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Opelika, Alabama Decides To Give Charter Fiber Competition
62% of locals vote to get into the broadband business...
by Karl Bode Wednesday 11-Aug-2010 tags: prices · Fiber · competition · business · alternatives · Op/Ed · municipal · consumers
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Despite best efforts by Charter Communications (including telling locals earlier this week that a coax network is more reliable than fiber to the home), 62 percent of Opelika, Alabama residents have voted to build a fiber to the home network.The $33 million fiber network will be funded with revenue bonds, using a core fiber ring from the local power utility as its heart -- with some services and support layered on top by local competitor Knology. Opelika Mayor Gary Fuller called out Charter when announcing results:

"It’s a great day for Opelika. It’s a great day for our future. It’s a terrible day for Charter," Fuller said. "We all worked very hard on this," Fuller said. “We heard the cry of our citizens about competition for Charter and know the importance of this to economic development that this fiber and high speed Internet will provide as well as the value of improving our existing smart grid system." "We still don’t have any plans to control anybody’s coffee pot," joked Fuller

Of course if history is anything to go by, this is usually the part where the local incumbent, after being semi-responsible for the community effort due to neglected upgrades and poor service, engages in an expensive campaign to bog down the community fiber build via a series of endless lawsuits. Then when the project struggles, the incumbent usually uses said failure as "proof" that all community broadband efforts end in failure.

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Linklist
Premium
join:2002-03-03
Longport, NJ
kudos:5

Mayor not too bright

The Mayor, by "calling out" Charter just made an enemy. An enemy who, whether he likes it or not, still provides most of the cable service to his town. I hope he can build out his fiber network very quickly. Because Charter can make life miserable for the town in the meantime.
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Karl Bode
News Guy
join:2000-03-02
kudos:33

Re: Mayor not too bright

He probably assumes they were planning to do that anyway.

Steve B
Premium
join:2004-08-02
Seattle, WA

Re: Mayor not too bright

As if they weren't doing it already, lol.

cork1958
Cork
Premium
join:2000-02-26

Re: Mayor not too bright

said by Steve B:

As if they weren't doing it already, lol.
No doubt, otherwise why would the people have voted to go for it?
Obviously not happy with Charter already.
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Ga Dawg

join:2003-09-11
Marietta, GA
said by Linklist:

The Mayor, by "calling out" Charter just made an enemy. An enemy who, whether he likes it or not, still provides most of the cable service to his town. I hope he can build out his fiber network very quickly. Because Charter can make life miserable for the town in the meantime.
Charter doesn't operate in a bubble. They still have a public service commission to deal with.
hottboiinnc
ME

join:2003-10-15
Cleveland, OH

1 edit

Re: Mayor not too bright

They can drop rates like you wouldn't believe and run the Muni so far in debt that they can't sink or swim.

Triple play bundle $56 including taxes for a lifetime.

--digital tv with 2 boxes (1DVR), Plus Internet, Digital Phone unlimited local and long distance.

Id like to see the city compete with that.

Steve B
Premium
join:2004-08-02
Seattle, WA

Re: Mayor not too bright

said by hottboiinnc:

They can drop rates like you wouldn't believe and run the Muni so far in debt that they can't sink or swim.

Triple play bundle $56 including taxes for a lifetime.

--digital tv with 2 boxes (1DVR), Plus Internet, Digital Phone unlimited local and long distance.

Id like to see the city compete with that.
Got a point, however, that is what us consumers want. We desperately want viable competition....especially of the pricing variety.

battleop

join:2005-09-28
00000
"Id like to see the city compete with that."

You can when you don't have to answer to anyone and can just go back and get more money from the tax payers as needed.

BF69
Premium
join:2004-07-28
Camden, TN
said by hottboiinnc:

They can drop rates like you wouldn't believe and run the Muni so far in debt that they can't sink or swim.

Triple play bundle $56 including taxes for a lifetime.

--digital tv with 2 boxes (1DVR), Plus Internet, Digital Phone unlimited local and long distance.
Then why haven't they done that BEFORE?
hottboiinnc
ME

join:2003-10-15
Cleveland, OH

Re: Mayor not too bright

why do they?

