Troy Walcott, a 39-year-old cable technician, felt vindicated last month when New York moved to expel his employer, Charter Communications, for allegedly failing to keep its promises to the state. “I shouted to myself,” Walcott said about hearing the news. “We’ve been speaking so long about the company’s wrongdoing, and people have agreed with [us], but nothing has been done.”
Walcott and more than 1,000 other members of Local 3 International Brotherhood of Electrical Workers (IBEW) have been on strike for over a year against Charter, which provides cable TV, Internet, and telephone service under the name Spectrum. The workers staged a walkout after Charter moved to replace its union health insurance and pension plans with the firm’s standard benefits.
Not only could the state action soften Charter’s resistance to the union, it has also further opened the door for Walcott and other strikers to launch a cooperative Internet provider or for the city to create a municipally owned network of its own. Advocates say either model could improve broadband service across the city, offering reduced cost, expanded access, good jobs, and a chance to ensure net neutrality in New York.
“While any telecom company that’s interested in working with us would need to submit detailed plans, I am deeply interested to see what a telecom worker co-op would look like,” New York City Mayor Bill de Blasio told The Nation in a statement.
Walcott said that in some ways switching to a co-op model would be straightforward: “We can easily take [Charter’s New York City business] over and then basically just change the name on the door and continue to make the same profits, [but] let the people of the city share it.” Failing that, he said his fellow union members could launch a broadband provider that lures disaffected customers away from the telecom giant.
Christopher Mitchell, who leads a community-broadband initiative at the Institute for Local Self Reliance, calls the situation with Charter a “once-in-a-lifetime opportunity” for New York City. “We don’t want these deadbeat cable companies to be failing constantly,” he said.
Of course Charter won’t leave New York easily. Barring a settlement, Charter will fight in court to stay put, and even if the company loses, it could cost billions to purchase Charter’s New York City infrastructure. Across the state, the company reportedly has more than 2.6 million subscribers, and serves an estimated 1.5 million households in New York City. Nonetheless, Charter’s alleged misconduct and uncertain future have provided fertile ground for a cooperative or city-owned provider to take root—even if it can’t acquire Charter’s local network.
Keep in mind, Mitchell noted, that “dead skunks on the highway” are more popular than cable companies. Cable-TV and Internet-service providers score last in customer satisfaction among the 46 industries measured by the American Customer Satisfaction Index. More than half of Americans are reportedly offered only one choice for high-speed broadband.
Richard Berkley, executive director of the Public Utility Law Project of New York, said that’s because telecoms often enjoy monopoly power and limited local oversight—the result of deregulation that was supposed to generate competition, but has largely failed to do so.
As the state attorney general sues Charter for allegedly defrauding customers, the New York’s public-service commission recently revoked its approval of the firm’s 2016 merger with Time Warner Cable for allegedly failing to keep certain promises, including meeting deadlines for extending its high-speed network to 145,000 more homes and businesses. On July 27, the commission ordered Charter to file a plan within 60 days “to ensure an orderly transition to a successor provider(s).”
De Blasio and other New York City politicians have slammed Charter for refusing to compromise with Local 3 IBEW and for breaching its franchise agreement with the city. Nearly half of City Council members have called for Charter to leave. The municipality is also suing Verizon for allegedly failing to make high-speed, fiber-optic service (Verizon Fios) available to all New Yorkers by 2014.
Against this backdrop, and particularly in light of the order for Charter to pack its bags, the concept of community-owned broadband, both in New York City and other parts of the state, is finding some purchase among officials. Governor Andrew Cuomo and de Blasio are both open to the concept, representatives from their administrations confirmed.
“This disruption in the contract would be a great opportunity to explore that idea,” added New York City Council member Helen Rosenthal, who represents the Upper West Side of Manhattan.
By Mitchell’s last count, 55 citywide municipal-fiber networks and 61 cooperative networks operate across the country.
Walcott’s preferred option is the latter. For over 80 years, the co-op model has proven an effective way to bring electricity to mostly rural communities. More recently, some have banded together to apply the model to cable and Internet service. One success story is FS Fiber Cooperative, which is bringing fiber-optic service to 10 cities and 17 townships across parts of Minnesota. But the model remains largely untested in urban areas.
Walcott worked with about 50 strikers for three months on a co-op proposal that the group has recently started circulating. Under Walcott’s plan, the telecom co-op could be owned by both workers and customers. Members could elect a board that would appoint managers, including a CEO, and vote on major business decisions, such as to expand the network to new areas.
Without pressure from Wall Street, the co-op could prioritize value over profits, offering faster speeds, reduced cost, and better customer service from workers earning solid wages and benefits. “We’re definitely going to look to build out to all the areas that are underserved,” Walcott said.
The co-op would also commit to net neutrality, promising not to block certain websites or slow their loading speeds.
New York City Council Member Rafael Espinal, who represents parts of Brooklyn, said he would “absolutely” support a cooperative or municipal network, “especially in light of the FCC’s [Federal Communications Commission] 2017 decision to repeal net-neutrality rules.”
