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Competitive Conundrum
County PUD accused of price fixing

Though Washington state is a hotbed for muni and utility provided broadband, allegations have emerged that the Grant County PUD may have behaved unethically. -

Tacoma is the home of Click! network, a municipally run cable company that has brought customers in the region some drastically reduced prices; $30 a month for broadband service, $25 more for a standard 50 channel cable package on top. The municipally run company has in turn forced Comcast to compete and offer lower rates than in their other service areas.

In markets with more than one cable company (which is a very small percentage of the nation), rates on average are 17% lower. Several Washington markets exemplify that fact, and competition has helped to bring some of the lowest broadband prices in the industry to the region. Like Comcast, Qwest has been forced to adjust their own strategies accordingly.

Despite these new found competitive benefits, cable penetration in Washington state is slightly lower than the national average; 52% of broadband customers choosing cable as opposed to 57% nationwide. Click! network is responding to that need accordingly, expanding operations into nearby University Place, and recently increased their marketing push considerably. The end result has been a 78 percent brand recognition increase within 18 months, claims Dana Toulson, who runs Tacoma Power's telecommunications division.

Things are not entirely well in Washington state (recently dubbed "competition alley" by some media outlets) however. In Grant county, allegations have emerged that the County PUD violated antitrust laws and broke state laws preventing the PUD from providing telecom services over fiber lines. The PUD subsidized Benton Rural Electric Association's push to develop a subsidiary that would use excess fiber as a delivery conduit for broadband and cable services.

The result was that several regional competitors say they've been shoved by the wayside. According to Craig Jungers, owner of a competitor named Network Essentials, "All other providers had to use their own capital to buy equipment, pay employees, etc. The one that didn't have to could drive prices down so others couldn't make a profit." Jungers says he intends to sue the agency.

Apparently an internal source at the Grant County PUD began leaking documents showing the agency was busy trying to lure area utility companies into providing broadband service to the region.

One document indicates a PUD attorney was concerned there was little legal support for the PUD's business relationship with Benton. "I have not been able to come up with any lawful way by which the District could expend public funds for the purpose of enabling a third party to meet the basic qualification requirements under state and federal law to become a service provider," Foianini wrote in an e-mail from 2001. "I think we have exhausted the list of creative options and with this contract we are venturing into an area that is not legally supportable."

Critics and competitors charge that the PUD's relationship with Benton intentionally made it impossible for other regional providers to compete; all of this while standing on shaky legal ground. Apparently the County has hired an outside investigator to explore the allegations, and a lengthy report is available on-line for those interested.
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pnh102
Reptiles Are Cuddly And Pretty
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Mount Airy, MD

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pnh102

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Go Figure...

I wouldn't expect anything less from some government-operated, taxpayer/ratepayer subsidized racket. At least if a private company did this, you would always have the choice of canceling your accounts with them.

oliphant5
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oliphant5

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Re: Go Figure...

Racket...yeah, it's sure hell to offer more products at better prices. If anyone has the racket it's the competitors who got the no-compete clause into the law.
vic102482
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join:2002-04-30
Upper Marlboro, MD

vic102482

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Re: Go Figure...

said by oliphant5:
Racket...yeah, it's sure hell to offer more products at better prices. If anyone has the racket it's the competitors who got the no-compete clause into the law.

Exactly.
BosstonesOwn
join:2002-12-15
Wakefield, MA

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to oliphant5
said by oliphant5:
Racket...yeah, it's sure hell to offer more products at better prices. If anyone has the racket it's the competitors who got the no-compete clause into the law.

Why is it when the goverment makes a smart move for the consumers the business complain they can't compete. Why the hell do they do this.. Compete geez. Learn to cut costs in a lot more ways then just kicking out workers save money all around and pass the saving on to the consumers and they wouldn't have this problem.

There is a fine line that these companies could walk on and show good profits but because of greed they fail to. Now they complain about not being able to compete. Hell the damn muni's have cut costs effeciantly to get this to work and get a low price why won't the other companies.

GREED GREED GREED

pnh102
Reptiles Are Cuddly And Pretty
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Mount Airy, MD

pnh102

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Re: Go Figure...

Well its kinda hard to compete on price when you are going against a tax-exempt government-run bureaucracy that has the benefits of subsidies from other municipally run services. Ever wonder why UPS can't ship you a letter for 37 cents? Maybe its due to the fact that they have to pay fuel taxes on their entire fleet, property taxes on all their buildings, registration costs for all their vehicles and just about every other regulatory fee under the sun. The US Post Office pays none of this (and still loses money).