Ask your self that same question on Why sprint needs to service your area and you'll get the same reponse.

Tel

join:2001-10-12
Reviews:
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said by hottboiinnc:

They can drop rates like you wouldn't believe and run the Muni so far in debt that they can't sink or swim.

Triple play bundle $56 including taxes for a lifetime.

--digital tv with 2 boxes (1DVR), Plus Internet, Digital Phone unlimited local and long distance.

Id like to see the city compete with that.
No they can't and anyone with a lick of business sense could see that. Just as they can't raise their rates on a whim, they also can't just lower them whenever they want.
hottboiinnc
ME

join:2003-10-15
Cleveland, OH

Re: Mayor not too bright

I don't know where you get your information from but YES they can lower their rates to anything they wish when ever they want. They don't have to ask the PSC or the PUC to raise rates like the telcos do. Cable may have to pay the state $$$ to operate in areas but they don't answer regarding pricing. Never have never will.

And yes a company of Charter's size or bigger could lower their rates that low and run ANY Muni into the ground faster than they can build.
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GLIMMER

join:2004-01-17
Fisher, IL

Re: Mayor not too bright

Yes they do. Most towns require aproval. A rate in
crease
hottboiinnc
ME

join:2003-10-15
Cleveland, OH

Re: Mayor not too bright

that is a rate INCREASE! not DE-CREASE. And most towns? LOL. Not many towns have a say so on what goes on as far as cable providers anymore.

And the towns can require what they want. It doesn't mean they have to give the towns what they want. That's the whole thing behind the State Franchise laws.
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marigolds
Gainfully employed, finally
Premium,MVM
join:2002-05-13
Saint Louis, MO
kudos:2

Re: Mayor not too bright

said by hottboiinnc:

That's the whole thing behind the State Franchise laws.
Alabama doesn't have a statewide franchise law last I knew.
Anyway, you are ignoring that Charter is in serious financial trouble and not in particularly good position to engage in a protracted 30,000+ RGU pricing war. At $56, that would be a potential $6M loss per quarter, when they are already losing $81M per quarter.
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hottboiinnc
ME

join:2003-10-15
Cleveland, OH

Re: Mayor not too bright

and that is why they're trimming their debt by the courts.

And they only have to offer that plan to the masses until the muni goes under and stops. then for everyone that didn't sign up price is regular rate. everyone who signed up- price stays the same.
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marigolds
Gainfully employed, finally
Premium,MVM
join:2002-05-13
Saint Louis, MO
kudos:2

Re: Mayor not too bright

There is a secondary risk here though. Remember how these bonds work. The infrastructure backs the bonds too. That means that if the utility goes under, the built infrastructure will be sold off. And that means Charter will still have another company (likely Knology) to compete with; a company with a dirt cheap ftth network.
Charter will try to fight until at least that point, but they might give up the market in the long run.
iansltx

join:2007-02-19
Golden, CO
kudos:2
You're thinking of Shaw, not Charter. I have never heard of Charter engaging in a price war. Too expensive. DSL companies, sure. Charter, no.
hottboiinnc
ME

join:2003-10-15
Cleveland, OH

Re: Mayor not too bright

just because its not heard of doesn't mean that it is not possible for a MSO to do it regardless of who they are.

marigolds
Gainfully employed, finally
Premium,MVM
join:2002-05-13
Saint Louis, MO
kudos:2
said by Ga Dawg:

said by Linklist:

The Mayor, by "calling out" Charter just made an enemy. An enemy who, whether he likes it or not, still provides most of the cable service to his town. I hope he can build out his fiber network very quickly. Because Charter can make life miserable for the town in the meantime.
Charter doesn't operate in a bubble. They still have a public service commission to deal with.
Cable companies are PSC exempt in Alabama:
»www.psc.state.al.us/News/1999%20···Info.htm
"However, the PSC does not regulate electric coops, most water companies, municipal utilities, cable television systems, cellular phones or the Tennessee Valley Authority."
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Sammer

join:2005-12-22
Canonsburg, PA
said by Linklist:

The Mayor, by "calling out" Charter just made an enemy.
Considering that a majority of voters in all five wards agree with the mayor it sounds like Charter is the one making enemies. Eventually the cable franchise will come up for renewal and Charter may find out the hard way that they can't fool all the people all the time.

davoice

join:2000-08-12
Saxapahaw, NC

Re: Mayor not too bright

And that's why most telephone and cable companies bought and paid for state level franchise agreements so they don't have to deal with cities anymore.

