Blog Post

Legislators aim to turn states into broadband backwaters

Regressive, telco industry-influenced state legislators are at it again, trying to kill communities’ right to determine their own broadband futures. Anti-community broadband bills are rearing their ugly heads in several states.

The anti-SOPA/PIPA crusades have given the public the taste of using the Net to stem some pretty ugly tides (The Internet Strikes Back), it’s time to apply similar online tactics at the statehouse. Why? Because the U.S. is at a point where its Internet future will be further diminished if more state bills pass that restrict communities to taking the train when most prefer to fly.

Trains or planes?

Around 1940, the railroads were in their heyday. They had made America great, railroads still basked in the glow of their role helping to conquer the West, they had nationwide infrastructure, ushered in innovations, and railroad barons carried clout in D.C. and beyond.

Post-World War II, airplanes were evolving into serious transportation vehicles that moved lots of people, mail and packages much faster than trains did. While railroads tried to make trains faster, more comfortable, etc., airlines made greater technological advances AND market advances. No matter what improvements railroads could make, those trains would never fly. Planes, however, got bigger, faster, and more popular.

Today’s telcos are the railroads. They’ve spent money to build infrastructure to a lot of places. But local governments, co-ops and nonprofits are building supersonic jetliners. Chattanooga, Tenn.; Santa Monica, Calif.; Wilson, N.C.; Lafayette, La. and dozens of cities and counties have fiber networks that kick telcos’ assets.

Copper wires might be ok, but they’ll never deliver a gig. That’s what cities and counties are delivering. Nor will the big corporations go to the places that need broadband the most. AT&T basically just told rural America “you’re on your own.” Verizon FiOS? If you don’t have it by now, you probably aren’t getting it.

So incumbents have flocked to the last refuge of a corporate scoundrel, the legislatures where their money can buy what they can’t do easily in a truly competitive market – bills that kill municipal broadband. In Georgia, they have an anti-muni bill in the state senate (SB 313) that defines broadband as 200 kbps!

In South Carolina, AT&T-influenced bill H-3508 reared its ugly head in the capital again this year as AT&T and a host of other providers are trying to get it passed after being stymied in past years. In a particularly grotesque travesty, communities in Washington state that requested better broadband were denied by the incumbent operators. Those communities then turned to Rep. John McCoy to bring a bill to the floor that would allow public utilities to build networks. But incumbents didn’t even let the bill get out of committee.

U.S. Broadband at the crossroads

People who understand the economic development impact true high-speed broadband, such as these members of the International Economic Development Council, can grasp the urgency of fighting this legislative threat. Georgia and South Carolina are not random blips on the radar screen, but the full-on escalation of a national push.

This push is brought to you by the American Legislative Exchange Council (ALEC), a group of corporate lobbyists who ghostwrite state bills behind closed doors that their pocket legislators then push on the floor. This “model” of anti-muni broadband legislation contains wording that is replicated in these latest bills and newspaper op-eds that attack community broadband.

That brings us back to Arab Spring and SOPA. The best way to fight the money and insider influence ALEC brings to bear is to enlist the Internet as a main vehicle of engagement. Enhance traditional communication with the Web to educate people to the advantages of community broadband and the 2,000 success stories that prove their viability. Use the Web to follow the money trail from incumbents to the pockets of legislators leading the anti-muni charge, and then expose these ties early, often and loudly.

Coordinate all the social network tools, Facebook and Twitter in particular, to rally local businesses and residents to call, e-mail and otherwise stay in front of legislators’ faces. Coordinate an endless stream of contacts with the media. And definitely occupy the statehouse with elected leaders and their constituents to make the case, as Georgia communities did recently. Pro-broadband supporters recruit strong business and other allies. The anti-SOPA crusade turned the corner when several Web giants flexed their muscles in a way D.C. could not ignore. The same leverage works at state capitols too.

This isn’t about unfair competition by local government. When Wilson’s 12-person IT department can plan, build and manage a network that can deliver speeds (up to a gig) 20 times faster than the best Time Warner Cable (s twc) offers, that’s competing with superior technology. When Comcast (s cscma) customers switch to Chattanooga’s gig network because of their public utility’s better customer service, that’s competent competition. When tiny Reedsburg, Wis. refuses to compete against the large cable company on price, but beats competitors by offering greater value such as a better selection of Internet services, they compete based on local credibility.

