Here's why the FCC chairman was in the Twin Cities on Tuesday - Bring Me The News

Here's why the FCC chairman was in the Twin Cities on Tuesday

Ajit Pai paid a visit to a Twin Cities internet success story.
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The chairman of the Federal Communications Commission, Ajit Pai, paid a visit to the Twin Cities on Tuesday.

You might recognize his name from the debate surrounding net neutrality, with Pai overseeing the rollback of rules introduced by the former Obama administration which has attracted criticism from commentators including HBO talkshow host John Oliver (more on that later).

But that doesn't seem to have been the primary focus of his visit to Minnesota, with the chairman spending time with US Internet, the Minnetonka-based fiber internet company that is seeing growing success as it slowly expands its service across Minneapolis.

The meaning of the meeting

Travis Carter, the COO of US Internet, told GoMN the meeting was"fairly spur of the moment" given he was only informed of the FCC head's visit a week or two ago.

Rather than shooting the breeze about net neutrality, Carter said Pai was primarily interested in the firm's roll-out of its fiber network, with the company's low overheads allowing it to offer fast internet access at rates much cheaper than those offered by Comcast or CenturyLink.

The main outcome of Pai's visit, Carter hopes, is that it encourages startups from other parts of the country to use US Internet as an example of how to compete against media conglomerates in the internet market.

"He was very complimentary to us," Carter said, "I don't need anything from the FCC, but if there's one thing it could do is go to other cities that have an entrepreneurial spirit like Minneapolis and say 'Hey, here's a company that does it correctly.' I would like to see the model we're using employed in other cities."

US Internet is capitalizing on the growing number of "cord cutters," as consumers move away from what Carter says is the increasingly "antiquated" cable and internet package model, instead opting to consume their media via streaming services like Netflix, Hulu and Amazon Video.

All someone needs in this case is an internet provider, and with subscriptions starting at just $34.95 a month (for its basic package – a still pretty quick 50 mbps), US Internet is significantly undercutting the competition.

"We have over a 50 percent market share in the areas we operate in and we don't offer cable television – that's pretty amazing and it gives you a litmus on what's going on out there," Carter said.

How so cheap? Well US Internet doesn't employ many people, bandwidth is relatively cheap, it has a mostly automated system, and more than anything: "We're not looking to be billionaires," Carter said.

Net neutrality didn't come up?

Not really, and Carter says the reason why it's not at the forefront of US Internet's minds is because whatever happens, their business model is such that it won't be unduly affected.

We have more details on net neutrality here, but the basic premise is that the FCC recently voted to start a public comment process about loosening rules that stop Internet Service Providers (ISPs – your Comcast, AT&T, Warner etc.) from blocking content or making some websites load slower than others.

This has stoked fears of a two-tier internet, where internet providers charge websites more for faster loading times, pricing out smaller startups. It also has created controversy because companies like Comcast could favor content produced by their subsidiaries at the expense of competitors, reducing choice for consumers.

Carter says if things stay the way they are, the company can continue what it's doing. If net neutrality is rolled back, he says the company could market itself as the antithesis to larger competitors who could potentially block or reduce the speed of websites.

So did US Internet ask for anything?

One area that Carter says he did bring up was the franchise deals that cable providers strike with municipalities, which he says stifles competition by making it incredibly expensive to launch a media network.

St. Paul he cites as one example where Comcast and CenturyLink effectively have a duopoly on cable subscriptions within city limits. Costs are then passed on to customers in the form of a "franchise fee" on cable bills. (Read more about the deal the city has here.)

Carter says getting into the cable business was an early consideration but the costs would have been too prohibitive for this reason. It turns out they're making it work just fine as a fiber internet company.

But he would like to see the FCC take some action about ending the franchise system, which he doesn't really see as having much of a life left in it given that millennials are turning their attention to streaming.

"Eighty-two percent of our bandwidth comes from streaming media, we're not really an ISP as much as we're a streaming media provider," he says. "We want streaming media to be successful."

Changing the system wouldn't necessarily help US Internet, Carter says, because the government tends to work "at a snail's pace," but it could open things up for startups a decade down the line.

Oh by the way, Pai also dropped in for a beer at Brit's Pub in downtown Minneapolis, with an eagle-eyed Reddit user snapping a picture as Pai surveyed what appears to be an election map of Minnesota while on the rooftop patio.

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