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Geneva, Illinois: Fighting AT$T

By saveaccess
Created 06/08/2006 - 4:13pm

from: Broadband Reports [1] Please see the source for links to supporting documents. The recent AT&T lawsuits trace back to a history (since 2003) of SBC/AT&T fighting the city over their attempts to offer municipal broadband. Apparently this huge corporation hold nasty grudges.

Interview: Fighting AT&T
Peter Collins, IS Manager for Geneva, Illinois
Posted 2006-06-08 16:23:09
Written by Karl Bode

Though one is using more fiber, both Verizon and AT&T have plans to upgrade their networks and offer video services. While they may not like them - Verizon is signing video franchise agreements with each community they want to serve.

AT&T meanwhile is arguing that existing franchise agreements do not apply to "Project Lightspeed", and any town or city that disagrees with this premise is being sued. Peter Collins, the Information Systems Manager of Geneva, Illinois, is on the receiving end of one of those lawsuits.

Peter has a unique view of the nation's broadband infrastructure, as his city tried twice to wire itself with fiber and offer residents fiber triple-play services, only to be beaten back by deep pocketed incumbent PR campaigns. We discuss his city's past battles, the current lawsuit, and Geneva's difficult technological dance with regional incumbents AT&T and Comcast.

BBR: Voters have twice decided to vote against your city's efforts to deploy fiber and IPTV services to your community. Can you briefly explain your role in that process, and explore what you believe happened?

PC: As most on BBR already know, citizens of Geneva, St. Charles, & Batavia had a municipal broadband question placed before them on the ballots in April 2003 and November 2004. In both referenda, approval by the voters would have brought a fiber to the home system run by a collective "TriCity" municipal entity to all that wanted to take service from the cities. That system would have offered cable television, high-speed internet & phone services initially, with later ideas being alarm services direct to our 9-1-1 center and remote meter reading for our electric and water utilities. It would have been a competitive option for our communities, not a requirement.

As all three cities each own their electric utilities (you pay the city not ComEd), we own our utility poles and have the trucks and linemen to support our outside plant. In addition, our electric linemen in all three cities are also trained in fiber splicing - we already run municipal fiber networks serving the needs of local government buildings, electric & water utilities, and our local school districts.

BBR: And the public was interested?

PC: Prior to the first referendum, the cities had done extensive in-house surveys of both the residential and business communities regarding interest in such a project and found a desire for such services. So the cities put out an RFP for a feasibility study to assess the costs and required market share to develop such an offering for commercial and residential uses. As part of that study, more surveys were conducted. Again, they showed a desire for services from the citizenry. Based on the results of that study and the continued support from the community, we went to ballot in April 2003.

BBR: Can you clarify the financials behind the plan?

PC:The entire plant would have been built across the three cities over the course of about 3 years - from engineering to rollout. The build costs would have been backed by General Obligation bonds - a potential property tax risk - at a total cost of $62 million. The issue failed at the polls by a 60/40 split.

BBR: But there was a second push -

PC: The citizen group that pushed the issue via education, yard signs, etc. - remember a city can not advocate "yes" or "no" once the item is on the ballots - brought the issue back in November 2004. While cities have the power to put an issue on the ballot via a city council vote, a citizen's group must collect signatures to bring a question to a vote. That is exactly what Fiber For Our Future did for the 2004 vote.

They, not the cities, took the initiative and did the legwork to bring the issue back to the polls. They, not the cities, got the original consultant to update the feasibility study to show that the dollar amount had actually dropped to about $55 million. Moreover, most importantly, Fiber For Our Future, rewrote the referenda questions to remove the possibility of any tax-backed financing for the build out. The cities were free to pay for the buildout any way they liked, but they could not put the taxpayers up as collateral.

Even with that, the issue lost at the polls by about a 55/45 margin.

BBR: But there was a lot of scare-mongering going on by incumbents, as we've reported. Can you go into that?

PC: How do I explain this? The citizenry, in both votes, thought there was a substantial tax risk or, in many cases, an actual tax increase. The main source of that logic was force-fed to our communities by SBC & Comcast (see examples here, and this video of an AT&T exec downplaying fiber -Ed.) The superior marketing power of these two companies squashed the under funded output of Fiber For Our Future.

One could certainly argue that the marketing prowess actually went in favor of the citizen's group that spent $4,325 and got 45% of the vote to the combined reported SBC/Comcast spending of $282,064 to achieve 10% more.

BBR: With it behind you, what do you think Batavia, St. Charles, and Geneva could have done differently?

PC: As I mentioned earlier, once the issue has been placed on a ballot, the cities themselves are prohibited from spending taxpayer funds to push a "yes" or "no" vote. All the cities can do is inform: "this is what the project is and here's what it aims to achieve." Elected officials and citizen's groups are obviously allowed to voice their views as they see fit. They are free to call press conferences to dispute misinformation. This is an area in which Lafayette, LA and their citizen's groups really played, and continue to play, the game right.

