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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 7/1/2014 | 1:06:27 PM
Re: Both sides now I think iProvo was WAY ahead of its time - the infrastructure costs were much higher and their business plan anticipated multiple service providers wanting to offer service and that just didn't materialize. 

I think projects such as Norwood's, which build on existing infrastructure and rights of way, are more cost-effective - and the overall technology costs have also come down considerably. That is one thing for which the US industry can thank Verizon. 
Carol Wilson 7/1/2014 | 1:03:32 PM
Re: Legal authority? That's a good question and I thought the letter was kinda vague on that point. I sent in an inquiry to the office of a couple of the senators - Markey and Franken -- and didn't hear back yet. 
Duh! 7/1/2014 | 12:50:16 PM
Legal authority? "We urge you and your colleagues to utilize the full arsenal of tools the Congress has enacted..."

What is in that "arsenal"?  Does it include Federal/State premption?

 
Duh! 7/1/2014 | 12:26:48 PM
Re: Both sides now Quite a few communities here in Massachusetts - not necessarily small ones - have deployed broadband.  Norwood, North Attleboro, North Andover, Braintree, and Leverett come to mind.   Broadband is structured as a service of the Municipal Light Departments (sic), which are pretty common here. 

I don't have time to dig too deeply into the financials, but did get a look at Norwood (disclosure: I used to live there).  Their broadband/cable operation is running a surplus, which goes into the general fund.  This, incidentally, competing with Verizon and Comcast.  There is some debt outstanding for the original deployment and plant upgrades, but it is small compared to the rest of the town's obligations.

It would be interesting to see expert analysis of why projects like Norwood are successful, and projects like Provo are not.  I suspect it's a matter of management competence, transparency and state law.
Carol Wilson 7/1/2014 | 11:25:05 AM
Re: Both sides now Yes, Tom, it's complicated. The three examples I sent you are thriving broadband networks that have documented their ability to attract/retain business in areas where it was suffering. And that's the bottom line for these municipalities. 

As Mitch points out below, this is hardly the case of cities shoving aside private interests to put taxpayer dollars at risk. This is a situation where munis are at risk because their telecom and cable companies have refused to invest in broadband networks. 

There certainly can be a debate over how wisely municipal officials can spend public dollars in an area where they have little or no expertise, but many of today's projects are partnerships, where they are looking for and finding that expertise elsewhere. And yes, the business case must be made. But it is built on economic development and retention/addition of jobs and population.

Oh, and I don't believe for a skinny minute that any major telecom player is worried about muni networks because they think they'll be forced to jump in and rescue the folks that get in over their heads. There HAVE been muni network failures and at no time has the incumbent been forced or even expected to step in and save the day - I wouldn't trust anyone trying to sell me that story.

Case in point: the iProvo network, one if the biggest muni failures, was "sold" to Google for $1. This network was planned in the late '90s and built in the early aughts and no incumbent stepped up or was forced to rescue it. 
TomNolle 7/1/2014 | 11:10:20 AM
Re: Both sides now I checked on the links you referenced in a prior post, Carol.  The problem is that none of them provide a real case study.  There's no data on initial or ongoing cost, no subscribership data, nothing a financial analyst could use to determine whether the situation was viable in the long term.

I'm not saying that a municipality couldn't decide to tax in order to provide partially or fully subsidized broadband.  Obviously they can do what they like as long as the regulations overall permit.  I do have a concern that if the numbers don't add up, if there's too much cost and thus too large and persistent a tax subsidization, the commitment won't endure.  If that happens then service disappears for all those who depend on it.  I agree that some of the telco/cableco opposition to this is that they don't want competition but some of the insiders tell me that they are more worried about having to jump in to invest to offer a service to replace a muni competitor who simply went away.  As I said, this is complicated.
MikeP688 6/30/2014 | 11:04:15 PM
Re: Both sides now This, to me, is another very timely story as we look to 4th of July.   Maybe it is a sense of idealism or just being naive, but encouraging this should be a no-brainer.  In my community of Laguna Niguel, there have been "pockets" of a muni- wi-fi network.  We can be "online" at all City-Owned Parks and facilities.  It is not a "city wide" effort--but still it is a baby step.  The question is whether such baby steps will be encouarged.    The commercial viability of it is may well force the FCC's hand.

 

 
TomNolle 6/30/2014 | 7:21:36 PM
Re: Both sides now I understand that, Mitch.  The question is whether they can keep doing it.  Why would local citizens pay for something via tax if they're unwilling to pay for it through monthly service charges?  The underlying cost isn't impacted by the payment mechanism.
Carol Wilson 6/30/2014 | 7:13:27 PM
Re: Both sides now Exactly, Mitch. 
Mitch Wagner 6/30/2014 | 6:42:19 PM
Re: Both sides now We're not looking at muni broadband as a competitor or alternative to a commercial solution. We're looking at local governments implementing broadband because commercial businesses don't do it.
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