I still would like to know why people haven't commented on the nice 50% rate hike that was passed on the municipal electric customers in this area. Why don't any of the "pro-competitive" people here suggest that there be some competition in electrical generation for this market, because clearly it is needed.
mocycler
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mocycler to pnh102

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to pnh102

Where are the MBB shills?

If this were an article about the ILEC's cooking the books and hiding the facts, there'd be about a zillion posts already. Now that the shoe's on the other foot, the socialist broadband proponents suddenly find themselves speechless.

Isn't this the kind of ilk y'all promised would disappear as soon as the munis arrived on their white horse? It sure as hell is easy to undercut the competition when you're dipping in the till and taking kickbacks, isn't it?

Big government is a big lie. These problems could be avoided entirely if the government would stick to filling potholes and hiring firefighters.

peace,
mocycler

oliphant5
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oliphant5

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Re: Where are the MBB shills?

Cooking the books? This was about corporate lawyers claiming that the PUD violated a non-complete clause...meanwhile customers benefited with better service and lower prices.

Yep, stick to filling potholes, hiring firefighters and letting telco and cable giants rape their customers with substandard service and high prices...spoken like a true corporate shill.
[text was edited by author 2003-10-01 19:33:55]

pnh102
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pnh102

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Re: Where are the MBB shills?

said by oliphant5:
letting telco and cable giants rape their customers with substandard service and high prices...spoken like a true corporate shill.
But you are perfectly free to cancel service from companies that you don't feel are up to snuff. Don't like your phone company? There are plenty of CLECs and numerous wireless providers to choose from. Don't like your cable service? There's always satellite.

From the time you cancel onward, you are not paying a single red cent to that company that was previously screwing you. With municipally provided service, almost all of which is subsidized by other municipally run utilities and/or taxpayer money, even canceling won't punish a municipal service provider into providing better service. And your tax bill is still higher than it needs to be because you're still feeding the municipal service provider.

I hope there is a full, complete and thorough investigation into these alleged accounting shenanigans, and if the handlers are indeed guilty, then I hope they end up up the river the same way the Rigas family and numerous other formerly rich corrupt CEOs ended up.
mocycler
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join:2001-01-22

mocycler

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Re: Where are the MBB shills?

said by pnh102:
But you are perfectly free to cancel service from companies that you don't feel are up to snuff.
pnh102, are you sneaking into my room at night and stealing my thoughts?

Being a customer is optional. Being a taxpayer is not.

If you don't like the ILEC or cable company, fine. If it pleases you, cancel them and spend the rest of your life wallowing in a personal vendetta...but don't come to me, Joe Taxpayer, with hat in hand to fill the hole.

Call me a shill or whatever you want...just don't ask me to pick up your broadband tab.

mocycler
BosstonesOwn
join:2002-12-15
Wakefield, MA

BosstonesOwn

Member

Re: Where are the MBB shills?

you guys don't read how a muni works they don't charge all the tax payers. they issue bonds and the customers who want it buy them for an amount of time, then they use income from customers to pay the bills and push the costs down after the bonds are repayed they then go into a full profit solution and the prices are either lowered to compensate or are used to fund other goverment projects.

Kind of sickening how these pull from the tax pools ain't it ?? do a bit of reading in the article and it also explains the companies are crying foul because of low costs. and a unfinished clause. Please read the articles and do a little bit of reading about muni's before you go on chanting they are stealing from taxpayers. THIS IS NOT THE CASE READ MORE TALK LESS
mocycler
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mocycler

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Re: Where are the MBB shills?

said by BosstonesOwn:
you guys don't read how a muni works they don't charge all the tax payers.
And you didn't read any of my posts. I never said the taxpayers were "charged". The taxpayers provide security for the loans, and I'm against that no matter how small the risk. I won't even go into the (often) hundreds of thousands of dollars spent on studies and surveys before the public even has an opportunity to speak. That money comes directly from public funds and is never repaid.

I don't know what you do for a living...but if a competing business opened across the street and had the benefit of YOUR tax dollars as leverage to undercut you, you'd be first to piss and whine...and rightfully so.

I've stated this before, but I'll recycle my challenge: If this is such a great idea, then get together with some like-minded investors, pool your money, and go for it. I will stand at the front door of the bank and shake your hand as you bring in your first of many big hauls.

