Light Reading
New federal legislation raises questions about states' rights and the role of municipalities and utilities in broadband competition.

The Municipal Menace?

Jason Meyers
7/22/2014
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My favorite recent headline about the ongoing legislative brouhaha over municipal networks is this one, from a publication called The Escapist: "Tenn. Congresswoman Valiantly Protects ISPs from Evil Municipal Broadband."

That sarcasm is a reference to an amendment attached by US House of Representatives Rep. Marsha Blackburn (R-Tenn.) to the fiscal 2015 Financial Services appropriations bill that would keep regulators from modifying state laws prohibiting municipalities from building and operating broadband networks. The amendment was approved 223-200 in the House last week, but a final version of the bill must still be passed by the House and Senate and signed by President Obama to become law.

The topic is a hotly debated one of late, as more municipalities and municipally owned utilities, frustrated by what they consider to be less than acceptable levels of broadband service, take matters into their own hands and build networks, usually funded by bond issues approved by taxpayer vote. Such activity in Blackburn's own home state of Tennessee is frequently cited as the model for municipal network deployment, thanks in large part to the success of EPB Fiber Optics , the unit of the municipally owned utility in Chattanooga that has operated a gigabit network there for four years and is currently seeking to expand its network into other parts of the state.


For ongoing updates on Gigabit Cities and the municipal network debate, visit Light Reading's Broadband/FTTx content channel.


Blackburn's aim is to prevent the Federal Communications Commission (FCC) from pre-empting state legislation, particularly in the 20 states that have laws regarding municipal broadband (including Tennessee). FCC chairman Tom Wheeler, along with several Democratic members of Congress, contend that municipal networks shouldn't be blocked by state laws and that the FCC has and will exert the authority to pre-empt them. (See Dems Urge FCC Action to Protect Muni Nets.)

It's a partisan debate, with legislators who share Blackburn's view largely standing behind the concept of states' rights. "Twenty states across our country have held public debates and enacted laws that limit municipal broadband to varying degrees," Blackburn said on the House floor last week. "States have spoken and said we should be careful and deliberate in how we allow public entry into our vibrant communications marketplace. Inserting the FCC into our states' economic and fiscal affairs sets a dangerous precedent and violates state sovereignty in a manner that warrants deeper examination."

For obvious reasons, incumbent service providers want to stomp out competition from municipal networks, both to protect their own market dominance and because they believe the public funding foundation of most municipal networks makes the competitive playing field uneven. Whether they are successful in that effort remains to be seen -- but with so much momentum of late from municipalities and utilities in the Gigabit Cities realm, it seems likely that telecom and cable providers will have city-backed competition to contend with for some time.

Is there a role for local governments and municipal utilities in the broadband game, or should municipal leaders stick to running their cities and stay out of the telecom fracas? Perhaps more time and more experiments like Chattanooga -- rather than more legislation and litigation -- will help identify the best solutions.

See these stories for more muni musings:

— Jason Meyers, Senior Editor, Utility Communications/IoT, Light Reading

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mendyk
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mendyk,
User Rank: Light Sabre
7/23/2014 | 1:39:57 PM
Re: Blackburn's politics
Not to discount or dismiss the effects of lobbyist spending, but there are people who will see this issue as protecting states' rights vs. federal government intervention.
milliman
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milliman,
User Rank: Light Beer
7/23/2014 | 12:43:25 PM
Re: Blackburn's politics
Carol:

People have been pointing a finger at Thomas Wheeler because of his past allegiance, but his stance on net neutrality and municipal networks has demonstrated to me that calling him an industry stooge is unfair. Rep. Blackburn on the otherhand is demonstrating that there is most likely an alterior motive. I suport municipal broadband with mixed feelings because too many of these efforts have failed with taxpayers picking up the tab. That is why I prefer that they build open-access broadband infrastructure and let other companies sell the services.  There is no reason that an incumbent would not purchase last-mile access expecially if they were dealing with twisted pairs.
jabailo
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jabailo,
User Rank: Light Sabre
7/23/2014 | 11:55:41 AM
Re: Qualified Contenders?
The problem I have with this line of thinking is that broadband is not a settled technology.

Maybe optical fiber is the answer, or maybe LTE wireless.   Maybe wifi hubs on every pole connected to optical.  Or maybe something wild like low earth orbit satellites will make a comeback.

