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The Courts Government Communications Networking News IT

Telco Appeals Minnesota City's Fiber-Optic Win 162

Posted by Soulskill
from the don't-you-have-anything-better-to-do dept.
tsa writes "In a predictable move, TDS Telecom has filed an appeal after its complaint against Monticello, Minnesota's new fiber network was tossed by a county judge in early October. As you may remember, the city decided to build its own fiber-optic network after the telco made it clear they wouldn't build it because it wouldn't be economically feasible for them. TDS Telecom then changed its mind and sued the city for unfair competition."
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Telco Appeals Minnesota City's Fiber-Optic Win

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  • just like kids (Score:5, Insightful)

    by Anonymous Coward on Saturday November 08, 2008 @11:32AM (#25687915)
    Mom: Who wants the blue cup?
    Kid1: I want the yellow cup.
    Kid2: I want the blue cup.
    Kid1: (screaming) No! I want the blue cup!
  • by girlintraining (1395911) on Saturday November 08, 2008 @11:38AM (#25687961)

    I live just outside Minneapolis, and I can't really blame them. Nobody up here thinks much of Monticello... Most minnesotans couldn't even find it on a map. That said, how is this "unfair competition"? They had their chance and they biffed it. They might have something to say if the city won't give them easement to lay their own fiber, at their own expense... But I'll lay odds that what they really want is access to the city's fiber network without paying for it. Good luck with that!

  • by Anonymous Coward on Saturday November 08, 2008 @11:38AM (#25687963)

    With its public roads and fire stations, the government also killed private toll-road builders and private firemen through unfair competition. Where are we headed to?

  • by Max Romantschuk (132276) <max@romantschuk.fi> on Saturday November 08, 2008 @11:38AM (#25687969) Homepage

    Really, what is the fscking problem? If the city wishes to build a network it should be allowed to, period.

    A real debate would be worth it if the city refuses to license bandwith on that network to operators...

  • by Golddess (1361003) on Saturday November 08, 2008 @11:47AM (#25688021)
    LITTLE TOWN: "Hey BIG CORP, you gonna build fiber in our little town?"
    BIG CORP: "Nope."
    LITTLE TOWN: "Ok. *to everyone* Hey everyone, lets build our own fiber network!"
    EVERYONE: "Ok!"
    BIG CORP: "Hey, you can't do that! We'll sue!"

    *BIG CORP sues LITTLE TOWN, faces JUDGE*

    JUDGE: "So let me get this straight, you're suing LITTLE TOWN for doing something that you never intended to do yourself?"
    BIG CORP: "YUP!"
    JUDGE: "...GTFO BIG CORP!"
    BIG CORP: "We appeal!"

    That sound like the jist of it?
  • by NormalVisual (565491) on Saturday November 08, 2008 @11:49AM (#25688041)
    I'd bet they simply don't want the prospect of any competition, since it will be substantially easier for any ISP to offer service to the city's residents. The city will be offering access to its network for any provider willing to pay for the interconnect, so there's a very low barrier of entry for any given ISP in that market.

    IMO, this is *exactly* how Internet service should be offered in the US - solid public infrastructure to the customer site, and let all the providers compete to transport the individual customer's traffic from the local net to the Internet proper.
  • by Concerned Onlooker (473481) on Saturday November 08, 2008 @11:51AM (#25688051) Homepage Journal

    What the telco really means is that it wants no competition.

  • by Albanach (527650) on Saturday November 08, 2008 @11:57AM (#25688087) Homepage

    Well except there's a bit more of an agenda.

    You see they're not suing to win - they're suing to delay.

    Maybe they'll be in a position to roll out something cheaper like wimax while still suing the county. Maybe newer technology will come along and allows them to deploy faster connections while the county is still being delayed by the lawsuit. Maybe the county will just give up due to the legal costs.

    All the company cares about it making the process as long and as expensive as possible. Even if they don't win here, they might put off some other upstart city from doing likewise.

  • by Bieeanda (961632) on Saturday November 08, 2008 @11:58AM (#25688097)
    Essentially. Laying fiber isn't worth it to them, since they've got a stranglehold on service and no reason to compete. The city doing it is probably a major threat to their bottom line, since they weren't anticipating it.
  • by jfengel (409917) on Saturday November 08, 2008 @12:16PM (#25688205) Homepage Journal

    The telco did an analysis and determined that the project could not be done profitably. Governments are in the unique position of not having to turn a profit. Their "customers" are taxpayers, and legally required to pay whatever the government tells them to pay. Even the ones who don't want the particular service the government is about to provide.

