234 million in the first year.

None of the Republicans propose grandiose infrastructure funding in competition with the private sector. But oddly enough it’s Romney, the so-called conservative, who is talking about boosting spending on dubious government IT programs. For example, Romney wants to mandate an employment verification system relying on biometric ID cards that the NTU estimates will cost $150 million a year for five years. The former Massachusetts governor also envisions a nanny state role for the government in PC distribution, ensuring no machine is sold without Internet filtering software. It’s not clear whether he use taxpayer money in this effort or foist this cost on manufacturers and retailers, but his proposed program to involved the government in education about Internet parental controls will cost $10 million

An “open network” is the hallmark of net neutrality movement and you find it in the talking points of nearly all the candidates, to one degree of another.

The essence of their positions will come down to how they stand on network management – the willingness to allow service providers to set performance parameters for the networks they themselves own. It would be welcome to see candidates like Barack Obama and Hillary Clinton acknowledge that certain technologies, such as the BitTorrent protocol, are designed to use as much bandwidth the network has available. They don’t have to get technical, all they have to say the network neutrality can’t be ensured with the push of a button and allowing carriers the freedom to prioritize and apportion traffic, benefit a much greater number of users.

There is also the national security issue, something that only the now-defunct Giuliani campaign has been willing to talk about – the vulnerability of the U.S. network to attack. Jules Polonetsky, policy advisor to Rudy Giuliani, noted that the principal challenge is that information security is largely a private sector policy and, although he was not speaking in the context of net neutrality, said that country needs to be able to cultivate the tools to protect itself from information warfare.

To be bipartisan, one of the few lawmakers who also seems to grasp the nature of the threat is Sen. Patrick Leahy (D-VT). While I find most of Leahy’s policy ideas unpalatable, he is right when he says, as he did last week at the State of the Net’s Technology Policy Exhibition on Capitol Hill, that the U.S. needs to confront formidable cyberwarfare development underway in countries like China. In addition, he correctly attributed much of the Internet fraud and identity theft to international organized crime, as opposed to the pimply teenage hacker.

All the rhetoric about open networks and protocols aside, the next president is going to have to address the reality that unfriendly nations already are testing network security at power plants, banks and other institutions that, by and large, rely on the global Internet for communications and operations. And that’s going to mean allowing carriers and end-users greater flexibility in terms of network management, packet inspection and, if necessary, blocking.

Who said telecom isn't a glam issue? A D.C. pundit just told Bill O'Reilly on Fox News that Barack Obama is the iPhone, as in the hot new thing. Hillary Clinton, she said, was AOL. Ouch!

With Democratic presidential hopeful Barack Obama predicting a “split decision” as voting began today in 24 state primaries and caucuses, it is noteworthy, and perhaps not all that surprising, that of the remaining candidates, the Illinois senator has talked most about technology policy.

In November, Obama visited Google headquarters where he outlined his support for such regulation as network neutrality, a Google policy favorite because such regulation would serve the company’s business plan very well. I’ll grant the candidate some slack because Google is an important employer in an important state, but I would caution him against getting to gushy about the search engine giant. During a panel discussion on the candidates’ positions at last week’s State of the Net conference, Julius Genachowski, Obama’s policy advisor for technology, mentioned Google no less than three times in a five-minute overview. Google’s apparently politically hip enough that Democratic candidates and their staff can toss its name around with such abandon (unlike other multi-billion-dollar corporations such as AT&T, Microsoft or Comcast).

Considering that Obama has promised “to step up review of merger activity and take
effective action to stop or restructure those mergers that are likely to harm consumer welfare, while quickly clearing those that do not,” it won’t help to get too palsy with Google, which faced its own antitrust questions with DoubleClick and now appears to be running interference to “help” its primary search engine competitor, Yahoo, push back on Microsoft’s buyout offer. So far, Google seems content to play within the boundaries of the market. It would be disappointing to see them turn to the government in an attempt to protect their market position.

Obama and his campaign staff should put the company at arms length.

After waking up to the news of Microsoft’s $44.6-billion bid for Yahoo!, our morning cappuccino had barely cooled when Sen. Herb Kohl (D-WI) announced the Senate Antitrust Committee he chairs would scrutinize the proposed buy.

Regulator interest is to be expected. And while any undue government interference in the deal would be unwelcome, I think we’re due for a debate about which companies, in 2008, are the most influential players in the digital economy and what their relative strengths and weaknesses might be.