Put your own private money where your mouth is and leave me, the taxpayer, alone. I'm not at all interested in some socialist dream, so keep you meathooks offa my wallet. It's easy to flap your jaws when it's someone else's dough.

mocycler
BosstonesOwn
join:2002-12-15
Wakefield, MA

BosstonesOwn

Member

Re: Where are the MBB shills?

said by mocycler:
said by BosstonesOwn:
you guys don't read how a muni works they don't charge all the tax payers.
And you didn't read any of my posts. I never said the taxpayers were "charged". The taxpayers provide security for the loans, and I'm against that no matter how small the risk. I won't even go into the (often) hundreds of thousands of dollars spent on studies and surveys before the public even has an opportunity to speak. That money comes directly from public funds and is never repaid.

I don't know what you do for a living...but if a competing business opened across the street and had the benefit of YOUR tax dollars as leverage to undercut you, you'd be first to piss and whine...and rightfully so.

I've stated this before, but I'll recycle my challenge: If this is such a great idea, then get together with some like-minded investors, pool your money, and go for it. I will stand at the front door of the bank and shake your hand as you bring in your first of many big hauls.

Put your own private money where your mouth is and leave me, the taxpayer, alone. I'm not at all interested in some socialist dream, so keep you meathooks offa my wallet. It's easy to flap your jaws when it's someone else's dough.

mocycler

--
www.lp.org

[text was edited by author 2003-10-02 00:34:48]

dude they don't take your money.. they take peoples money who want to invest in this and get it rolling. I do work for a datacenter for a living we get our customers saying these guys have lower prices all the time. and we say if thats what you want is a lower price then by all means go for it. Don't come crying to us to move over all your info from thier broken down servers when your service goes down. And 95% agree that we offer a superb price and superb people to do the work.. thats how we compete and we do quite well.

As far as using your tax dollars against you.. the muni's don't do that. The only questionable tax dollars spent are the ones for studies. I will give you that part. but it's just like those $100 toilet seats. You grin and bear it. If i personally had enuff capital to do it I would gladly put my money up. i know how cheap and how much profit can be had on a muni style system.

Muni's are great things and only the taxpayers who want to use the system invest in the securities.. Not every taxpayer.
vic102482
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Upper Marlboro, MD

vic102482 to mocycler

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to mocycler
said by mocycler:
said by pnh102:
But you are perfectly free to cancel service from companies that you don't feel are up to snuff.
pnh102, are you sneaking into my room at night and stealing my thoughts?

Being a customer is optional. Being a taxpayer is not.


If I remember correctly many of these munis turn a profit from leasing to businesses during the daytime. So if that was the case being a taxpayer would be a non issue.

oliphant5
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to pnh102
said by pnh102:
said by oliphant5:
letting telco and cable giants rape their customers with substandard service and high prices...spoken like a true corporate shill.
But you are perfectly free to cancel service from companies that you don't feel are up to snuff. Don't like your phone company? There are plenty of CLECs and numerous wireless providers to choose from. Don't like your cable service? There's always satellite.

It's not about pure monopoly, it's about market manipulation. When you have non-compete, I don't care what size anyone is...that's market manipulation.

PaulHikeS2
join:2003-03-06
Fitchburg, MA

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to oliphant5
It's the little guys trying to compete that are complaining, not the giants. The muni subsidized one company to use existing infrastructure instead of leasing it to startups who were subsequently crushed due to the expense of purchasing their own equipment. At least that's how I read it.

pnh102
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Mount Airy, MD

pnh102

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Re: Where are the MBB shills?

said by PaulHikeS2:
It's the little guys trying to compete that are complaining, not the giants.
Government is hardly the little guy. Government is the biggest, most over-funded, inefficient, over-bloated monopoly in this country. They even put Microsoft to shame.
said by PaulHikeS2:
The muni subsidized one company to use existing infrastructure instead of leasing it to startups who were subsequently crushed due to the expense of purchasing their own equipment. At least that's how I read it.
This is the root of the problem. A privately-owned company would have looked at the financial ramifications of this decision before deciding to subsidize some unproven startup. If the private company screws up, then they have to eat the cost. If they pass that cost onto the consumers in the form of higher prices, then they risk losing customers. Those factors play into the decisions businesses have to make every single day.

