City-Owned Broadband Networks Gain Allies
Battling bills in at least 10 states that seek to ban or curb their provision of broadband services, municipalities are enlisting new allies. Two reports released Mon. by groups including the Media Access Project and Consumer Federation of America counter cable and telephone incumbent arguments driving the bans. The reports followed a High Tech Broadband Coalition declaration of opposition to statewide barriers to municipal entry (CD April 8 p7).
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“This is a battle we have begun to win,” CFA’s Mark Cooper said in a conference call, referring to pro- municipal groups’ state-level lobbying. Without those efforts many prohibition bills would have passed, he said, and the groups also will target states that already have outlawed or curbed municipal provision of broadband services. Without local govt. involvement in broadband deployment, the U.S. will keep losing ground to nations like Canada and S. Korea, where local govts. are encouraged to provide broadband networks, said a report by MAP, CFA and Free Press. The private sector does a “good job” of providing service where profitable but doesn’t provide “timely deployment to address health education and welfare issues,” said the report, Connecting the Public: The Truth About Municipal Broadband.
Other arguments the report makes for municipal entry: (1) Municipal networks, or even the threat of municipal entry, keeps prices low and quality of service high. Many communities have only a single provider or a cable/telephone duopoly. Incumbent cable or telephone companies have incentives to block VoIP companies such as Vonage that compete with their business model, but municipalities have no such incentive. “Absent federal regulation requiring network neutrality or open access, municipal systems remain the last line of defense against such practices.” (2) Municipal systems don’t crowd out private providers. (3) Local govts. don’t enjoy unfair tax or rights-of-way advantages over cable or telephone incumbents. On the contrary, the report said, private incumbents enjoy state and federal subsidies, guaranteed rate of return and regulated pole attachment rates. “To pretend that these local incumbents, with their subsidies and regulated access, need to ‘level the playing field’ to protect a ‘free market’ against local government systems flies in the face of reality.”
A study by Free Press, Telco Lies: The Truth About Municipal Broadband, said private incumbents’ claims that municipal networks were failures were based on data that were “years out of date, unverified or inaccurate.” Moreover, the arguments used against municipal broadband entry were old analyses developed to fight public cable systems. Access to the Internet is more of a utility function, and the “economics of the Internet and cable” are different, speakers in the conference call said.
Reports from independent sources put the “burden of proof” on industry to show why municipal broadband isn’t necessary, said attorney Gerard Lederer, who represents municipalities: “It gives legislators pause. These voices are very important because they are the credible, 3rd party commentators that don’t have a financial interest in the game.”
State bills still in play include Tex.’s HB-786, a major rewrite of that state’s telecom law. Many curbs on municipalities were dropped in the House Committee on Regulated Industries. But substitute restrictions adopted March 23 would let municipalities providing wireless services for a fee as of Jan. 1 this year continue while forbidding others. It would require the PUC to study municipal wireless and report next year. Fla.’s SB-1714 and HB-1325 would let municipalities providing communications or information services of any kind as of May 1 this year continue to do so, but they can’t extend their service areas, add new subscribers or add new services. Other bills seeking to restrict municipal entry are: SB 05-152 in Colo.; SB 2072 in Fla.; SB-499 in Ill.; SSB 1136, HSB 182 and HSB 205 in Ia.; LB 157, LB 645, LB 136, LB 722 in Neb.; HB 2445 in Ore.; and HB 1403 and SB 1760 in Tenn.
Many cable operators have “serious reservations” about local govts. investing “increasingly scarce taxpayer dollars” for telecom services already provided privately with state of the art technology, an NCTA spokesman said.