The first fact that will rock many in the government regulatory establishment is that, unlike the past, Microsoft approaches the deal from a position of weakness. However strong the Redmond, Wash., giant might be in PC operating systems, this deal is an attempt to shore up its sagging on-line and search engine businesses, which are second to Google. Yahoo, its target, ranks third.

I am hopeful that, as the merger proceeds over the course of the next few months, lawmakers and public gets a better understanding of the changes the search engine industry is bringing to media, advertising and what in the past has been called audience research, but now involves crunching data correlating Internet usage, search keywords, online purchases and downloads.

For starters, see Adam Thierer’s research at Technology Liberation Front.

The Utah state auditor’s office has opened an investigation into iProvo’s finances after receiving a tip that the municipal broadband operation was owed nearly $1 million from its retail partners.

iProvo is a fiber-to-the-home network owned and operated by Provo’s city electric department. Retail sales of phone, cable TV and high-speed Internet service are handled by three local companies—Veracity Communications, MStar and Nuvont Communications. According to the Salt Lake Tribune, Veracity and Nuvont denied being in arrears. MStar officials, however, did not return calls from the reporter.

This would not mark the first time iProvo had trouble with a retail partner. Its first year of business was hampered by poor performance of HomeNet, which ultimately went out of business.

The retailer woes are only the latest for iProvo. In December, the operation reported that it was $614,000 in the red for the first four months of its fiscal year, which began July 1. That comes on top of several million in losses since its launch in 2005.

See coverage here and here.

No one follows the telecom policy scene long before coming across the broadband penetration statistics issued regularly by the Organization for Economic Cooperation and Development (OECD).

For those just tuning in, the OECD places the U.S. 15th in the world in terms of per capita broadband penetration with 22.1 lines per hundred users. According to the OECD, Denmark leads the word with a penetration of 34.3 per hundred. Over the past few years, the U.S. rank has been steadily falling. Meanwhile, the OECD consistently reports the U.S. users pay more on a per-megabit basis for service than foreign counterparts.

The numbers have been controversial, being as they rely on data provided by governments and don’t measure the broadband penetration among businesses or the effect of wireless. That the stat tends to be used as a club for policy activism (“The U.S. ranks 15th, therefore the government should…[insert your favorite government telecom program here]”), served as the impetus behind a rather informative panel on broadband metrics at yesterday’s State of the Net Conference in Washington, which discussed ways to better measure broadband penetration and use and provide context for the OECD numbers.

Taylor Reynolds, communication analyst and economist for the OECD himself admitted concern that the U.S. media reports the ranking in isolation of a number of other OECD metrics, many of which reflect positively on the U.S. Among those include the amount of areas in the U.S. where broadband service is available, and, most pointedly, that in the U.S, broadband use is not capped—that is, users are not limited to the amount of broadband use within a given month. The average bit cap in the OECD is 10 gigabytes, after which additional charges kick in. In terms of content, 10 gigs amounts one season of half-hour TV episodes downloaded from a service such as iTunes.

Bit caps are a critical counterpoint to the lower per-megabit prices many European and Asian users pay for broadband – and suggests that their low-price regime requires rationing. This would be expected whenever government interferes with market pricing, in this case creating a demand glut by urging service providers (in some cases companies in which the government maintains a financial stake) to keep prices artificially low.

The town of Oro Valley, Ariz., has backed off a demand that a 71-year-old resident register his blog as a political action committee after he used it to endorse two candidates who were running against incumbents.

A number of attorneys in Arizona, including Clint Bolik with the Goldwater Institute, agreed the town was completely out of line and that Art Segal, whose blog, www.letorovalleyexcel.blogspot.com, is often critical of local government policies and activities, is well within his First Amendment rights to support of any local candidate.

Bloggers such as Segal are not required to register with the government to express an opinion unless they cross the boundary into financial support, Bolick told the Arizona Daily Star.

“His blog is not a political action committee,” the attorney said. “He is simply a citizen expressing his political views.”

The clear intent of the town was to silence political opposition, Bolick said.

Oro Valley changed its mind after awkwardly defending the move, claiming that, upon receiving a complaint about the site from an anonymous citizen, local election law required it to demand Segal register. Yet one check of the rules and officials would have learned that they don’t apply to bloggers.

