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.

Rightfully so customers want choice and competition so they blindly turn to the government for answers.  The bureaucrats see and opportunity to grow their fiefdoms so they start planning to build broadband networks.  The incumbents feel betrayed because they spent millions to get their franchises and now the government that granted them that license is going to compete against them.  Instinctively they go higher up in the government to attempt to stop it.  This is why there are laws in 20 states against municipal broadband.  The government should not be in an industry when private enterprise is willing to provide a product or service.  No one seems to mention that fact now days.  

Multiple broadband service providers would not only provide facility competition but services competition which is what consumers are most interested.  Content providers have figured a way to deliver their content over the incumbents’ networks.  Delivering services Over The Top (OTT) of incumbent networks is another way to compete, but these OTT providers don’t have the ability to control the quality of service like the incumbent providers have;  enter net neutrality.  

Under the guise of freedom, many of the OTT providers want the incumbents to shoulder the cost of upgrading the broadband networks to carry their traffic while they pay the same costs.  They feel if they can get the government to regulate the incumbents, then they could keep their bandwidth costs low while maintaining a healthy profit.  The incumbents want the OTT providers to pay “their fair share” to keep their costs low and profits healthy.  Both parties are using the government to get their way instead of competing fairly.  

The OTT providers like municipal broadband because it offers the potential of inexpensive Internet separate from the incumbents’ competing content.  The whole argument of “fast lane” and “slow lanes” are an oversimplification of the situation invoked only to create an impression of special privilege or elitism.  The truth is that traffic management is the best alternative for the OTT providers to compete effectively, but it will cost them a little more for their bandwidth.  The proposed net neutrality regulations or legislation will realize an Internet far from neutral.

Municipal broadband is not the way to create more competition either.  Municipalities do not have the experience to build and operate these networks.  Technology changes more rapidly than water, sewer, garbage, and electricity services which requires more capital investment.  When these ventures fail which most of them have, then taxpayers are on the hook to pick up the tab.  A better solution would be for the municipality to put in the broadband infrastructure and lease it to service providers.  This way the most expensive part of the network is amortized over several carriers not not just one. The municipality will see a payback in 5-7 years at most on an asset than can last at least 25 years.  True competition will exist for content and networks and the net neutrality issue will vanish without extensive government meddling in the Internet.

by Andrew Zaleski

The debate over net neutrality is important, but to give consumers more choice, it may be wise to look in a different direction: municipal networks.

At its annual meeting in June, the U.S. Conference of Mayors passed a resolution that made two recommendations. The first was that the Federal Communications Commission preserves a “free and open Internet” as it was outlined in the 2010 Open Internet Order, which was subsequently challenged by Verizon  VZ 0.22%  and struck down by D.C. Circuit Appeals Court earlier this year. The “open Internet” that the group calls for would almost assuredly mean reclassifying broadband Internet service as a “common-carrier telecommunications service” under Title II of the 1996 Telecommunications Act, a classification that bars operators from charging different rates or means of access to their service. (The trusty telephone? A common-carrier service.)

The second recommendation was that the FCC “preempt state barriers to municipal broadband service as a significant limitation to competition” in providing residential broadband Internet service. “Barriers” in this case means laws enacted by state legislatures, often pushed through at the behest of big Internet service providers, that prevent cities from establishing their own broadband networks.

Annoyed by slower broadband speeds offered by a handful of private ISPs, multiple municipalities across the U.S.—a prominent example is Chattanooga, Tenn., where the electric utility doubles as ISP and offers a gigabit-speed broadband network—have established their own public broadband services. Comcast  CMCSA 0.99% , Verizon  VZ 0.22% , and other major ISPs routinely lobby against cities’ abilities to establish such networks; limits on public broadband have been enacted in 20 states so far.

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About Mark Milliman

Mark Milliman is a Principal Consultant at Inphotonics Research driving the adoption and assisting local governments to plan, build, operate, and lease access open-access municipal broadband networks. Additionally, he works with entrepreneurs and venture capitalists to increase the value of their intellectual capital through the creation of strategic product plans and execution of innovative marketing strategies. With more than 22 years of experience in the telecommunications industry that began at AT&T Bell Laboratories, Mark has built fiber, cable, and wireless networks around the world to deliver voice, video, and data services. His thorough knowledge of all aspects of service delivery from content creation to the design, operation, and management of the network is utilized by carriers and equipment manufacturers. Mark conceived and developed one of the industry's first multi-service provisioning platform and is multiple patent holder. He is active in the IEEE as a senior member. Mark received his B.S. in Electrical Engineering from Iowa State University and M.S. in Electrical Engineering from Carnegie Mellon University.
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