So U.S. communities have to ask themselves, are they going to stay stuck on the train or will they be zipping along at warp speed?

Craig Settles is a broadband industry analyst and consultant who helps organizations develop effective broadband strategies. Listen to his radio show (Gigabit Nation) and follow him on Twitter (@cjsettles) or via his blog.

Image courtesy of Flickr user dok1.

21 Responses to “Legislators aim to turn states into broadband backwaters”

  1. chrisconder

    Some great discussion here!
    Think its just the same in the UK. The incumbent protecting its copper assets by insisting it can keep up with modifications, and covering the fact that due to long copper line lengths many people are on substandard services or no service at all. I understand that they have to answer to shareholders and pay their CEO £5 million bonuses, but they should be truthful. The truth is that any public money should go to new fibre networks in rural areas to provide them with connectivity. How much comes down that pipe is not the question, they can have a meg or a gig or whatever they like in the future. Get the new networks in and the incumbents will automatically have to up their game. Get a fibre backbone round the states and cut out the bottlenecks. Like building the railroads to replace the wagon trains, open up the traffic and become a digital nation. Communities have to follow the example of the pioneers who have started the adventure into the future and not play it safe huddling round the old phone line waiting for a call. Bring IT on. Build your own Chattanooga coo choo. JFDI.

  2. I think you missed the most important part of your analogy: The airlines are heavily subsidized by the government (think municipal-owned airports) much like the municipal broadband. The telcos and cable companies, like the railroads, are penalized by the government (through regulations and taxes on privately-owned infrastructure) and aren’t (can’t?) competing at the same level.

    • To which I reply, if you had to get to L.A from Boston in a hurry, are you going to take the train or are you going to fly? Governments subsidized airports because they saw the future and planes were the better bet. Also, airlines are taxed and regulated as are railroads. Furthermore, we’re being distracted by the analogy whereas the main focus of this article is incumbent-influenced legislation that is harmful to communities’ best interest.

  3. This is a populist blog, so facts aren’t nearly as useful as rhetoric, but what the heck…. Let’s go a bit deeper into EPB.

    EPB needed about $340M (about $2000/home to reach all of Chattanooga) to build their new fiber network. They got $111M in federal stimulus money (that’s about $650/home), and an additional $230M by floating new bonds. The stimulus money was granted to EPB power to build out a fiber network in support of a smart power grid (exactly how much bandwidth is needed to run a smart grid, anyway?) That’s right. Residents of Chattanooga got a free $650 per home from the federal government. Good deal, if you can get it. And it gets better. The bonds will be paid back not via the revenue from new Internet services, but via a rate increases levied against all electric customers. Since they’ve started this boondoggle, they’ve raised rates twice. Once when they started the venture, and again last year to avoid a downgrade in their credit rating. All in all, electric customers in Chattanooga have been handed a total of 9-10% rate increases over the next 25 years, which is the term of the bond sale. EPB Fiber is running around saying they’ll be able to recover their costs. Technically true, because they don’t really have any. All of the costs were levied on the electricity franchise. So, you think this is a model that should be, and could be replicated across the country?

    It’s no surprise that the private network providers would be opposed to this. It’s not really possible to compete effectively against someone that gets free money from the federal government, has a monopoly electrical franchise that you can pass on rate hikes to that customers have no choice but to pay, no mandate to be profitable, and can raise money with tax free muni bonds. A private company would need to raise nearly twice as much cash as EPB to have the same financial resources available to them because the private company is not getting free stimulus money, has no access to tax free investment instruments, has no monopoly to pass its costs back to, and has to finish the year with money to return to shareholders. Who here would keep their company in these markets, and how would you defend that decision to your shareholders?

    The legislation that lawmakers are proposing mainly seeks to defend private businesses and taxpayers by requiring local governments that want to compete with private network providers to do so on an even playing field, and be able to pay for their initiatives without sticking the people with more debt. Why is that so bad? The only rational reason that you anti-business Occupiers would be so vocally against this that you want an Arab style uprising is if you know, as most already people do, that the government cannot build and operate a network more efficiently. Otherwise, why oppose a level playing field? Are you afraid the private network forms might win?

    What will really be comical is when the private network providers pack up and leave (and take their jobs and taxes with them), and y’all will be standing there with your hands up waiting for the mayor to come install your $350/month broadband (the current rate from EPB for “up to” 1gbps).