What’s good is that, in the end, it’s another case where Internet blogging is afforded First Amendment protections. Blogging is a legitimate form of journalism and commentary. There have been more organized attempts to silence bloggers by attempting to argue that they are not truly “media” of not “professional journalists.” Witness Apple’s lawsuit to close down Think Secret, which excelled at doing exactly what I and my one-time Electronic News colleagues were encouraged to do week after week—scoop insider company and product news. Apple “won” that suit by succeeding in closing the site. Or was it simply that Nicholas Ciarelli, who as a 13-year-old had Apple’s PR people tearing their out, grew up and had other things to do, like attend Harvard, reportedly with some cash from the Apple settlement?

So, on some level, it’s gratifying to see a town’s attempt at blogger intimidation turn out to be acknowledged for the petty power play it was.

The whole affair left Segal — who said he has given no money to the candidates he endorsed months before hearing from the town — with a bad taste in his mouth.

The resources that town officials spent trying to strong-arm him into compliance would have been better used to address issues important to Oro Valley residents, he said. "It's just another example of the wastefulness that this town has shown a propensity to do on much too many occasions," Segal said.

Comcast CEO Brian Roberts today became the first cable company CEO to address the annual Winter Consumer Electronics Show, emphasizing the role public broadband networking has in the delivery of sophisticated consumer information and entertainment platforms that leverage technology and content from multiple sources.

Broadband networks, as I’ve written often, are part of a much larger value chain for service. Each year it gets more and more difficult to categorize what the cable and telephone companies as merely infrastructure companies. Yet there continues to be a naive belief by city governments that they can easily duplicate cable TV service.

According to the CES press release, here's the bar Comcast is going to set for competitors this year:

“Roberts announced the end of an era for set-top boxes, and proclaimed a new generation for two-way platforms with the introduction of an OpenCable platform called tru2way. Panasonic president Toshihiro Sakamoto joined Roberts on stage to announce their co-creation of AnyPlay, the first portable DVR and DVD combination with tru2way capability. Roberts also announced that more than 1,000 HD choices will be available for the portable device in 2008.

”With the help of American Idol's Ryan Seacrest, Roberts debuted Fancast, a launch pad for the convergence of the PC and television, creating a personalized television experience. The individualized site links quickly and easily to content on the television, Internet, DVDs or in theaters. With the use of wideband instead of broadband, Fancast is able to download a two-plus hour HD movie in four minutes. It is the first site where consumers can find, watch and manage all their video content in one place.”

Yet the cities like Provo, Utah, and Lafayette, La., forge on, spending millions on their own broadband and cable TV systems, insisting to local taxpayers that simply because they are using fiber-to-the-home, they will easily match or succeed the quality and quantity of commercial broadband service. It doesn’t work that way. Service providers are competing on the strength of the service packages. So expect more head-scratching and puzzlement from the muni crowd as 2008 turns into another bum year for municipal broadband.

In another ill-conceived government effort, no doubt designed “for the children,” the Middletown, R.I., school district plans to place RFID chips in the backpacks of school kids to track when they get on and off the school bus.

The idea has the American Civil Liberties Union, not to mention the usual anti-RFID crazies, riled up. I don’t like the idea either, but for different, and I hope simpler, reasons.

Look no further to find that the company supplying the technology to the trial is run by the brother of the Middletown school district’s facilities director. That alone is reason to spike the plan.

Steven Brown, executive director of the ACLU Rhode Island chapter, is right when he calls the plan “a solution in search of a problem.” Even if you think RFID tracking is a good idea, the Middletown approach is hardly efficient – all the chip will record is when a child got on and off the school bus. (What about kids who walk or carpool to schools?) And even then, what’s really being tracked is the backpack, not the kid. Given the upper-middle class paranoia that fuels such government-sponsored "let's-track-our-children" ideas (Middletown neighbors tony Newport), it's easy to imagine the cross-departmental chaos a group of mischievous 10-year-olds could create simply by exchanging their backpacks. Above all, this plan should be opposed simply because it is poor use of taxpayer money. It won’t make children any safer. It’s a matter of local government officials letting themselves be seduced by tech sizzle.

