The municipalities and municipally-owned utilities that have been successfully providing broadband services are gearing up for a long battle, determined to address demand from surrounding communities to extend their networks -- even if they have to get approval to do it one community at a time.
Two of those entities -- EPB Fiber Optics in Chattanooga, Tenn., and the City of Wilson, N.C.'s Greenlight, an operating unit of Wilson Energy -- have petitioned the Federal Communications Commission (FCC) to pre-empt state laws in their respective states that prevent utilities from providing Internet and video programming services outside of their utility service areas.
Both EPB and Greenlight argue that several surrounding communities have specifically requested the services provided on their gigabit networks -- clear evidence, they say, that the incumbent communications providers are not addressing the broadband needs of residents in those markets.
"We extend into parts of six counties, and on almost a weekly basis we have people from these surrounding counties requesting we bring services to their areas," says Will Aycock, general manager of Greenlight.
"Right outside of our territory you see people that have access only to dial-up," says Danna Bailey, vice president of corporate communications for EPB. "Over the past several years they've been asking us, as individuals and as communities, to bring our service to them. Tennessee law allows us to bring them phone, but that's not what they want. Local communities should be able to decide their own destiny."
It's too early to say how the FCC will react to the petitions, but FCC Chairman Tom Wheeler specifically cited EPB's network in a recent blog post, in which he stated that it's in the best interests of consumers and competition that the FCC exercise its power to preempt state laws that ban or restrict competition from community broadband.
Last month, several members of Congress sent a letter to Wheeler urging him to combat efforts to restrict community ownership of broadband networks, using the powers given to the agency in the 1996 Telecom Act. Meanwhile, Rep. Marsha Blackburn (R-Tenn.) recently attached an amendment to the fiscal 2015 Financial Services appropriations bill that would keep regulators from modifying state laws prohibiting municipalities from building and operating broadband networks -- legislation that was narrowly approved in the House but still requires Senate approval and the signature of the President to become law. (See Dems Urge FCC Action to Protect Muni Nets, The Municipal Menace?.
What might the incumbents do?
The other significant question in all this is if, and how, the incumbent telcos and cable operators will respond -- and why they don't see the communities' desire for broadband services as incentive enough to develop their networks to be able to address it. AT&T Inc. (NYSE: T) and Comcast Corp. (Nasdaq: CMCSA, CMCSK) operate in the Tennessee markets: AT&T did not respond to requests for an interview; and a spokesman for Comcast had no comment.
Time Warner Cable Inc. (NYSE: TWC) and CenturyLink Inc. (NYSE: CTL) are the incumbents in the communities around Wilson. A spokesman for Time Warner Cable replied to an email question about how the company is addressing broadband demand in the areas mentioned in the Wilson petition by stating "we're focused on serving the communities where we're currently offering service right now."
He also provided a statement from Marcus Trathen, counsel to the North Carolina Cable Telecommunications Association: "We are in the process of reviewing the petition filed by the City of Wilson. It is important to understand that North Carolina's level playing field law does not prevent cities from providing competitive communications services -- it only sets the rules if they choose to compete."
A CenturyLink spokesman responded to Light Reading's email request for an interview with a statement: "CenturyLink currently is able to serve 96% of the homes in our North Carolina service area with high-speed Internet. We feel that with the passage of HB129, the North Carolina General Assembly has outlined a clear pathway for cities to build municipal networks with specific consumer protections. This law puts the decision of whether to incur debt into the hands of the citizens, and is similar to the ways that municipalities allow the citizens to decide whether to build schools or improve roads. The City of Wilson is simply trying to bypass their citizens, governor, legislature, and state policy."
One opponent of municipally provided broadband maintains that the matter should be handled at the state and federal government level, not by the FCC.
"It's a conversation for states to have about how they're going to spend taxpayer dollars, or a conversation about federal subsidies or federal laws that pre-empt state laws," says Berin Szoka, president of TechFreedom, a non-profit think tank that Szoka says is supported by AT&T, Comcast, Google Fiber and others. "The FCC does not have this authority."
Teresa Mastrangelo, founder and principal analyst of Broadbandtrends LLC , says she doesn't understand the arguments put forward by the Congressional opponents to municipal broadband, but acknowledged that the FCC's authority might be limited and that federal law favors the incumbents.
"Why would you not want investment in your state? It's been my impression that they don't care about these small communities. Clearly these members of Congress have a lot of funding coming to them from big players," she says. "The Communications Act is actually preventing people from participating in the digital age in these cases. In un-served and under-served markets, there should be exceptions to this rule."
— Jason Meyers, Senior Editor, Utility Communications/IoT, Light Reading