Gigabit Cities

Obama Rocks Broadband World Again

To put it mildly, the US broadband industry is not very happy with President Obama right now.

Complaints and criticisms poured in from major cable and telco interests late Tuesday after Obama called for the feds to override state laws blocking municipalities from developing their own broadband networks. The two biggest cable and telco trade associations and the incumbent cable operator in the community where Obama spoke all issued blistering statements attacking the president's position.

Taking on the industry once again, Obama is urging the Federal Communications Commission (FCC) to preempt state laws that keep local communities from building high-speed data networks and promising greater financial and technical aid for smaller communities seeking to build those networks. Speaking Tuesday afternoon in Cedar Falls, Iowa, where a municipally owned utility built a broadband network that turned the community into the state's first Gigabit City in 2013, the president forcefully made the case for cities and counties seeking to create their own broadband networks. Framing it as a pro-consumer, pro-competition cause that crosses political lines, he called on the FCC to "push back on those old laws" in the 19 states that prevent or restrict municipally owned networks and spelled out other federal moves to foster the development of those networks.

"In some states, it's virtually impossible to create a community network like the one that you've got here in Cedar Falls," the president said. "So today, I'm saying we're going to change that. Enough is enough. We're going to change that so every community can do the smart things you guys are doing."

Without naming any companies, Obama lambasted the large broadband providers that have lobbied the states for the bans on public networks. "In too many places across America, some big companies are doing everything they can to keep out competitors," he said. As a result, he said, in 19 states "we've got laws on the books that stamp out competition and make it really difficult for communities to provide their own broadband the way you guys are."

Not surprisingly, many leading broadband providers reacted quite coolly to Obama's proposal. Speaking for the cable industry, National Cable & Telecommunications Association (NCTA) President & CEO Michael Powell contended that many municipal networks "have ended up in failure, saddling taxpayers with significant long-term financial liabilities and diverting scarce resources from other pressing local needs." Rather than "chase false solutions," Powell said, "government policies should be directed at overcoming barriers to [broadband] adoption and extending the reach of broadband to places yet unserved."

Using stronger language, the United States Telecom Association (USTelecom) said Obama's state preemption proposal and proposed Title II reclassification of ISPs, if enacted by the FCC, "would be sweeping exercises of authority, raising Constitutional concerns related to separation-of-powers, the scope of an independent agency's Congressionally delegated authority and the role of states in our federal system." The group charged that "these expanded government roles" would be financed by "higher costs to consumers and new taxes and fees on local citizens."

Mediacom Communications Corp. , the incumbent cable operator in Cedar Falls and many other Iowan communities, had no love to share with Obama either. Saying it was "deeply concerned" with Obama's comments, the MSO argued that Cedar Falls Utilities (CFU) "is a municipal utility that leverages its government-conferred monopoly over electric, water and gas service to unfairly compete with private enterprises" for cable and broadband customer. "The president's remarks, combined with the selection of CFU as the venue for his speech, clearly show that the White House wants to waste taxpayer dollars to supplant our nation's private sector broadband providers with government-owned utility companies."

For the latest on urban network innovation, visit Light Reading's dedicated Gigabit Cities content channel. And watch for forthcoming details on Light Reading's Gigabit Cities Live event, to be held in May 2015 in Atlanta.

Yet an undaunted Obama, who plans to make universal broadband access a key component of his State of the Union address to the nation next Tuesday night, argued that community broadband networks are "not a partisan issue." He noted that the people of Yuma County, Colo. voted overwhelmingly in favor of a community broadband network two months ago in the same election where they overwhelmingly supported a Republican candidate for the US Senate.

"It's not a red [state] issue or a blue [state] issue," he said. "Folks around the nation want these broadband networks. They're good for business. They're good for communities. They're good for schools. And they're good for the marketplace because they promote efficiency and competition."

Obama's call for federal preemption of the state bans on municipal networks comes as the FCC is weighing a proposal to do just that. In response to petitions from two other small and midsized cities -- Chattanooga, Tenn. and Wilson, NC -- to preempt their state broadband laws, the Commission is expected to approve that idea at its meeting late next month.

The president's latest broadband initiative also comes as the FCC prepares to upgrade the definition of broadband service dramatically. In another proposal that's expected to be approved shortly, the Commission is weighing whether to raise the broadband bar from the current 4 Mbit/s downstream standard to 25 Mbit/s, with a corresponding increase in the upstream rate as well.