What’s regrettable is that ideas like this bring the tinfoil helmet crowd out of the woodwork declaring that RFID is an automatic identity theft and privacy threat. While we should be careful about proposals to use impose RFID for personal tracking (even for our own “safety and security”), it has many beneficial applications. Yet hysteria over the technology has already seen efforts such as California’s ill-conceived proposal (vetoed by Gov. Schwartzenegger), to ban all commercial investment or development of the technology within the state.

Much of this legislative action is based on misperceptions over what RFID can and cannot do. For more clarity, see my post from about a year ago.

The issue of collecting and processing search engine data, as well as other Web surfing habits, by ISPs from users stands to be an emerging issue in 2008. Essentially companies like Google, Yahoo as well as others like NebuAd are developing the ability to process information they collect from you and (for lack of a better word) deduce your interests, primarily for advertising purposes. Some government agencies have begun to take notice. NebuAd, as the ClickZ story reports, is already discussing the capabilities of its behavior tracking and ad targeting software with the Federal Trade Commission.

Concerns about this concept were implicit in some of the opposition to the Google-Doubleclick merger, but I believe the complexity was lost on both sides.

This issue bears watching into the new year because it will pit those concerned about privacy against enterprises looking to expand a potential universe of buyers. The line between welcome promotion and unwanted intrusion is always moving, and it can vary from individual to individual. Some will happily sacrifice a chance to save on groceries in order to avoid having purchases tracked through a supermarket card club.

Stay tuned.

Last Saturday night’s game between the New England Patriots and the New York Giants, which saw the Pats battle back from a 12-point deficit to achieve a perfect 16-0 season record, drew 34.5 million viewers, according to Nielson estimates, making it the most watched regular season pro football contest since 1995.

Viewership got its biggest boost from a late decision by the NFL to allow CBS and NBC to simulcast its feed from the NFL Network.

Those following the issue recall that the NFL originally had reserved this game for exclusive broadcast on the league-owned NFL Network. Problem was the league hit negotiation snags with the two of the largest U.S. cable companies, Comcast and Time Warner Cable, over how the channel would be carried on their systems. Comcast placed the channel on a higher-priced tier of all-sports channels, not on its “expanded basic” tier as the NFL wanted. Expanded basic is the standard 80-to-100 channel line-up that includes ESPN, Discovery Channel, Turner Classic Movies, History Channel and such. A similar dispute kept the NFL and Time Warner from reaching any deal. Therefore the NFL Network was not available to Time Warner customers.

New York Gov. Eliot Spitzer, who’s been all worked up about violence in video games, and his friends in the New York Department of Criminal Justice are wiping the egg off their faces after a 20-minute presentation cited a well-known Internet hoax and parody site, Mothers Against Videogame Addiction and Violence (www.mavav.org) as an important “parental resource.” The site, in truth, does a terrific job of spotlighting and lampooning the very type of moral panic Spitzer’s fomenting.

The MAVAV citation caps a sensationalized presentation filled with errors, inaccuracies and misinformation about the so-called dangers of violent video game content, including the since-discredited report that the Virginia Tech shooter was an avid player of Counter-Strike.

With the ominous title “Video Games and Children: Virtual Playground vs. Danger Zone,” the slide show was designed to drum up support for state new laws restricting the sale of video games.

For more see Cord Blomquist’s post at Technology Liberation Front and this entry at Gamepolitics.com. Note also that all of New York State's links to the presentation are currently down.

I find it hard to get as worked up as the opposition over yesterday's FCC’s decision to allow a company to have common ownership of a newspaper, TV and radio station in any one of the top 20 U.S. markets, amending a 32-year old rule.

As I said yesterday on Larry Mantle’s AirTalk program on KPCC, the Los Angeles public radio station, it amounts to a half-baby step toward liberalization of media ownership. My opposite number in the discussion, Josh Silver, executive director of the Free Press, was apoplectic over a ravenous quest for “profits” ending diversity in media. The segment is available at the KPCC site here.

The trouble is, there’s no sign of the great blanding of media content that Silver rails against. To be sure, local newspapers and radio stations have cut their staffs, but that reflect changing market conditions – a shift on the part of readers, viewers and listeners to other sources of news, the Web, cable TV and satellite radio, to name three. And if local alternative journalism is the goal, in this day and age owning a newspaper or TV station is a terribly inefficient way to accomplish it. Why take on all this overhead when, with far less resources, a motivated individual can accomplish much more with a video camera, a PC and a connection to YouTube.

