SUNDAY EDITION | Pipe dream? A closer look at Louisville's push - WDRB 41 Louisville News

SUNDAY EDITION | Pipe dream? A closer look at Louisville's push for fiber Internet

Updated: Nov 24, 2013 06:00 AM

LOUISVILLE, Ky. (WDRB) -- Earlier this month, Louisville effectively declared itself "open for business" to any company willing to spend millions of dollars installing super-fast fiber Internet connections throughout the city.

By formally asking for gigabit-speed connections to homes and businesses, Louisville is not so much blazing a new path, but getting in line.

More than a thousand cities have expressed interest in having gigabit-speed fiber, the type of wire Google is installing in only three places: Kansas City, Kan.; Provo, Utah and Austin, Texas.

Google is not the only company capable of bring these connections to homes, but incumbent providers like Time Warner Cable have shown little interest in making the upgrade, so cities like Louisville are exploring their options.

"Neither cable nor AT&T are rushing to put fiber in the home," said Susan Crawford, a law professor at Yeshiva University and author of Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age. "They have no reason…to make the upgrade."

Crawford argues that so long as cable companies don't face more competition for residential Internet service, they're content to reap profits from coaxial cable lines installed long ago rather than spend millions to bring faster fiber lines into homes.

For the cable industry in general, big spending on fiber upgrades would likely mean less money for stock buybacks and dividends, the Wall Street Journal noted in January.

In Kansas City, Google's gigabit fiber service costs $70 a month – essentially the same price Time Warner Cable charges in Louisville ($65 a month for 12 months, $75 thereafter) for a connection that's 20 times slower in download speeds, and 200 times slower in upload speeds.

It's against this backdrop that Louisville has joined a growing number of communities seeking faster and less expensive (on per-speed basis) Internet connectivity --- from anyone willing to provide it.

On Nov. 14, Louisville Mayor Greg Fischer's administration issued a Request for Information seeking a vendor to install a network to homes and businesses that would provide gigabit speeds.

For its part, Time Warner Cable said earlier this month that it was "interested in learning the details" of Fischer's proposal, and Randy Hollis of the Kentucky Cable Telecommunication Association said the company is seriously considering responding.

The network Fischer's administration wants would be more than 100 times faster than the median broadband download speed in Jefferson County, 9.2 megabits per second, according to the National Broadband Map.

Louisville is offering access to its rights of way such as alleys and light poles, but the city is not proposing to spend taxpayer dollars on the network.

The RFI is a clear signal to providers that Louisville will do all it can – short of committing city money -- to facilitate the installation of fiber, said Blair Levin, executive director of Gig.U, a group of research universities (including the universities of Louisville and Kentucky) pushing for gigabit networks.

"The mayor is being very strategic and very smart," said Levin, a former chief of staff at the Federal Communications Commission. "In a low-cost way, Louisville is putting itself at the front of the line."

Cost, challenges

But what would such a network cost? And who would take on the financial risk to build it?

Norman Schippert, CEO of Louisville Internet service provider BluegrassNet, estimates it would take more than $500 million to bring a fiber wire to every home in Jefferson County, based on a conservative industry assumption of $2,500 in costs per home.

Any company willing to spend that amount of money would then have to hope enough subscribers would sign up to pay back the cost over 20 or 30 years, while fending off competition from Time Warner Cable and AT&T, he said.

"The challenge is just the economics of it, and there is no guarantee they are going to sign the necessary number of people up," Schippert said, adding that he applauds the mayor's proposal.

Schippert particularly likes the provision that smaller ISPs like his would be able to access the new network at wholesale costs. It would lead to a lot more competition in the market, he said.

Another issue that could complicate things: Unlike in the communities where Google is building fiber, Louisville Metro government does not own the power company, Louisville Gas & Electric.

City-owned electric companies have proven helpful in streamlining access to utility poles for stringing wires, said Christopher Mitchell, telecommunications director at the Institute for Local Self-Reliance, an organization that help localities tackle issues like broadband access.

In Jefferson County, nearly all of the poles are owned either by LG&E or AT&T, and third-party service providers have the right to access them for a state-regulated fee, according to Kentucky Public Service Commission spokesman Andrew Melnykovych.

But any new fiber provider entering the market may face problems such as "the sheer amount of stuff being hung on those poles" and their ability to withstand severe weather, he said.