This morning I was reading about "wireless optical fiber" using guideways through the air.   Do we really want Government to go out and string technology that might be obsolete in a few years, or should private enterprise bear the risks?

Government should only provide utilities when the technology is stabilized, but it seems like that is far from the case in communications.

 I do think there is a case for some very low level, low bandwidth service to be "always there" -- sort of like the Emergency Broadcasting System.   This would have to be an energy grid independent system, maybe run by hydrogen fuel cells, in the case of a disaster like Sandy.

For basic use and access...there is the library.
Carol Wilson
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Carol Wilson,
User Rank: Blogger
7/23/2014 | 11:30:24 AM
Re: Blackburn's politics
Just the fact that Blackburn, who represents a state that is largely composed of smaller towns and cities and rural areas, speaks of the damage municipal networks would do to the "vibrant communications marketplace" tips off her true loyalties. 

Talk to those rural areas and small towns about how "vibrant" their choices are for broadband and you will get a very different story. 
milliman
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milliman,
User Rank: Light Beer
7/23/2014 | 11:29:47 AM
Re: Qualified Contenders?
Blackburn is right most likely for the wrong reasons. Broadband deployment is a private business and local issue that should be left up to local governments. While I applaud Chairman Wheeler's desire to allow towns to make decisions over their broadband future, it is not the federal government's role to get involved. Rep. Blackburn is using this issue to push her own agenda because the FCC does not have the authority to usurp state laws so I don't trust her motives.

No government should be in the communication services business but I do believe that they should be able to form business relationships to create competition in their towns and cities. Most of these state laws prohibit local governments from entering into those relationships. Since the last-mile infrastructure is the most expensive component of a broadband access network, a town should be able to build their own open-access fiber infrastructure and lease capacity on a non-discriminatory basis to communications providers. Most state laws prevent this sort of arrangement.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
7/22/2014 | 9:00:46 PM
Blackburn's politics
"Blackburn received $10,000 from the National Cable & Telecommunications Association this year and last year, according to OpenSecrets.org. She received $12,500 in contributions from Verizon, $10,000 from AT&T, $7,500 from Comcast, and $7,000 from representatives of Time Warner Cable," according to Ars Technica.

I'm sure these contributions in no way affected Blackburn's positions.  
kq4ym
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kq4ym,
User Rank: Light Sabre
7/22/2014 | 5:56:38 PM
Re: Qualified Contenders?
Without a lot of consumer input and even protests, the carriers with the expensive and experienced lobbyists will most likely get their way. It's going to be a tough road to travel for cities and other lesser power attorney equipped concerns to get the legislation needed to favor them or even alloiw a level playing field for competition of all colors.
brookseven
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brookseven,
User Rank: Light Sabre
7/22/2014 | 4:28:40 PM
Re: Qualified Contenders?
Kbode,

Investors believing something is true is very different than the company believing something is true.  You have accurately quoted investor opinion about FiOS.  The Verizon regime at the time believed there was more money in not losing the core consumer base in the urban and suburban parts of the network.  That is why they wanted to do FiOS.

I am also unaware of any FiOS cities doing significant 2nd fiber builds.  Verizon DSL only spots...why yes they are!  AT&T is the primary overbuild followed by Centurylink.

Companies don't need to agree with their investors.  But they do need to act in what they think is their biggest profit.

seven

PS - Remember in all these scenarios CAPEX is limited and it is going other places than Wireline.  Particularly small city and rural broadband.
KBode
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KBode,
User Rank: Light Sabre
7/22/2014 | 4:17:35 PM
Re: Qualified Contenders?
It's certainly possible. Verizon stopped lobbying against municipal broadband builds several years back and instead invested in FiOS, much to the chagrin of the myopic, impatient investors who'd rather you just milk a network and a customer base until you face rotting lines and open revolt (at which time the investors just flee anyway). 

And, to come full circle, what we're talking about is having the FCC undo some of these awful protectionist state bills they've imposed to give rights back to the local communities.
brookseven
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brookseven,
User Rank: Light Sabre
7/22/2014 | 3:49:02 PM
Re: Qualified Contenders?
Guys,

The RBOCs and big MSOs are in the money making business.

IF they can spend a few million on lobbying instead of putting in networks and make more money....they will.

You think they would do it if they thought they would make more money the other way?

seven

 
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