Bottom line, however, the FCC’s decision did not amount to much. Through past waivers, the FCC has permitted cross-ownership in many of the major markets covered by the new blanket ruling, including New York, Chicago and Los Angeles. Under the new rules, a newspaper still cannot acquire one of the market's top four broadcast properties and at least eight independent voices must remain. So despite the outcry from anti-business corners, from a regulatory perspective, there isn’t much that’s going to change.

Although the FCC made a token effort at loosening media ownership rules yesterday, at the same meeting the Commission adopted a rule preventing any cable company from serving more than 30 percent of all pay-TV subscribers nationally.

At least its arguable that media companies are consolidating, although that consolidation has not been accompanied by the decline in diversity that critics fear. The multichannel video industry, on the other hand, is growing. The telephone companies have entered the business and have peeled off 3.2 million customers as of Q1 07.

The industry rightly believes this latest FCC overreach won't survive a court challenge. More at Multichannel News here.

The network neutrality crowd is taking a page from the climate change club. In the same way environmentalists say just about every social, economic and natural problem is attributable to global warming, it’s getting so that anytime an Internet-based application hits a glitch, the activists say the root cause is lack of network neutrality regulation.

The latest accusations have been directed at T-Mobile, whose users had trouble connecting to the Twitter SMS application this weekend. The problem was a technical glitch, which Twitter (which does not believe it was blocked on purpose) is working to repair. But that didn’t stop accusations from flying.

The Twitter jitter continues a pattern where network neutrality advocates cry “net neutrality” wolf at every relatively minute and isolated applications interruption.

A few months ago, over the course of a few days, Cox users couldn’t reach Craigslist.com. After charging Cox with a neutrality violation, they quieted down when the problem was traced to a flaw in a security software problem.

Accusations that Comcast was blocking Google turned out to be a DNS glitch. Another claim that Comcast was blocking peer-to-peer sites turned out to be completely false -- Comcast merely was slowing down isolated P2P uploads by reducing the number of simultaneous connections the user could have to the file-sharing site at peak times. This was routine traffic management.

Then there was the kerfluffle over AT&T’s alleged “censorship” of lyrics critical of President George W. Bush during a wireless web transmission of Pearl Jam concert. Turned out a solitary employee of the company managing the webcast, not AT&T, had made a unilateral and unauthorized decision to delete the lyrics.

With the classic fable in mind, observers are warning net neutrality activists to stop are endangering their own credibility.

Here’s Mike Masnick at TechDirt.com with some common sense.

“Before we get accused of all sorts of incorrect things (as per usual when we post about network neutrality), let’s start off with a few clear points: I think that the concept of network neutrality is important for creating conditions that enhance innovation. However, I don’t think that means we should mandate network neutrality through legislation. I think what it means is that we should look for ways to increase competition in the connectivity space, as that would make network neutrality a non-issue. Anyone who violated network neutrality would pay for it in lost customers. Unfortunately, with many people having very few connectivity choices, companies can get away with things. However, these firms aren’t stupid. They're not randomly blocking stuff just for the hell of it. And, yet, every time a minor technical problem pops up -- such as T-Mobile having problems delivering SMS to Twitter, suddenly everyone makes it out to be a net neutrality violation. Unfortunately, it appears that the phrase “network neutrality” has now become a catch-all for any connectivity provider that has trouble delivering any particular service. While that generates headlines for advocates and politicians who want to keep “network neutrality” in the headlines, it actually does a great disservice to the actual concept of network neutrality. It changes the debate away from one that concerns the actual issues (competition and what is best for innovation) to one that involves lots of needless finger-pointing and blind accusations. So, next time there's a problem on the network, before shouting “network neutrality,” at least wait until the details come out.”

Despite a lack of general sympathy, the NFL is attempting to apply pressure at the state level to force cable companies to carry the NFL Network on its larger tier of “expanded basic” channels.

NFL Commissioner Roger Goodell and Dallas Cowboys owner Jerry Jones addressed the Texas House of Representatives’ Regulated Industries Committee in Austin yesterday, and although they said they were not seeking legislation or aribtration that would require cable companies to carry NFL Network on expanded basic, that’s more or less exactly what they wanted.

In its Texas markets, Comcast makes the NFL Network part of an add-on package of sports channels for $7.95 a month. Time Warner Cable has not come to terms with the NFL for carriage. DirecTV, Dish Network and AT&T all carry the network as part of an expanded basic-like line-up.