"That is certainly an issue that would have to be looked at and addressed," Melnykovych said. "Does the existing infrastructure have the capacity to absorb a new network from a third-party provider?"

To be sure, Fischer's proposal does not call for uniform deployment of gigabit speeds across the county -- only in "targeted commercial corridors" and residential areas with "demonstrated demand." But it sets a minimum expectation of 100 mbps speeds to "underserved and disadvantaged" residential areas, which would still be ten times faster the typical Louisville connection.

Ted Smith, director of the Louisville Metro Department of Economic Growth & Innovation, said the hope is for the network to reach as many homes as possible. But it will likely have to start in areas with high concentrations of customers.

"We've asked for a broad solution that works for our entire community in the event that somebody could do it, but recognize that we may be hearing other kinds of responses," he said.

At louisvillefiber.com, about 1,000 people have entered their addresses to indicate their desire for service in the event a provider comes to town, said Chris Cprek, one of the people behind the website.

Benefits of fiber

Fischer and Smith, who is spearheading the project, view a gigabit network as crucial to Louisville's economic success in coming years.

The RFI says a widely available high-speed broadband network has become "critical urban infrastructure, similar to electricity, water, and roadways."

"In entrepreneurial communities, it's incredibly important," said Cprek, co-founder of Louisville's LVL1 Hackerspace.

Cprek said faster connections would help software developers who work from Louisville for companies based elsewhere; workers for companies like Humana who might want to have a video conference call from home and researchers swapping bandwidth-gobbling things like genomics data.

One particular benefit of fiber is a "symmetrical" connection, allowing users to upload data to the Internet just as fast as they can download it.

Coaxial cable is still mostly a one-way technology, with uploads only a fifth or a tenth as fast as downloads.

Gigabit connections could lead to benefits that can't be predicted now, Cprek said, noting that it was difficult to imagine streaming video services like Netflix and Hulu in the days when households connected to the Internet via 56k dial-up modems.

With a gigabit connection, a household can stream five HD movies at the same time with no buffering and still have some bandwidth leftover for web surfing and email, according to Google.

Price versus value

But how many households would pay $70 or $80 a month for that? Time Warner Cable offers connections, albeit much slower, for as low as $15 a month.

"The real story here is less about speed of transmission and more about usage and value," Time Warner Cable spokesman Michael Pedelty said in an email. "Our broadband Internet service comes in six different speed tiers that fit the needs and budget of nearly any Kentuckiana household."

At the same time, the cable industry is working on an enhancement to cable technology called DOCSIS 3.1 which "should allow speed up to or faster than 1 gigabit" and can be deployed quickly without rewiring homes with fiber, he said. That technology should "come to the market in the next few years."

"The cable industry is moving forward and not sitting still," said Hollis, executive director of the Kentucky Cable Telecommunication Association.

Mitchell, of the Institute of Local Self-Reliance, said consumers are showing demand for gigabit connections in places that have them. In Chattanooga, Tenn., Comcast customers are migrating to the fiber service offered by the city-owned electric utility, he said.

In Austin, where Google has announced plans to bring fiber connections, AT&T has followed with its own plan for gigabit fiber hook-ups.

Opposition from industry

The KCTA, which represents the state's private cable operators in Frankfort, thinks it's a "positive sign" that Fischer is not proposing to spend taxpayer dollars to fund a competitor to Time Warner Cable in Louisville, Hollis said.

"That is one thing we would be opposed to," he said.

Public efforts to expand broadband access have run into opposition from the industry in other places.

On Oct. 31, the Washington Post reported that Comcast was "donating heavily" to the ultimately successful campaign to unseat Seattle Mayor Mike McGinn, who planned to bring gigabit speeds to certain areas of the cities by letting a third-party provider have access to the city's unused fiber.

Meanwhile, Comcast and Tennessee's cable association unsuccessfully sued to block the Chattanooga-owned electric utility from bringing fiber access to homes.

Louisville Gas & Electric operates in a "different regulatory environment" than the power company in Chattanooga and has no plans to offer fiber Internet access, spokeswoman Liz Pratt said.

"We've looked at similar types of businesses in the past, but today our focus is on our core business," she said.

Mitchell applauded Louisville for taking a first step toward upgrading its connectivity.

"It's good to see mayors recognizing that they need to do something… Louisville is trying to get a sense of what it can do," he said.

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