}Davoice

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
They made an enemy anyway by daring to defy Charter in the first place.

Charter will do everything they can to make it fail. And then they will hold it up as a poster boy saying "See Muni-Broadband is a really bad idea".

Actually, it's an excellent idea if done properly.
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wkm001

join:2009-12-14
They are still operating under a franchise agreement. If they don't live up to it the city can likely fine them. I take it the franchise agreement is not exclusive since the city will now be a competitor. Good for them, wish my city would get off their ass.
iansltx

join:2007-02-19
Golden, CO
kudos:2
Reviews:
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Yay Opelika!

THe whole public-private partnership with Knology makes me a tad happier, even. Leave running ISP etc. ops to the people who do it for a living, and run the underlying network like a utility, for the betterment of all.

Looking forward to seeing how this all turns out

moldypickle

join:2009-01-04
Haughton, LA

Re: Yay Opelika!

i too like this approach. hope to see it work

battleop

join:2005-09-28
00000

Re: Yay Opelika!

This is how Muni Projects should be done. Let the people vote and see if they are willing to foot the bill. Don't just make up the need and do it without the taxpayers approval.
hottboiinnc
ME

join:2003-10-15
Cleveland, OH

Re: Yay Opelika!

and when its run into the ground who gets to pay? All of those people that never wanted the service to start off with. Why should it be fair for them to pay to build a network that has a 50/50 chance rate of going under. Would you want to pay for something that went under that you never wanted to start off with?

If so i'm sure there are several Munis that would like some green to help foot their bills on the networks that have failed that they're still paying off. Provo is one that comes to mind.
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battleop

join:2005-09-28
00000

Re: Yay Opelika!

The difference is that a majority of the voters voted for it.
hottboiinnc
ME

join:2003-10-15
Cleveland, OH

Re: Yay Opelika!

the difference is many still voted "NO" and and will still get stuck with the bill regardless. That's the whole thing behind this. Why should some 60yo+ person have to pay for this build out if they don't want it? But yet, they'll still pay for it, one way or another, the same they do in many other cities.
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battleop

join:2005-09-28
00000

Re: Yay Opelika!

And many people voted "NO" to Obama, yet we are going to have to pay for health care for that 60 + crowd. This is how democracy works.
hottboiinnc
ME

join:2003-10-15
Cleveland, OH

Re: Yay Opelika!

the health care plan is what the country needs. but speaking of tax money. You don't want to help bring down the cost of your own healthcare but yet you'd be willing to pay for a war that has gone on for how many years now? 9? yep! that's it! 9 and no proof that Iraq ever did anything to us. Expect for when he bombed the White House when G. H. Bush was in office. But yep! we'll bomb the hell out of Iraq then spend boat loads of money to rebuild, only to go back in 30years to reblow it back up and build again.
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hottboiinnc
ME

join:2003-10-15
Cleveland, OH

Re: Yay Opelika!

again I DO NOT LIVE IN CLEVELAND. What part of that don't you seem to get? Just because Cleveland is the main PO here doesn't mean i live there. I'm sorry i live in an upscale town with plenty of $$$$ that Cleveland will never see. And yes i do not like Muni projects, their nothing but a money pit and thats all they ever will be. They don't even come close to breaking even.

