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Regulation

Dems Urge FCC Action to Protect Muni Nets

Eight Democratic members of Congress are challenging the FCC to reverse the trend toward legal restrictions on municipal development and ownership of broadband networks.

The five senators and three representatives last Friday sent a letter to Federal Communications Commission (FCC) Chairman Tom 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.

According to The Baller-Herbst Law Group, a D.C. firm long associated with municipal broadband efforts, there are 21 states that currently have some restrictions on the rights of municipalities to own and operate their own broadband networks. These vary widely, however, ranging from outright bans to restrictions on how such networks can be financed or used to specific requirements on what services can be offered. (The full list can be found here.)

AT&T Inc. (NYSE: T), in particular, has actively worked at the state level to impede muni networks. It is far from alone in those efforts, however, as other major cable and telecom operators have worked hard to oppose specific network plans and what they see as a general threat of being forced to compete with tax-subsidized network efforts. AT&T CEO Randall Stephenson spoke out against municipal networks in addressing Congress just last week.

The Democrats, including Senators Ed Markey (D-MA), Al Franken (D-MN), Amy Klobuchar (D-MN), Richard Blumenthal (D-CT), and Cory Booker (D-NJ), argue in their letter that municipalities needing to promote their communities and attract jobs should not be restricted in their ability to fund and build their own networks.

The three members of the House of Representations signing the letter are Mike Doyle (D-NJ), Henry Waxman (D-CA), and Anna Ishoo (D-CA). The full text of the letter is here.)

— Carol Wilson, Editor-at-Large, Light Reading

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Carol Wilson 6/30/2014 | 2:00:07 PM
Both sides now I totally get why AT&T, Comcast, et al., don't want to compete against "tax-subsidized networks." But is their answer to the munis that they should just wait for better broadband? 

I think I wrote my first article on this topic back in The Net Economy days and that publication died in 2002. A long time to be stuck. 
TomNolle 6/30/2014 | 2:25:40 PM
Re: Both sides now It's instructive to look at the situation in Australia.  They have a highly dispersed population which means that natural return on infrastructure is lower.  They tried to advance broadband with a kind of national equivalent of Muni broadband in their NBN initiative, which was supposed to create a not-for-profit taxpayer-subsidized national access infrastructure.  It's way over budget, way behind in penetration and capacity.  The problem with "public" solutions is that there's no guarantee that they'll work, and the commercial providers will have every incentive to stop developing in areas where the tax-subsidized competitors exist.  What then happens if they don't deliver?  It's not an easy problem to resolve.
Carol Wilson 6/30/2014 | 2:55:17 PM
Re: Both sides now Tom, I'm not sure the two situations are the same. In Australia, there was a grand plan for a massive national buildout that included the government taking over - buying out - the existing infrastructure, I think. Correct me if I'm wrong on that. 

What's playing out in the US is municipalities, some of which already own and operate utility networks, getting tired of waiting for the cable and telecom operators to build the gigabit and/or FTTH networks they believe they need to compete economically and have the health care/education/job development they need. 

There are multiple models for these projects, including public-private partnerships, that don't depend on public financing through taxes, and yet can have real benefits. And there are multiple models - Chattanooge, TN, and Bristol, VA. are two - where this worked. 

If existing cable or telecom players were going to invest in these areas,  I think they would have already done it. 
smkinoshita 6/30/2014 | 2:59:21 PM
Re: Both sides now The thing about corporations is that they only have their own interests at heart most of the time.  Even when there's public good, there's significant gain.  This isn't a moral element, this is just part of recognizing motivation.

I'm concerned about the indirect impact this might have however -- on censorship, competition, and who really owns the 'Net.  It just feels like one of those instances where the real target is hidden behind smoke and mirrors of what's being presented.
Carol Wilson 6/30/2014 | 3:03:17 PM
Re: Both sides now A lot of the munis aren't interested in providing Internet service - they have open access networks or contact with existing ISPs. So I don't think there's impact where Net Neutrality is concerned, if that is what you are talking about. 
TomNolle 6/30/2014 | 3:12:43 PM
Re: Both sides now I agree there are differences, but the issues at the end of the day are still similar IMHO.  The question is whether "government" at any level can sustain effective broadband services.  If there is a risk that the government can't substitute fully and in the long term for commercial providers, then what happens when they fail?  If commercial providers avoid investment to avoid low return when competing against a tax-subsidized alternative, then the consumers no longer have the commercial option.  If the government in some way forces commercial operators to sustain services even at a loss, then each municipality that does this is taxing the remainder of the commercial provider's customer base by forcing higher rates on others.

Will the muni broadband network be less costly or more operationally efficient?  If not, then could users be paying more for service when rates and tax contributions are combined?

I don't know the answers, but Oz jumped into this without looking at all the ramifications and I'd hate to see us to the same, even on a local level.
Carol Wilson 6/30/2014 | 3:34:32 PM
Re: Both sides now Tom,

The time when munis jumped blindly into this was a decade ago and yes, many got burned. But the current generation of civic leaders wanting to add broadband has had a chance to learn a lot from those failures.

As I said there are models for success out there. And as for discouraging commercial investment, I think the mayors of some small towns and cities would tell you they couldn't get more discouraged then they are now with the level of investment in broadband for their communities. 

There are many small telcos and some cable folks as well willing to invest in their communities. But where these folks are served by large incumbents (who haven't yet figured out how to sell off these properties or shed their common carrier status) they are out of luck where broadband ivnestment is concerned. So the inherent risk of doing something on their own is relatively small, where discouraging commerical investment is concerned. 

And there are many efforts in process to mitigate other risks as well. Statewide groups, other consortia, partnerships with stakeholders such as universities or colleges, etc. 
TomNolle 6/30/2014 | 3:37:44 PM
Re: Both sides now I'm still skeptical that a small community can deploy broadband to serve their population when the opportunity that population presents isn't sufficient to generate commercial interest.  What everyone says now about FTTH is what they said about municipal wifi years ago, and they were wrong then.  A different technology choice doesn't necessarily change economics.  Show me the numbers!
Carol Wilson 6/30/2014 | 3:56:41 PM
Re: Both sides now You want proof? Check it out:

Bristol, VA: http://www.metaswitch.com/resources/case-studies/bristol-virginia-utilities-case-study

Chattanooga, TN: http://www.washingtonpost.com/blogs/the-switch/wp/2013/09/17/how-chattanooga-beat-google-fiber-by-half-a-decade/

Lafayette, LA: http://lusfiber.com/

These munis owned and operated utility networks -- like many other US municipalities and the biggest obstacles they faced were legal fights with the incumbents. 

 
briandnewby 6/30/2014 | 4:35:23 PM
Re: Both sides now I was on the city council of a 60,000 resident city 10 years ago and looked into this. Very few municipalities actually did it. I see the public benefit, but it's really an enhancement to the community or even a recruiting thing. It seems a stretch though to have FCC intervention to preserve them.
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