1. The Tri-Cites Broadband Referendum Batavia, IL Geneva, IL St. Charles, IL

2. Tri-Cities Broadband Referendum  Tri-Cities believed they were underserved over the years by incumbent providers of telecommunications and cable  Illinois Bell/Ameritech/SBC  Jones/AT&T Broadband/Comcast  Issued Telecom Feasibility Study RFP 1/25/02  Said Broadband will be successful in the Tri-Cities or in individual cities  Heartland Institute Study  Broadband Will Not Work (KCC 10/31/02)  Citizens for Responsible Broadband formed 11/26/02  Fiber for our Future formed 1/06/03  Referendum placed on ballot for 4/1/03  Election law restricts municipalities from campaigning  Municipal leaders can inform voters of choices but not solicit support

3. What did the opponents say?  Municipal Government should not be competing with private enterprise.  The municipalities would be administering the franchise agreements of their competitors.  The highly complex task of predicting future buying decisions is a specialized area that the Tri-Cities can’t do.  Tri-Cities Broadband would become available in two years after Comcast and SBC retrofit their networks.  Real estate taxpayers would have to foot the bill if a profit is not realized.  There is a high penetration of other broadband companies already offering services in the Tri-Cities.  Television programming controversies may erupt among local users.

4. What did the opponents say?  “Since 2000, $40 Million dollars has been put into the infrastructure of the Tri-Cities. Of that, $4.5 million is directly in DSL. Competition is something we believe in and thrive on. We employ 20,000 people in Illinois and 300 in the Tri-Cities”. Kay Hacher, Director, External Affairs, SBC, KCC 1/27/02  “The Tri-Cites lack a proper business plan to show the project will survive financially. A sixty cent increase per $100 of assessed value would result in a $200,000 house being billed an additional $379 a year. Depending upon the terms of the default, liability to the citizens of Batavia….particularly our senior citizens…would be catastrophic”. Larry Smith, Batavia citizen and former Ameritech employee, The Sun 2/5/03

5. What did the opponents say?  “Had the market demanded a fiber to the home technology, I’m sure that’s what we’d be building right now”. Debra Piscola, Comcast Manager of Corporate Affairs, KCC 3/19/03  “We will respond to the market in whatever way we have to. The cities are asking residents to take a big risk. These are tough economic times. Taxpayers have to ask themselves what additional encumbrances do they want to add. It’s a bad time to embark on a project with a price tag of this size”. Carrie Hightman, President SBC Illinois, KCC 3/19/03  “How much better could that money be spent, like on an educational referendum?” Patricia Andrews-Keenan Comcast VP of Communications, KCC 3/19/03

6. The Opponents Mobilize  Informational flyers appear in doors in the Tri-Cities.  House to house campaigning by Comcast  Numerous Letters to the Editor  Letter to City of St. Charles  Letters to SBC employees from SBC  Full page newspaper ads  Telephone Survey

7. The Opponents Mobilize “The Failed Cites”  Eugene, Oregon  Paragould, Arkansas  Lebanon, Ohio  Tacoma, Washington  Braintree, Massachusetts  Coldwater, Michigan

8. The Opponents Mobilize  In mid-February 2003 a Broadband Survey was conducted by third parties paid by SBC and Comcast with calls made to residents of the Tri-Cities.  Opening lines from the phone solicitors included:  “We are working with your City Council”  “The Tri-Cities paid for this survey”.  “That is a lie.” Kevin Burns, Mayor of Geneva, KCC 2/21/03  “We don’t mean to upset anyone…we are doing what any legitimate business would do. This is legitimate research.” Andrea Brands, SBC spokesperson, KCC 2/22/03  “The things that have been said that we are asking about are not true.” Comcast spokesperson Pat Andrews-Keenan, KCC 2/22/03

9. SBC/Comcast Survey Questions  Do you believe local schools will have to cut teaching staff, increase class sizes and eliminate after school programs because the Tri-Cities broadband referendum competes with existing school referendums?  Should tax money be allowed to provide pornographic movies for residents?  Would a government owned Broadband network invade privacy and allow the government to listen to your telephone conversations, monitor the internet sites you visit and know what cable shows you watch?  Did you know that ATT Broadband and SBC offer high speed internet access to most businesses in your community?  Is it appropriate to spend $62M when two private companies already provide that service?

10. SBC/Comcast Survey Questions  Would the following statements make you more or less likely to support Tri-Cities Broadband?  The technology local government would use would be obsolete in a few years therefore requiring another bond issuance later.  The government plan requires property taxes to increase if 30 per cent of the households do not immediately sign up for service.  Because private companies already offer Broadband service there is no need for government to provide this same service.

11. The aftermath  The three mayors of the Tri-Cites came out in support of the Broadband referendum on 3/24/03.  The Tri-Cities were always on the defensive. They never were able to effectively provide answers to:  “Having dial up internet access means people already have broadband.”  “SBC DSL and Comcast Cable Modem service are the same as a FTTH product.”  “It’s going to raise taxes.”  “Only a few citizens want high speed broadband.”  “Comcast and SBC already provide it.”  “Municipal networks have all failed.”  “The municipal utilities can’t deal with building and maintaining complex telecom networks.”

12. The aftermath  School referendums that were on the same ballot passed by a 60/40 margin in both Batavia and St. Charles.  The Broadband Referendum failed by a 60/40 margin in Batavia, Geneva and St. Charles.  “I congratulate SBC and Comcast for effectively scaring…our communities.” Kevin Burns, Mayor of Geneva, Daily Herald 4/2/03

13. The aftermath  Since the referendum both SBC and Comcast have moved quickly to expand DSL and Cable Modem service in the Tri-Cities.  Offering SBC Yahoo DSL at $29.95 for 12 months.  SBC is ready to ask for approval to offer long distance service in Illinois.  Approval will give them with the ability to offer bundled services.  Local service  Internet service  Wireless service  Television  Long distance

14. The aftermath  Prior to being bought by Comcast, AT&T Broadband had picked up 1.3 million local phone customers with a 14% penetration in the 8 million homes it served.  In the Chicago area Comcast has 1.6 million subscribers which is an 85% share of market.  Average cable rates are up 6.2 % in Chicago this year and nationwide cable rates have went up 21.6% since 1999. KCC 12/4/02  Comcast has offered three months of cable modem @ $19.95 and then it goes to $42.95 (if you have cable).  Comcast has stated that while it is conducting Voice over IP trials for a launch at a later date, telephony is not its main priority this year.

15. Thanks for listening!!!