    The taxpayers can be astonishingly obtuse about that connection, clamoring for bread, circuses, and cheap fat pipes, and then griping when their taxes go up to pay for it. Or pulling money from other areas, like roads or education, without actually realizing why they have to make that tradeoff.

    I can't help the obtuseness of taxpayers, and if they're (collectively) for building a fiber network then the telecom shouldn't be in a position to stop them. It's a privilege of government to force everybody to do what a majority wants, because often there's a profit of scale that goes beyond the obvious returns. Better education with kids doing research over high-speed lines? More web startups? Simple better quality of life?

    Still, I think that the telco's suit is not as unfounded as the previous comments suggest. It's reasonable for them to at least make clear to the taxpayers that "government-funded" and "free" aren't the same, and that the confusion between the two can cause unfair competition.

  • by Narpak (961733) on Saturday November 08, 2008 @12:19PM (#25688227)

    What the telco really means is that it wants no competition.

    Isn't the entire idea behind a free market to that there should be competition? And if a city/county want a service that isn't available then creating that service for themselves seems like a good idea. Personally I think this type of behaviour from a company, doing things that is definitely not in the interest of the customer and the citizens; should be penalized.

  • by causality (777677) on Saturday November 08, 2008 @12:23PM (#25688257)
    I wish state governments would start revoking the corporate charter of companies that behave this way, as it is clearly manipulative and costs a great deal of money and wasted time while benefitting no one. As others have pointed out, the telco probably has no interest in actually building a fiber network, they just want to delay this process and make it as expensive as possible because they see this as a threat to their monopoly. They had their opportunity to build it if they wanted to -- the city consulted them first before it decided to build anything. That alone should absolve the city of any further obligation. The telco made their decision when they had every opportunity to make a different one; that's tough shit, let them accept the consequences of that decision.

    The goal should be to deliver a high-speed fiber optic network, with or without the telco in question. Petty squabbles like this are probably a big reason why the USA is so far behind many other countries in terms of bandwidth speed and availability. Corporations seriously need to be sent a message (before it's too late, if it is not already) that they are here to serve us, that their interests have the lowest priority when they are at odds with those of the community and that they will be gone the moment they stand in the way of advancement. Any damage that could possibly be done by revoking their corporate charter, seizing their assets and selling them at auction (or however it would be done), and replacing them with a more reasonable provider is nothing in the face of setting such a good example.
  • by lenski (96498) on Saturday November 08, 2008 @12:41PM (#25688385)

    Profit is not a bipolar concept. The telco probably concluded, possibly correctly, that building fiber infrastructure would not provide adequate ROI. That's perfectly within their rights.

    The community probably concluded, possibly correctly, that building fiber infrastructure would provide adequate ROI. That's perfectly within their rights.

    As soon as the telco decided not to build the network, their participation in the decision was OVER. Their decision not to bother terminated their part of the discussion.

    Bringing in the "clamoring for bead, circues, and cheap fat pipes" may be valid argument, but there's no guarantee that just because Government Does Something that it is guaranteed to be inefficient, or have inadequate ROI for the community.

    Bringing a suit after the fact is bogus, unless they can show evidence that the community committed fraud during the original discussions about costs and revenue sharing (for example). So I agree with the earlier comments about the suit being unfounded: Absent evidence of governmental shenanigans, the suit bogus.

  • by convolvatron (176505) on Saturday November 08, 2008 @12:44PM (#25688401)

    but i think there is a question of standing. you're not really allowed to file a suit just to teach someone a lesson. there isn't a contractual realtionship between the city and the company. why should the company be allowed to use the courts to undermine the city's plans?

    if you want to make an argument about public services and funding use the political arena

  • by schon (31600) on Saturday November 08, 2008 @12:48PM (#25688423)

    The telco did an analysis and determined that the project could not be done profitably.

    So, what you're saying is that the telco has now (by beginning their own fibre build) invited a lawsuit from their shareholders because they engaged in a project that they *knew* would not turn a profit?

    Please excuse me if I take your post with a rather large grain of salt.

  • by BoberFett (127537) on Saturday November 08, 2008 @12:49PM (#25688425)

    Even as a libertarian, I agree 100%. There are some things that government can do better than private companies. Anything which requires a physical connection to every location and where duplication of that physical medium is not cost effective. Roads, water, sewer, and now telecom.