The NFL Network aired the first of eight scheduled games Thanksgiving night. They will continue through the end of the season. Despite NFL Network's marquee match-up between the Green Bay Packers and the Dallas Cowboys Nov. 29, league attempts to sway the Federal Communications Commission to press the cable industry generated little interest. Even several media outlets, including USA Today, never champions of the cable industry, thought the NFL was overreaching.

And it is. Government should not be arbitrating business decisions at all. In fact, the NFL should be careful about what it wishes for.

“As America’s team, the Dallas Cowboys have millions of fans outside the home market who are being kept in the dark by Big Cable,” said Jones.

“This is about fans and consumers having access to the programming they want,” Goodell asserted.

Oh, really?

If, as Goodell and Jones protest, cable companies are doing fans a disservice by making out-of-market games inaccessible, why allow Monday Night Football to move to ESPN? Why extend DirecTV’s exclusivity on the “NFL Sunday Ticket” package? Why not allow “Big Cable,” with its 60 percent market share, to offer the season game package, too. Why acquiesce to CBS and Fox’s demands that they rotate “doubleheader” Sundays, a deal that essentially guarantees each network, on alternating weekends, the higher-rated 4:15 p.m. kickoff slot free of a competing telecast? Better still, why not open all out-of-market games to a la carte pay-per-view?

The NFL clearly has the power to do so, but it will mean less revenue from the networks, who are willing to pay handsomely for exclusivity.

So what’s good for the goose is good for the gander. If the cable companies feel the NFL Network rates placement on a special tier, it’s their right to make the call, Packers-Cowboys showdown not withstanding. By the way, this Thursday, the NFL Network serves up Denver and Houston in a battle of 6-7 teams. That’s followed Saturday night by an utter meaningless game between Cincinnati (5-8) and San Francisco (3-10).

Must-see TV!

There have always been those who are magnanimous enough never to say, “I told you so.”

Unfortunately, I’m not one of them. iProvo, the municipally-owned wholesale fiber optic system, has lost $214,000 over the first four months of its current fiscal year, which began July 1, Provo’s Deseret Morning News reported last week. That figure does not include the four payments of $100,000 made by the city to cover the shortfall iProvo had anticipated going into the current fiscal year. So, all told, four months into fiscal 2008, the operation is $614,000 in the red.

In a policy study Reason released 12 months ago, I predicted that the losses would continue, growing larger year to year. If they continue at this current rate for the rest of the fiscal year, iProvo’s 2008 cost will be approach $2 million--$850,000 on top of the $1.2 million already budgeted from city coffers. iProvo spent $1 million in 2006. All this for phone, cable and/or Internet services that Provo residents can get from either Comcast, Qwest, DirecTV or Dish Network, not to mention a bevy of local ISPs, at comparable prices.

iProvo reports that it has 10,236 customers, a goal that its business plan had required it to reach two years ago. Even then, 10,000 has not proven to be the break-even point it was expected to be. Lower revenue per subscriber plus an abysmal churn rate–140 service activations per month offset by 120 cancellations—frustrate any attempt to gain market traction.

Some of the proposed quick fixes are rather cynical. iProvo is seeking to add additional retailers. The idea is that they would flip their captive customers to the iProvo network, immediately boosting the muni’s numbers (at the expense of commercial ISPs now carrying the backbone traffic). And while Mayor Lewis Billings is loath to raise taxes to support iProvo, he and interim project director Kevin Garlick have said they might raise the rates city departments pay for iProvo services. Any resulting tax increase then, while not funding iProvo directly, will fund the ability of the city to do business with iProvo.

Billings says he has “31 key strategies” for iProvo. He needs only one: An exit strategy. This route might be the best way to salvage the city treasury, taxpayer wallets and perhaps his own administration.

The Deseret News said it best in an editorial (which cited the Reason study) the next day:

“By now it should be obvious that private businesses, faced with such losses, would consider abandoning ship. Provo is treading where only private business ought to go, and doing so badly. Telecommunications is a market demanding the nimble feet of private investors. Trends and technologies are constantly shifting.”

FCC Chairman Kevin Martin’s plan to impose greater regulation on the cable industry may have hit a snag as members of Congress, along with Martin’s fellow commissioners, have questioned the chairman’s rationale and methodology for the n