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.


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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House To Vote On Anti-Net Neutrality Measure; Administration Threatens Veto

Save the internet Net Neutrality protest at  G...

Image by Steve Rhodes via Flickr

Jonathan Charnitski, Managing Editor,

WASHINGTON, April 5, 2011 – The House of Representatives is anticipated to hold a floor debate and vote this week on a measure that would put the kibosh on net neutrality rules passed by the Federal Communications Commission late last year, but the White House has said that it would likely veto such a measure should it come across the President’s desk.

House Joint Resolution 37, which is a Resolution of Disapproval, states simply that Congress disapproves of the Open Internet Order issued by the Commission late last year and that the rules shall have no effect.

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Dem amendment cuts broadband funding in spending bill

By Sara Jerome

The spending bill approved by the House on Saturday includes an amendment that would defund a broadband grant program at the Agriculture Department.

Rep. Jim Matheson (D-Utah) introduced an amendment to defund the Community Connect broadband grant program, which pays for broadband infrastructure projects and community computer centers in rural areas. The program had a budget of around $13 million last year.

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The Flaw in Obama’s Wireless Plan

Main Street in Ten Sleep, WY

Main Street in Ten Sleep, WY

The President hopes an increase in Internet access will result in more economic development. Fiber networks would do that better than mobile broadband

By Brendan Greeley

The residents of Ten Sleep, Wyo., know the meaning of rural. They didn’t have phone service until the 1950s, when Tri-County Telephone Assn., a municipal cooperative, used federal subsidies to string copper wire to every home. In 2005 the co-op upgraded to fiber-optic cable, giving the town’s 300 residents Internet access at 20 megabits per second. For the technically unfamiliar, Chris Davidson, Tri-County Telephone’s general manager, describes this as “smoking fast.”

Even President Barack Obama is impressed. On Feb. 10 he rolled out a national wireless plan, pointing to Ten Sleep as an example of what he wants to replicate nationally: Because of the town’s high-speed fiber network, one company has been able to hire locals to teach English to Asians by video chat over the network. Obama hopes his plan will result in more such economic development by providing 98 percent of Americans with access to high-speed wireless Internet. “Ten Sleep,” Obama mused. “I love the name of that town.”

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From voice to broadband: FCC redirects its $8.7B in phone bill fees

By Matthew Lasar

ARS Technica

Can the Federal Communications Commission save a huge government program that overpays carriers to provide old school phone service, overtaxes subscribers to subsidize it, discourages modernization, and doesn’t even offer broadband to the low income and rural consumers it purports to serve?

Yes it can, insists FCC Chair Julius Genachowski.

The Commission’s $8.7 billion Universal Service Fund and Intercarrier Compensation system was designed “for a world that no longer exists,” Genachowski told the Information Technology and Innovation Foundation on Monday. The USF was created “for a world with separate local and long-distance telephone companies; a world of traditional, landline telephones before cell phones or Skype; a world without the Internet.”

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