State Legislatures to Wheeler: See You in Court

I like the spirit behind Chairman Wheeler’s move to allow municipalities to determine their own broadband future, but unfortunately he does not have the legal standing to take in the matter. The constitution is pretty clear on states’ rights, and the FCC’s regulatory authority is not sufficient to override the Constitution. Wheeler will lose this battle should he chose to fight it. I wish the 25 or so state legislatures would review these laws that they have passed and either repeal them or change the wording to allow communities to develop business relationships that promote open access broadband in a taxpayer neutral fashion.


 By: John Eggerton
National Conference of State Legislatures

National Conference of State Legislatures (Photo credit: Wikipedia)

The National Conference of State Legislatures wrote FCC Chairman Tom Wheeler this week to say they would challenge the constitutionality of any attempt to preempt state laws restricting municipal broadband networks.

Wheeler has said those laws are attempts by ISP incumbents, including cable operators, to prevent competition and that he wants to use the FCC’s authority to loosen “legal restrictions on the ability of cities and towns to offer broadband services to consumers in their communities.”

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The Municipal Menace?

Although I agree with Rep. Blackburn that government involvement in communications is a states’ rights issue, I find it rather ironic that she is going about it with a federal law. I have applauded Chairman Wheeler’s support of allowing municipalities to take control of their broadband destiny even though I do not believe that they should be in the communications services business. I do not believe that the FCC has the authority to trump state law in saying that states cannot pass laws prohibiting cities from building and operating broadband networks. This fact is why I am deeply suspicious of Rep. Blackburn’s bill.  

The LightReading article below is a good synopsis of the situation without the typical editorializing I have seen in many other publications. I agree that there should be no state laws prohibiting local governments from determining their broadband destiny, but I do not believe that they should become a service provider like so many of them attempt. The communications’ industry moves much quicker than electric or water utilities, and the market works better when there are more competitors not one that can operate with an unfair advantage. I do support local governments building and selling the infrastructure though.

JASON MEYERS

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.

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Is municipal broadband more important than net neutrality?

I had high hopes for this article because the author successfully saw the link between the two concepts.  Maybe he read my tweets.  There is a definite correlation between municipal broadband and net neutrality, but I have only read one or two articles that actually get it right.  

Municipal broadband evolved from the concept that the cost of building these networks is prohibitive so it is a function that the government could provide.  That concept is fine when no service provider is serving an area but most of the municipal broadband deployments have one or two franchised providers.  This situation results in the government competing with private enterprise.  Granted that a duopoly does not create a competitive market, but the government has several advantages over private enterprise that makes it an unfair competitor.  Also, any subsidization of broadband networks by taxpayers creates an unfair advantage.

The reason that there are not more competitors for broadband network is that they are extremely expensive to build.  Investors do not like waiting almost 10 years to see if their investment is going to yield a profit which is what would happen with 3 or more competitors.  People seem to overlook that fact when accusing the incumbents of snuffing out the competition.  Economics have snuffed out the competition.

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FCC Chairman Wheeler pledges support for municipal broadband network efforts

Commissioner Wheeler once again showed his support for competition despite the accusations that he is in the pocket of the industry.  Much like his proposed net neutrality rules, allowing municipalities to enter the broadband market creates competition against the incumbents, albeit from a governmental entity.  This pro-consumer stance that is more than just speeches is refreshing in an industry that is just lumbering along.

Although I do not personally agree with any governmental entity entering the private sector, laws that have been passed also prevent governments from forming public/private partnerships with companies to build broadband infrastructure and networks.  The laws as written typically prevent a government from building their own fiber infrastructure and leasing that infrastructure to communications service providers unless they were grandfathered.  I believe that this model of “open access” is not only economical and taxpayer neutral, but extremely pro-competition since many different service providers can offer their services without a huge capital expenditure in a last-mile network.

Open access broadband infrastructure is the smarter way for municipalities to go because it reduces the financial risk of running a business in competition with the incumbent providers.  The financial results of municipalities running their own communications business are mixed at best.  There are several examples in the country (e.g. Vermont, Minnesota, and UTOPIA) where companies have gone bankrupt and left bond holders and taxpayers to clean up the mess.  If a municipality only leases the infrastructure then they have potentially several carriers paying for the fiber, and those companies combined will have a larger potential market share than if it was just them selling the services.  Also, their expenses are greatly reduced because they don’t have to purchase the content, buy the equipment, and maintain a much larger staff to sell, market, and service customers. 

I applaud Commissioner Wheeler’s move because it demonstrates that he is pro-business and not just another political lackey with a social or specific industry agenda.

 
Editorial Director and Associate Publisher

Character for children of FCC

Character for children of FCC”Broadband” (Photo credit: Wikipedia)

In an address to attendees at the National Cable and Telecommunications Association’s (NCTA) The Cable Show in Los Angeles yesterday, Federal Communications Commission (FCC) Chairman Tom Wheeler expressed strong support for the right of municipalities to supply broadband services using their own networks. Wheeler pledged to “preempt” state laws that restrict the construction and operation of such networks.

As high-speed broadband becomes a more important aspect of residential and business life, several communities, particularly in rural areas, have become frustrated while waiting for incumbent service providers to upgrade their services. Some have decided to build their own networks, often using fiber to the home (FTTH) technology, withLafayette, LADalton, GA, and Chattanooga, TN, among the most high-profile examples.

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Wyoming Town Creates Broadband Bonanza

How does a town of 5000 people in a sparsely populated region get its own fiber-to-household broadband system — WITHOUT relying on federal funding? Powell, Wyoming, is one of the great broadband success stories of the decade.

By Craig Settles

Powell, Wyoming, at first glance may appear to be the typical rural community that large and even some small broadband service providers avoid. The town has just over 5,000 residents in a county with a population density of four people per square mile. The last place for a fiber network, right? Wrong! Powell’s community-owned network, Powellink, is one of the great success stories in broadband.

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AT&T, cable lobbying drive Chattanooga’s EPB to shelve network expansion bill

Market Square in Chattanooga, Tennessee, USA, ...

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By Sean Buckley

EPB, the Chattanooga, Tenn.-based service provider known for its 1 Gbps service, and its supporters have decided to put on mothballs a new bill that would enable municipal broadband operators to expand outside of their service areas.

If the “Broadband Infrastructure for Regional Economic Development Act of 2011″ bill had gone through, municipal-run broadband providers like EPB would have been able to extend service up to 30 miles outside their service areas. One of EPB’s motivating factors to have the bill was to bring service to Bradley County, where Amazon.com is building a second distribution center.

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Controversial Broadband Bill Moving Forward in North Carolina

April 1, 2011 By Brian Heaton

Downtown Raleigh, North Carolina as seen from ...

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A bill that would place restrictions on the establishment of municipal broadband networks is gaining traction in North Carolina. The proposed legislation, House Bill 129, was passed by the state’s House of Representatives in an 81 to 37 vote on Monday, March 28, and is making its way through the state Senate.

The bill, which has sparked controversy across the state, is called the “Level Playing Field/Local Gov’t Competition” act. The legislation would require communities to alter the way networks are financed and deployed. One section of the bill mandates that a municipal network not price services below their actual costs. The intent of the language appears to be an attempt to protect companies from unfair competition, even though private companies regularly offer incentive deals to attract customers.

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