    We need to move to a new model where the local government (local mind you, not state or federal) needs to own the physical lines and ISPs can purchase access to those lines.

  • by sumdumass (711423) on Saturday November 08, 2008 @01:10PM (#25688543) Journal

    There are some places where you simply can't have a free market and the same goals of government. This is why Utility companies end up with monopolies and lockout franchises.

    Imagine if you had 20 companies delivering water, how would all those pipes run through the city and how would you know which ones went to your house. Imagine the same for sewage disposal, how could they tract a leak down to one specific pipe. Now imagine all the over head wires if 20 different electric companies participated in the same city. Somewhere, the free market has to be put aside because of other facters that need to be controlled.

    Then there is the problem of service delivery. Lets say that you don't break even on the cost to deliver service to poor people on one side of the town. A free market would pretty much ignore them until there was a profit potential. Surely someone who can barely make the rent payment can't make a $500 a month utility payment. Then we have the population density issues too. There might eb rich enough people to afford regular service in one area but there are so few of them, you will never recover the cost of getting the service to them in the life spand of the delivery mechanism. So the government agrees to lock competition out if a company spends the money on areas that wouldn't otherwise be serviced.

    And unfortunately because of this, you can't alwasy say government and free markt in a sentence that makes factual sense. Especially when dealing with telecoms who were one of the first government protected monopolies.

  • by MarkvW (1037596) on Saturday November 08, 2008 @01:16PM (#25688567)

    Think back to the pre-1930s where power companies refused to provide service to rural communities and small towns because the profit margins were not great enough for them to bother. Only the Great Depression and Roosevelt got public power to those communities.

    The "free market" ignored those small communities. People forget real fast and history repeats itself.

  • Re:wait wait wait (Score:5, Insightful)

    by sjames (1099) on Saturday November 08, 2008 @01:30PM (#25688661) Homepage

    They were asked to deploy the fiber for the residents of the city. They said no. The city then decided to do the deploying itself for exactly the same people in exactly the same place.

    City to whiny spoiled brat of a company: "you snooze, you loose".

    This is part of a recurring pattern of corporations with an inflated sense of entitlement expecting for people to wait around in the dark ages until they ever so graciously choose to let them pay them for entrance into the 21st century. If the people decide that self help is in order, the companies suddenly whine to the courts that it cuts into their profits (that they had no plans to work for).

    If the telecom wanted to be the ones contracted to roll out the network, the suit would allege that the bidding was rigged or that they were not given a fair chance to bid. Instead, they're claiming that it is illegal for the city to contract to build such a network AT ALL with ANYONE.

    In other words, they didn't want to build the network, but DID want the area to remain without one just in case they changed their minds.

    Consider, if an independent group of citizens have the right to form a co-op, they also have the right to vote that their existent government be that co-op. They chose the latter by a decent margin in a referendum.

  • by Firehed (942385) on Saturday November 08, 2008 @02:02PM (#25688845) Homepage

    I'll second that. The problem is that we did the first part of that (laying down the infrastructure on the government's, and thusly the taxpayer's dime) without the second (allowing providers to lease the lines as customers sign up). Which is to say that we got close, but forgot that model doesn't work when there's a single provider which then buys out exclusive service providing rights over those government-laid lines.

    If Verizon wants to lay down fiber and then have exclusive control over said fiber, fine. But I just find it remarkable how we've managed to fail so completely at not granting monopolies over the infrastructure that we paid for.

    I envision something like a modernized equivalent of the old telephone switchboards - tons of patch panels in a (state/city/town-owned) room that go out to local homes, and each ISP in the area gets a switch in the room. When a customer signs up with an ISP, they get a patch cable going from their house to the ISP's switch. If they change ISPs, just move the patch cable to a different switch. The city leases these lines out to the ISPs at, say $5/mo, which then comes out of your monthly bill to the ISP (NOT tacked on top like the bullshit that the cell companies do - that should be illegal) to help pay back the costs that went into laying down the lines in the first place. After the costs have been repaid, then the monthly lease cost goes away (or way down to just match the cost of keeping this giant switching closet running) - the lines will NEVER be sold to an ISP, just leased at-cost.

    Of course I'm not a networking expert so tweak that accordingly, but you get the general idea. Seems very fair to the consumers/taxpayers (hate using either term talking about normal people, but they certainly apply here), reasonably fair to the ISPs (they might not be able to extort to their current levels, but they'll absolutely turn a profit), and it stops private companies from having absolute control over the infrastructure running to your house. I'm definitely no fan of government running things, but this seems like an appropriate use of them IF IMPLEMENTED CORRECTLY.