A government agency won't care about the financial costs because they can simply make up the lost money in taxes that they collect by holding a gun to people's heads. They don't have to actually earn the money like the rest of us.

pupowski
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join:2002-03-22
Staten Island, NY

pupowski to mocycler

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to mocycler
"MBB shills" sounds embarrassingly stupid, like a Rush Limbaugh line. The greater concern in America is corporate socialism, not taxpayer owned utilities. I live in Washington State, and I'm familiar with Click, Comcast, and QWEST operations in the region, I'll take my PUD (Clark County)over them anyday. I wouldn't be surprised if the "law" allegedly being violated was lobbied for by AT&T , Comcast, or QWEST, since all have an aversion to competition.

pnh102
Reptiles Are Cuddly And Pretty
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Mount Airy, MD

pnh102

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Re: Where are the MBB shills?

HEY!!!!! Where ya been?!!?!?
mocycler
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to pupowski
I've been called an "shill" a bazillion times...I figure for once turnabout is fair play.

In truth, I'm no fan of the ILECs or cableco's. I believe in small government and in preaching that belief I give the impression that I'm a "shill", at least in the context of municipal broadband. If I'm misunderstood, that's my tuff luck...goes with the territory. I don't have the time nor desire to sit on the internet and justify in microscopic detail my thought process and why I think I'm right...that is, assuming my thoughts have mass appeal in the first place! My comparatively low post count bears this out.

That said, you can't successfully throw the "corporate socialism" line at me because I don't believe in that either. No matter which way you cut it, it's still dipping into my wallet.

Thanks,
mocycler

pnh102
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Mount Airy, MD

pnh102

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Re: Where are the MBB shills?

said by mocycler:
I've been called an "shill" a bazillion times...I figure for once turnabout is fair play.
I'm the ultimate shill I shill for ILECs all the time and I'm not even a customer... top that! LOL
pnh102

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to mocycler
said by mocycler:
If this were an article about the ILEC's cooking the books and hiding the facts, there'd be about a zillion posts already. Now that the shoe's on the other foot, the socialist broadband proponents suddenly find themselves speechless.
And the crickets are still chirping...
mocycler
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mocycler

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Re: Where are the MBB shills?

said by pnh102:
And the crickets are still chirping...
Yeah, where's ravital, zabes63, 2farfromco, and calviopier when you need them?

This article is two days old and there's only 25 replies...half of them from you and me!! The ILEC-bashing threads get that many the first hour.

Yawn. I don't expect to win them over...but I will use this thread against them later.

mocycler

oliphant5
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oliphant5

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Re: Where are the MBB shills?

Uh...perhaps it's 'cause ILECs suck and you would have an easier time finding someone to defend Hitler than an ILEC...meanwhile people see a muni violating an anti-competitive cause of the law down there on the sin list with the rolling stop and flogging the bishop.
[text was edited by author 2003-10-03 22:13:33]
mocycler
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mocycler

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Re: Where are the MBB shills?

Well, well, well. The lights go on and the roaches go a-runnin'.

I'm not looking for someone to defend the ILECs. I'm looking for someone to defend the MBB's. And in this case, the defenders are few.

As always, put up or shut up. If the "ILECs suck" then cancel them and get a cellphone. You as a consumer have choices. I as a taxpayer do not.

This is not complicated: Open your own wallet and leave mine alone.

mocycler

oliphant5
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oliphant5

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Re: Where are the MBB shills?

What's to defend. Better service. Better prices. As for the POS ILECs, I did. I cancelled Verizon and went with Vonage, double the service for 1/2 the price. It's really not that complicated, don't like the MBB...move. You want to pay more...go for it, but don't expect your neighbors to.

And I suppose we should close public schools since private schools have to compete against them. I suppose we should close the USPS because UPS and Fedex have to compete against them. I suppose we should close Amtrak and public transit because auto manufacturers and airlines have to compete against them. I suppose we could cancel PBS and NPR since the private networks have to compete against it.

What logic. Telecom is as equally important as mass transit or mail delivery and the populous shouldn't be left to the anti-competitive consumer raping cable operators and telcos. If private enterprise isn't interested in providing decent service for a good price tough crap if a city or town should elect to deliver their own services.

And it works, as evidenced by sudden increases in service levels and sudden decreases in costs...both benefit the consumer.
[text was edited by author 2003-10-03 22:41:46]

pnh102
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said by oliphant5:
people see a muni violating an anti-competitive cause of the law down there on the sin list with the rolling stop and flogging the bishop.
And why not? The law is the law. If a private company violates such laws or worse we would be seething if their heads didn't roll or if some people didn't end up in jail, rightfully so in my opinion. If this government racket is indeed guilty of breaking the law, then why shouldn't the people running it be entitled to the same penalties?

oliphant5
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oliphant5

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Re: Where are the MBB shills?