When the incumbents say something outlandish to confuse your citizenry, I think you've got to come right back and tell your community, "Actually, here's the real deal". You have to keep coming back again and again with the truth, not "truthiness", because you certainly can't outspend the incumbents. I think Lafayette might have known the "Chicago way" better than we did.

BBR: Did you see greater deployment or service improvement in your area by Comcast or AT&T after the vote?

PC: On the Comcast side of the fence, we went from having no cable modems to full coverage in all three cities. Of course, we also got the price increases as well.

As for AT&T (then SBC), we saw increased DSL rollout. The local POP is in Geneva so we were relatively covered, but Batavia & St. Charles were really hurting. That has largely changed now.

I live near downtown Batavia. It used to be that I was unable to get either a cable modem or DSL. Now I can get both.

BBR: Historically, Comcast and AT&T have a long backstory in your neck of the woods, could you elaborate on that?

PC: The current AT&T was made up of the merger of SBC and AT&T. In our area, SBC was the result of the absorption of Ameritech into the SBC family. Remember the Ameritech has already had a venture into the video arena with their Americast offering and failed.

Likewise, the former AT&T also gave up and sold of all of its local AT&T Broadband holdings to Comcast.

Now that the two companies - that have both failed in video delivery in the past - have merged to become the "new at&t", are we supposed to believe they'll get it right this time?

BBR: As far as "this time" goes, your city recently imposed a 180-day build-out moratorium on AT&T "Project Lightspeed". Can you explain why?

PC: The long and short if it is:

We believe AT&T is a competitive video service and is required play by the same rules to which other terrestrial based providers in our city (in Geneva's case - Comcast) have to adhere.

We believe that we have a responsibility under the Illinois Level Playing Field Statute [65 ILCS 5/11-42-11(e)] that we have a duty to defend our existing franchise holders. (More detail here -Ed.)

Since AT&T does not seem to have a desire to follow all the requirements of Geneva's video franchises, most notably a "full coverage" requirement, and will not currently agree to such a provision, AT&T will not be allowed to offer those services in Geneva.

BBR: You're now being sued by AT&T for your position. Can you explore any direct contact you've had with AT&T? Has the negotiation consisted of lawyer letters, or human-to-human contact?

PC: We have had direct discussions with AT&T. They have their outlook and we have ours. Obviously, we think our view is correct and in the best interest of our city.

In addition, Geneva is a member of the Metro West Council of Government, which is in turn a member of the Metropolitan Mayors Caucus and under that organization's umbrella, the larger group has had several discussions with AT&T.

In fact, the Mayor's Caucus issued a letter last week to all the 272 municipalities it serves concerning the status of negotiations. We hope that the larger group with be able to convey to AT&T how serious this issue is to all cities.

BBR: Other cities in California were similarly sued. Some, such as Lodi, decided to back off the legal battle. Others, like Walnut Creek, persisted, and have at least seen initial success in the courts. Will Geneva be willing to take this legal battle as far as they can?

BBR: We expected this path to be a potentially rocky one, and as such, did our legal homework upfront. Geneva sought advice from some of the top telecommunications lawyers in the country (see this pdf -Ed). We feel our case is sound, and more importantly, we believe it is vitally important that the cities defend the rights of all of their citizens equally. It would seem problematic, at best, for a city to enter into an agreement that allows for, and actively uses the power of the city to redline its own citizens.

As to the lengths Geneva will go, that will largely depend on the advice of counsel and ultimately the elected officials.

BBR: As other neighboring cities are sued by AT&T, do you have plans to work with them, legally?

PC: It appears this may be the best approach for all involved, as all the lawsuits are nearly identical. Four of us (North Aurora, Roselle, Wheaton & Geneva) are being represented as a group.

BBR: AT&T is clearly running local ads claiming you're impeding "progress & competition". Are you having success this time around educating locals on why you've decided to fight AT&T's notion that they need no franchise agreement?

PC: Most of the ads are largely transparent to our communities. In Geneva, we've been through the broadband referenda in the past, so their behavior here is really nothing new. AT&T continues to play the same games as they have in the past. We continue to publicly repeat our stance. And, in the end, we're simply upholding the law in the State of Illinois.

BBR: What happens if AT&T simply decides to move on and leave the area un-served? Would the city consider making a fresh run at building their own fiber network?

PC: I suppose you could look at it this way. If AT&T passes us by while we're upholding the law, we're really no worse off than we are now. In Geneva's case, we don't have direct cable competition as it stands currently. We certainly welcome AT&T trying to provide a competitive service to our citizens, but it all comes down to everyone being treated fairly - both the businesses that operate in our town, and most importantly, our residents.

As to a fresh run, that's a question for our elected officials. If they feel the time is right to move in that direction, it's always an option because of our existing electric utilities.

From a geek point of view, AT&T is still attempting to deploy equipment that is sub par to the offering that we, the cities, suggested in 2003 and again in 2004. Fiber to the Home is the Holy Grail and AT&T doesn't think we're worth it.

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