The Tug-of-War Over Municipal Competition

Capitol_domeI wrote back in July that politics had reared its head in the issue of allowing municipalities to compete in broadband. Depending on who is doing the counting there are 19 to 21 states that restrict local governments from competing with broadband. In some of these states there is an outright ban on competition. In some states a local government can only build wholesale networks to lease out to others. And in some states there are numerous hurdles that make it really hard for a local government to get into business.

And there are attempts every year to add to the list. There currently is a move at the Missouri legislature to create a total ban against municipal competition. Last year a ban was passed in North Carolina (although it was made to look like it was not a ban).

Politics has entered the fray again recently in a big way. President Obama recently made a speech in Cedar Rapids Iowa in favor of having the FCC eliminate all of the bans on municipal competition. FCC Chairman Tom Wheeler has been talking about this for a long time and last summer the FCC asked for comments on petitions files by Chattanooga Tennessee and Wilson North Carolina that asked to lift restrictions that stop them from expanding their existing fiber networks.

The President had barely finished his speech when the two republican Commissions at the FCC issued formal statements against the idea. Commissioner Michael O’Rielly said, “It is clear that this Administration doesn’t believe in the independent nature of the FCC. It is disappointing that the Commission’s leadership is without a sufficient backbone to do what is right and reject this blatant and unnecessary interference designed to further a political goal. Substantively, this missive is completely without ‎statutory authority and would be a good candidate for court review, if adopted. In reality, this debate is about preempting a state’s right to prevent taxpayer rip-offs. Municipal broadband has never proven to be the panacea that supporters claim and the Administration now boasts. Instead, we have seen a long track record of projects costing more than expected and delivering less than promised.”

And Commissioner Ajit Pai said: “As an independent agency, the FCC must make its decisions based on the law, not political convenience. And U.S. Supreme Court precedent makes clear that the Commission has no authority to preempt state restrictions on municipal broadband projects. The FCC instead should focus on removing regulatory barriers to broadband deployment by the private sector.”

Obviously the President and the these Commissioners disagree about the ability of the FCC to preempt state law. I have no idea which side is right about this and I assume that if the FCC passes this that the Supreme Court will eventually decide who is right.

But what I find sad about this is that so many telecom issues are now partisan and are being argued blindly along party lines rather than being looked at for their merits. Municipal broadband is certainly one such issue.

While Commissioner O’Rielly says there is a long track record of poor performance by municipal broadband networks, the facts say otherwise. There are well over 100 municipal networks that are offering fiber to every home and business in their towns and you can count the ones that have gotten into trouble on one hand. If you look at competitive commercial broadband ventures the failure rate has to be higher than that. One of the major premises of competition is that it comes with no guarantee of success. But some communities want broadband badly enough to take this risk. And even where there has been failure, the towns still end up with a fiber network. I think the citizens of Provo are happy to now have Google fiber, which started out with a municipal system that performed poorly.

The whole anti-municipal effort starts with a handful of huge telcos and cable companies that don’t want municipal competition. In reality, these companies are against any competition and they do whatever they can to squelch commercial competition as well. But these companies are very good at lobbying and they are directly behind the recent efforts in states to expand the ban against municipal broadband.

Even though I think every town in the U.S. ought to have fiber broadband, even I am skeptical about the idea of some of the largest cities in the country being able to compete in the broadband business. One only has to look at what is happening in Austin Texas where there are now four different companies offering fast broadband in the wake of the Google announcement to build there. I don’t know that a large city could handle that kind of competition. But no large City has ever come close to building a broadband network and this issue is really about small-town America.

There are tens of thousands of little towns that have been left behind in broadband deployment. While big cities now have 100 Mbps cable modems or even gigabit fiber, these small towns have data speeds that are already not adequate and which fall farther behind each year. The rate of household broadband usage is doubling every three years and places that have broadband below 10 Mbps (often way below that) are going to be left in the economic wastelands if they don’t get broadband. They will lose businesses and jobs and their kids are going to grow up without the same technical skills that everybody else takes for granted.

That is what ought to be debated, but instead opinions on the issue are split down party lines. Why in the world would a rural republican congressman not want his local communities to build broadband if nobody else will do it for them? I honestly don’t get it, but I feel the same confusion about most issues where partisan politics overrides logic. There are arguments to be made both for and against overriding state bans against broadband. But if this was a fair debate there would be some people from both parties on each side of the issue.

3 thoughts on “The Tug-of-War Over Municipal Competition

  1. “Why in the world would a rural republican congressman not want his local communities to build broadband if nobody else will do it for them?”

    1. With Citizens United, there is a greater advantage to one’s political career in keeping Big Telco happy than keeping small town America happy (I see it all the time)
    2. Because he wants to be like Tom Tauke, former US Representative of eastern Iowa, now a big wig at Verizon making millions of $ per year.

    Its not just members of Congress, its the State Representatives and even county commissioners that are equally delusional/dishonest.

    • You are right of course. But it is a ‘Mr. Smith goes to Washington’ type of question. Years ago an issue like this might have split along urban / rural lines, but now issues just follow the money.

  2. Pingback: 2014 MN Broadband Task Force is out: recommends $200 million for infrstructure grants | Blandin on Broadband

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