The courts will decide if they violated the law, just as they did with Microsoft.

Again, the racket is run by those who got the non-compete into the law in the first place. They racket is run by businesses who are able to run roughshod over customers and have the practice state sanctioned. You may enjoy the non-competitive atmosphere created by abusive business but consumers in general don't.

And now, these anti-competitive companies who thought they had it made could get away with abusing customers with horrid service and high prices, are pissed because Benton is the only one selling the service. Hypocrites.

Fine, let them sue, open those lines to ALL ISPs willing to pay the PUD and give more choice to the people...but the day of greedy businesses colluding and scheming to reduce choice for consumers is over.
bobbinbob
join:2002-02-21
USA

bobbinbob

Member

I have wondered

what would happen if the Muni drove prices down so far that they were losing money on the service. Would the taxpayer then have to subsidize those operations ?

As a taxpayer, I would not like this at all since I would have no choice in the matter.
TACSPEED
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join:2001-04-14
Tacoma, WA

TACSPEED

Premium Member

Re: I have wondered

quote:
what would happen if the Muni drove prices down so far that they were losing money on the service. Would the taxpayer then have to subsidize those operations ?
The services are suppose to be self supporting. I guess if they continued to lose money over a long period of time they would have two choices: shut down the system or find a way to subsidize the operation. Since Grant county PUD is using the network for electrical monitoring, any subsidy necessary would most likely come from shifting more of cost of the network to the electrical side of the equation.

As far as changing the Washington state law to allow Muni's to supply retail services, I'm all for it! I feel my ISP, Advanced Stream, and the other two ISP's using Click! are raping their customers at the higher levels of service.

BTW, Luke Esser is Qwest's main lackey in the Washington state.

winky
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Saint Louis, MO

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winky

Member

DUDE! You must be physic:

"The services are supposed to be self supporting. I guess if they continued to lose money over a long period of time they would have two choices: shut down the system or find a way to subsidize the operation. Since Grant county PUD is using the network for electrical monitoring, any subsidy necessary would most likely come from shifting more of cost of the network to the electrical side of the equation."
DUDE! You must be physic:

Dalton Georgia starts a "Cable Company" to compete with Charter
From:

»www.zwire.com/site/news. ··· 62&rfi=8

"Dalton Utilities residential customers will likely see their electric bills go up by 12 to 13 percent in November as officials move to stem losses they say could eventually put the utility in financial trouble.
The board which governs the utility voted unanimously Monday to increase some rates to keep from eroding the utility's $300 million in investments.
"Residential sewer rates will also go up substantially, and industrial customers will be paying higher electric and sewer rates as well", CEO Don Cope said.
"As much as we regret having to increase rates, we do not think it is prudent to continue to subsidize the rates until all of our capital has been depleted," he said.
Burkett, who served on the board several years ago and was appointed again by the City Council at the start of this year, said the utility has been losing money "for at least eight years, that I know of."
"Cope said rates will now be adjusted each fall as part of the utility's budget process. Rates for any one service will not go up by more than 20 percent in any year, he said."
"The only area where the utility won't use investment income to offset rates is in its new fiber optics services", Bethel said.
The utility is using its fiber optics network to offer telephone, cable TV and high-speed Internet access, competing with area providers Alltel and Charter Communications.
"When you are in an arena where you are competing head-to-head with other providers, it wouldn't be fair, and it would be against the law, to subsidize your rates," Bethel said."

I may have altered the general tone of the article, so you'll want to check the link.
Gee, Ya think it might start to cost 'em sumpin? Of course Charter lowered its rates, which was nice. The city slapped Charter with some new stipulations concerning response times for tech support and service..I wonder if the city will live up to it's own regulations. Posted comments from the citizens (only 3) are not favorable. It'll be nice if it works out for them, but since municipals lack the ability to operate in a vaccume they are often at the mercy of the whims and vagaries of public opinion.


tschmidt
MVM
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Milford, NH
·Consolidated Com..
·Republic Wireless
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tschmidt

MVM

See How this plays out

As a wholesale distribution network they should offer the same terms to each service provider: Data, Voice, TV for transit over the first-mile access network.

My understanding, from the article, is that Grant PUD, a wholesale service, struck a deal with another with another public utility. The other utility delivers retail service. Private companies are complaining this represents unfair competition.

Be interesting to see how this plays out as municipal high-speed access networks becomes more popular. My personal preference is for munis to run wholesale networks and let private industry deliver competitive services.