Finally, Obama's support for community broadband networks comes as Republicans and Democrats gear up for another huge battle over net neutrality rules in Washington. The president added fuel to that fire two months ago when he came out strongly for utility-style Title II regulatory treatment of ISPs. At least partly in response, the FCC is expected to take up that issue at its meeting next month as well. (See Obama Backs Net Neutrality, Stuns Industry.)

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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Duh! 1/16/2015 | 11:28:27 AM
Re: A dose of fear might be good I am not a lawyer, and I don't play one on the Internet.

My understanding is that the Communications Act gives the FCC limited authority to preempt state and local regulations, mostly having to do with zoning regulations.  Jim Baller, in his Chattanooga and Wilson Petitions for Rulemaking, lays out an argument that Section 706(b) is broad enough to grant the FCC preemption authority.  Jim's a smart dude, and to the untrained eye, his case looks convincing. 

We have to assume that the FCC's attorneys are digging into it, with an eye to defending an Order against the inevitable appeal to the DC Circuit.  Wheeler is a smart guy, and he doesn't do kamikaze missions.  If the FCC grants the PRM, all the ducks will be lined up.

This is going to be interesting.  At least to us telecom nerds.
Ariella 1/16/2015 | 9:16:24 AM
Re: the problem " You will not support and sustain the markets if you remove all the profit opportunities. " @Dhagar Yes, that's a basic component of economics, as well as human nature, that people lose sight of when they express quixotic longings like, "If only we could live like the people of "Star Trek: Next Generation," a society that was not based on money. Yup, that's one of the fictional components. Real people who have seen socialized systems have seen them work very inefficiently because people lose motivation if their rewards are the same for little or no work as for excellent work.


brooks7 1/16/2015 | 8:51:11 AM
Re: A dose of fear might be good Mitch,

Not a right/wrong thing....constitutional thing.  I see the possible stretch of interstate commerce clause, but not sure it can be applied to local construction.



thebulk 1/16/2015 | 2:19:26 AM
Re: Problem I have no issue with it at all.
DHagar 1/15/2015 | 11:08:52 PM
Re: the problem kbode, agreed.  I see the issue as one where of sustainability.  You will not support and sustain the markets if you remove all the profit opportunities. 

The goals are the same but if you really want market development, the best models have been public/private partnerships which have found a variety of ways to invest in the infrastructure and services to make it work.

Mitch Wagner 1/15/2015 | 3:02:30 PM
Re: A dose of fear might be good brooks7 - The federal government has found the constitutional interstate commerce clause to be a powerful tool to use in overturning state laws.

And if it's not right for the feds to step on state authority, then it's equally wrong for the states to step on local government authority.
kjsing 1/15/2015 | 2:47:23 PM
Let's keep our eyes on the ball Lack of choice in and access to broadband services should NOT be a partisan topic. If we agree that broadband access and faster speeds are crucial for economical development and international competition, then approach the topic from a bi-partisan corner. Otherwise don't waste time commenting on it but get educated first what other countries have, are and continue to do on broadband for economical and competitive reasons.
KBode 1/15/2015 | 12:39:56 PM
Re: A dose of fear might be good Not so sure.

The FCC has a mandate to ensure broadband is being deployed in a "reasonable and timely manner," and there's some lawyers I've spoken to who state that with data in hand that three quarters of the public can't get more than one choice at speeds over 25 Mbps, they can legally justify nullifying parts of these state laws that hinder these projects.

The problem, if there is one, is that this week's announcment simply tells the FCC to "go do something you already planned to do." The goal may be political cover, but what good is that when you immediately enflame partisan loyalties? 

This subject shouldn't be seen as a partisan issue, as letting massive companies write state protectionist telecom law (and make no mistake, that's what happened here) works against EVERYONE's interests.
KBode 1/15/2015 | 12:37:14 PM
Re: Problem "Anyone else have a problem with Cities using tax payer money to compete with private enterprises?  On the surface this doesn't feel "American"."

Is it "American" to let AT&T, CenturyLink Comcast and Verizon write state telecommunications law that strips away local community rights to decide this for themselves? Because that's what's happened in 19 States and counting.

Regardless of what people think about municipal broadband, these bills are bad, bad news -- and in some cases even hinder public/private partnerships -- the kind needed to shore up coverage gaps in areas providers aren't seeing adequate ROI for.
GregW333 1/15/2015 | 12:13:26 PM
Problem Anyone else have a problem with Cities using tax payer money to compete with private enterprises?  On the surface this doesn't feel "American".

The answer IMHO, is real facilities based competition.  
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