  • by Khyber (864651) <techkitsune@gmail.com> on Saturday November 08, 2008 @02:04PM (#25688865) Homepage Journal

    Umm, no.

    City to Telecom :"Build us a fiber network"
    TC to City: "No, fuck you."
    C to TC: "Fine, we're laying our own"
    TC to Judge: "Unfair competition!"
    Judge: *looks at monopoly status, decides case is meritless on the grounds of 'unfair competition'*

    The TC has NO BUSINESS telling a government entity what to do when it comes down to public works and utilities. If the city is making a fiber network as a public utility, the TC has no rights, period. The city may create and deploy it's own network as it sees fit without ANY permission needed from a fucking business.

    Contract or no contract, TDS is abusing monopoly power in an attempt to force the government to back down - that counts partially as terrorism (using a threat, legal or not, to attempt to coerce/influence the government can be construed as such.)

    In reality, the city needs to file RICO against TDS. This reeks of attempted extortion.

  • It Isn't (Score:4, Insightful)

    by maz2331 (1104901) on Saturday November 08, 2008 @02:24PM (#25688989)

    This is just an attempt to use the courts as a weapon to protect a monopoly position. The tip of that weapon is an injunction delaying the public network while the private one is built, resulting in a "win" for the company regardless of the actual outcome of the lawsuit.

    Really, it just amounts to a "hack" of the legal system. The process itself can be hijacked to delay competitors, or even bankrupt them outright through legal fees and other costs in the pre-trial parts of a case.

  • by unity100 (970058) on Saturday November 08, 2008 @02:41PM (#25689093) Homepage Journal
    getting a 'license' to lock down an ENTIRE state, country, region is NOT free market. free market happens when everyone is allowed to compete in the same area.

    curiously for some reason these 'licenses','patents','copyrights' and 'free market' somehow coexist in libertarian/republican mind, tho all of them contradict each other.
  • Sounds familiar (Score:2, Insightful)

    by asamad (658115) on Saturday November 08, 2008 @04:28PM (#25689751)

    Sounds like another american business group, with a flawed business model.

    1) Over promise / don't deliver
    2) Don't invest in the future

    3) When the users get sick of it sue them when they try and do
    4) Cry foul cause you monopoly goes away
    5) buy off the politicians

  • by thisissilly (676875) on Saturday November 08, 2008 @04:48PM (#25689895)
    They didn't "force" electrification, instead the Government provided loans to local electrification cooperatives -- in other words, the small communities that you are talking about. See http://en.wikipedia.org/wiki/Rural_Electrification_Administration [wikipedia.org]
    Read up on it, the situation is very analogous: large companies refusing to provide service, yet claiming the government was not allowed to compete with them or regulate them.
  • Re:wait wait wait (Score:5, Insightful)

    by Y.A.A.P. (1252040) on Saturday November 08, 2008 @04:49PM (#25689901)

    It gets down to philosophical differences about economic value and the role of government. According to one point of view, the government should above all do no harm to any business. If a business wants to sell government weather data, the government ought to make it hard for individuals to get the data directly. By the same token, if a private company wants to provide network services in an area, the government has no business providing better or cheaper services.

    That is one point of view regarding government, but there are others.

    In this case I would say that the more relevant point of view is this: A government's purpose is to use the resources available to it to provide as best as it can for its citizens.

    That is exactly what this city government was doing. The first attempt to do so included its corporate citizens, an attempt to utilize and provide for a corporate citizen while providing for the normal citizens as well. The corporate citizen decided against benefiting from that help.

    The government moved on with a plan to benefit all the other citizens, and now the corporate citizen is trying to stop the government for providing for any of its citizens.

    And that is where the corporate citizen is completely in the wrong. Not only did it opt out of getting greater benefits before, but it could still lease bandwidth in the new system to remain competitive. Their profits won't be as high as if there were no competition on the fiber network, but they can still make a profit. Instead, they want to interfere with the proper role of government so they can maintain their profits (or expand them) at the cost of the other citizens.

    From this point of view, the corporate citizen is clearly doing wrong to both the government and the citizens that that government is responsible for. In that point of view, the corporate citizen should be removed from where it can do further harm to that government and its other citizens (much like how we send people to prison when they assault other people).

    Hopefully, the courts will also see things from this point of view and act appropriately.

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