It comes back to the whole thing with Ohio and taxes- especially with school districts. Why should someone have to pay when they're not going to use it nor ever plan on using it. My 75year old grandmother shouldn't hae to pay for something like this if her city deployed this, nor should you're grandparents or parents. It's not fair to them just because you want it. IF you want it YOU pay for it. And that's the way it has ALWAYS been.
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pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD
said by battleop:

The difference is that a majority of the voters voted for it.
It always seems that the voting majority that wants any freebie rarely coincides with the shrinking number of people who are taxed to pay for it.
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marigolds
Gainfully employed, finally
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join:2002-05-13
Saint Louis, MO
kudos:2
said by hottboiinnc:

and when its run into the ground who gets to pay? All of those people that never wanted the service to start off with.
Actually, the bond holders get to pay, with some compensation from the Federal government (i.e. all taxpayers) since I am sure this is partially backed with Build America bonds.
iansltx

join:2007-02-19
Golden, CO
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Re: Yay Opelika!

btw it appears as though, for a ten year, 6% bond Opelika's payout per month would be $366,367. For a fifteen year bond at 4.8% it's $257,536. The best way to finance that bond is via triple play packages that are maybe a little cheaper than Charter, but with much better performance.

Now, that may be a little hard to do depending on how Charter runs their promotions versus Opelika. Right now Charter offers a $70 triple play package...for the first twelve months, on a twelve month contract. The bundle appears to include basic cable (like, broadcast basic), 8/1 internet service (I think it's 1 Mbps up) and unlimited VoIP. It appears as though the price skyrockets to $110 per month after the twelve months are up, meaning that a $100 triple play might be just the thing...or maybe not.

So let's say there's a $75 triple play, because people will switch to Opelika fiber over Charter even if it means paying a couple bucks more than the promotional price. Let's say the bundle includes unlimited VoIP, basic cable and 10 Mbps symmetric internet service. That should win a few customers

Or take Charter's $95 triple play. For $25 more than the $70 one, you get digital TV but MUCH slower (1 Mbps) internet. Plus, in all likelihood, a big price shock at the end of your contract. $110 per month gets you Express (8/1) internet and a few HD channels. At that point, there's enough overall margin that providing competitive services won't be an issue.

On the internet side, six-month starting prices are cheap, but after that things get more expensive. 8/1 starts out at $30, then jumps to $55 after six months. 25/3 "Max" starts out at $55, then jumps to $80. In between, 16/2 ends up being $65. So if Opelika came in and offered 10/10, 20/20 and 30/30 for $50, $60 and $75, respecitvely, they'd be making enough money to keep the ship afloat and be outdoing Charter in the process.

What about the poor basic internet customers, constrained to their $20 per month existence? They should get DSL, to be honest. You don't get those kinds of prices in the US until your infrastructure has been paid off.

iLive4Fusion
Premium
join:2006-07-13

State-Wide Fiber

Now we need an Alabama state wide fiber plan

Though it won't happen any time soon it's fun to pretend!!

I'm stuck right now with pseudo fiber (UVERSE)
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See 11 replies to this post

dvd536
as Mr. Pink as they come
Premium
join:2001-04-27
Phoenix, AZ
kudos:4

People are tired

of crap service levels with no upload.
hottboiinnc
ME

join:2003-10-15
Cleveland, OH

Re: People are tired

tell those people to spend their own money and become a Co-Op and leave the people that don't want it out of it.

adisor19

join:2004-10-11
Reviews:
·Acanac

Re: People are tired

said by hottboiinnc:

tell those people to spend their own money and become a Co-Op and leave the people that don't want it out of it.
Oooooh, this whole society thing doesn't seem to be made for you. If North Korea is not to your liking, may i suggest a more remote place like Alaska or some lost farm in the prairies. This way you won't be forced by the majority to pay for all those useless services like : electricity, sewage, internet, phone etc.

Adi

opelikacit

@charter.com

politics make strange bedfellows

I live in Opelika and there is NO way that the city can afford this project. The mayor made Charter out to be the bad guy BUT guess what, the city is in bed with Charter. Charter is going to lay the fiber for the city. Charter never said one word and was suspiciously quite the whole time this was debated.The mayor had an agenda the whole time, he used tax dollars to print many signs, run radio ads and accused the no voters of being Charter employees. He was very nasty. It will be very interesting to see how all this plays out.

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