Many Local 3 strikers would be eager to jump on board, according to Walcott. “With someone new [such as a co-op or publicly owned broadband provider] at least we have a chance to rebuild what we lost, hopefully something even better.”
To raise money for the venture, Walcott envisions offering New Yorkers the option to buy equity stakes for anywhere from $10,000 to $1 million, though each member would only have one vote on business matters. He wants to raise billions of dollars this way, arguing that thousands upon thousands of New Yorkers, particularly union members, would give the investment a hard look.
In his ideal scenario, the co-op would build out a fiber-optic network to replace Charter’s slower copper network—a project that will need to be undertaken at some point, whether by Charter or another entity. The co-op could quickly snatch up Charter’s customers when the firm departs, he said.
Mitchell, on the other hand, suspects the co-op would be most viable if it could take over Charter’s existing network, and upgrade the infrastructure gradually over time. He also questioned whether restricting membership to individuals who can pony up at least $10,000 could reduce the co-op’s accountability to the wider community, and suspects that debt—rather than equity financing alone—would need to make up a large portion of the co-op’s startup capital.
Walcott said he is open to all ideas: “We have to…see if there are any holes that we need to fix before putting the plan in front of investors.”
Another way to provide community-owned broadband service would be to create a city-owned provider. Chattanooga has proven this can work in a city: It reportedly offers the fastest and most affordable Internet service in the United States.
Still, getting a community-owned provider off the ground in New York City would be an enormous challenge, at least if the goal was to completely fill Charter’s shoes in a short time. Doug Dawson, a telecommunications consultant, estimates buying Charter’s New York City network could cost $5 billion or more, while Walcott reckons that building a faster, fiber-optic network of comparable scale could cost $3 billion. And unlike in Chattanooga, a public network in New York City could not lean on a city-owned electric utility and federal grants for financing and deployment.
Much of the funding would likely need to come from bonds guaranteed or directly issued by the city. In contrast to many community-owned networks, one operating in New York City would also have to be prepared to face competition—particularly if Charter is allowed to remain in place.
Key to the success of RS Fiber, the Minnesota broadband cooperative, was a grassroots marketing campaign that included 100 local meetings, 14,000 mailings, newspaper advertisements, and door-to-door canvassing—all to build support for a network intended to serve only 6,000 households, according to a report co-authored by Mitchell.
Burlington, Vermont’s experiment with municipal broadband failed, in large part, because the city didn’t market the service well enough, even though it provided the “most reliable high-speed” access in the area, Mitchell said.
Despite these obstacles, New York City may have the will and resources to muster a public option. It has a massive budget, strong borrowing power, and a progressive mayor and city council. Moreover, a third of city households still lack a broadband subscription, even though the city has committed to bringing affordable high-speed service to all of them by 2025.
To help meet this goal, the city has set aside $70 million and indicated a willingness to make publicly owned assets, such as building rooftops and light poles, available for use, and “may consider constructing or augmenting its real assets or capacity,” according to a request from the city for proposals on how to improve broadband access. These resources could help a cooperative or city-owned network hit the ground running.
Josh Breitbart, who is helping lead the de Blasio’s Internet initiative, said the city is “still in the process of reviewing potential business models” to ensure universal broadband.
“The one thing we know is that the status quo is not fair,” he said. “Too many New Yorkers are left out or have to pay more than they can afford.”
Charter’s potential expulsion from the state could also pave the way for municipalities other than New York City or coops in other parts of the state to purchase Charter infrastructure, according to Jeffrey Nordhaus, who has overseen Cuomo’s $500 million broadband-expansion program. The state has already distributed millions in subsidies to Otsego Electric Cooperative, which is bringing broadband to a handful communities in central New York.
But Charter will likely either reach a settlement to remain in New York or significantly delay its expulsion through legal challenges, according to Berkley. In the meantime, other telecom giants, such as Comcast or Altice, may look to snatch up Charter’s New York assets. “I think you would see a great deal of activity by the private sector to try and avoid or deter a model like this [public broadband] from popping up in America’s most important city,” Berkley said.
Regardless of what happens in the fight between Charter and the state, New York City could independently throw out the telecom by declining to renew the firm’s local franchise, which expires in 2020. Under the terms of Charter’s franchise agreement, the city would then have the option to acquire Charter’s local infrastructure or arrange for its purchase by a third party of the city’s choosing, according to Kate Blumm, a spokeswoman for New York City’s Department of Information Technology and Telecommunications. Should New York City take this path, it would likely have to convince a judge that Charter’s actions had risen to the level of misconduct required under federal law for a non-renewal—a high bar, Berkley said.
But even if a community-owned provider can’t acquire Charter’s New York City operation, one could start small—such as by building a new network that caters to underserved residents—and then expand to compete more with other providers. Other regions in New York could launch similar experiments.
Progressive candidates could lend the idea additional weight. Ross Barkan, a member of the Democratic Socialists of America who is running for New York State Senate, recently tweeted in favor of a public Internet-service option.
“Internet should be provided as a public utility,” he told The Nation. “[T]he current arrangements are exploitive and predatory.”