    Why are you people so darn angry, anyway? Has your internet speed not increased since the days of 14.4 dial? Is there a single content provider serving up content at a speed of a gigabit per second to their visitors? What are ISPs keeping you from doing? What did they do to you that feeds your hate?

    If local municipalities want to run private business out of town and serve themselves, that’s a local matter that makes a large part of the FCC charter void, and introduced a whole other debate about USF and COLA obligations. But to make a case for it using ignorance, fear, false choices, and misinformation is just weak, juvenile and irresponsible. 

    And I live how the gentleman above calls put Mr. Bennett for earning money from the telecom industry (nothing new, the people who actually hold jobs in this field are routinely vilified here by those who never have) while giving a pass to Mr. Settles, who earns a living selling his views to local governments. 

  4. This makes me wonder how much content distribution plays into Telco strategy here. Are they trying to be more nimble than RIAA in anticipating the evolution of independently produced content? With the growth of cord cutting, the Telcos can no longer be the sole delivery system of video content. Fatter pipes = more content opportunities.

  5. As the air travel metaphor illustrates, the railroads can delay the future but are powerless to prevent it.

    Also, these state laws may not survive review in the federal courts and could end up backfiring on the incumbents if deemed to be sanctioning uncompetitive, monopolistic market conduct. It could be 1984 all over again but with a different twist.

  6. Ok, clearly the trains and planes analogy seems to distract a little from the main message. The bigger point of the story is that private interests are screwing over the local consumer, government, and business interests within communities by incumbents’ actions at the state legislative level.

    I chose the analogy because trains were once the pinnacle of transportation technology and railroad empires were a dominant force. Planes came along and changed the transportation dynamic by making it easier to move people – and some packages/mail – faster. Railroads tried to protect their business in many ways, but they could never be faster than planes because trains can’t fly.

    Today’s railroad companies may be more efficient, and other ways better than telco and cable companies. But the gap between planes’ ability to move people and some things faster than railroads is similar to (granted, not exactly the same) as the gap between what fiber can deliver and the typical services/speeds of many of today’s incumbents. What the incumbents are selling, or a willing to sell underserved markets, isn’t going to fly in 3 or 4 years.

    Carry on :-)

  7. Good story however I object your analogy to the railroads! The railroads are nothing like the telcos of today, railroads play nicely and only have a small margin of profit and work with airlines and many trucking firms. The telco and cable companies would rather see all their competition die and make hand over fist profits, to call the railroads like the telco and cable company of today is an insult to railroads, None the less still a good article just work on your analogies.

  8. Hmmm…. While I’m not privy to the background and details of the legislation, I’d seriously wonder whether a public utility should be in the business of building yet another overlay network. Typical public utilities can function because they have a natural monopoly that requires every household to use and pay for the service (think water and sewer systems). Broadband is a different story. There are typically more than one choice where most Americans live. In exurbs and rural areas, public utilities are not players anyway. So should a community be forced to pay for parallel infrastructure to compete with what’s already there? It would have to since there is no way the users of the service could foot the bill.

    I will add that the vast majority of broadband users want tv and phone service with that and get the benefits of bundle discounts. Community broadband seems like a good idea until you take even a casual look at it.

  9. Hey, with politicians of all stripes trying to make sure that all calendars in the US get turned back to the 13th century, accompanied by creation of any living conditions that existed then as well, does this really suprise anyone?

  10. I’m not sure railroads are an ideal example of what the author is getting at; rail is the most efficient means of bulk cross continental transport at present…perhaps horse drawn buggy would have been more appropriate.

  11. Ed Robinson

    The comparison to trains vs jets is unfortunate as train are our future for comfort, environmental, safety, convenience and many more reasons. Last two flights cancelled or extremely delayed. Two train trips great. Good point but bad comparison.

  12. You make a couple of odd points, Craig. On the airplane analogy, I wonder if you remember the Concorde. It was a super-sonic jetliner built by a consortium of European governments that no longer flies because it was too expensive and too cramped. Speed is nice, but it’s not everything.

    You also say: “Copper wires might be ok, but they’ll never deliver a gig.” This is just wrong. The HFC networks the cable companies operate currently deliver close to 5 Gbps divided between digital TV, phone, and Internet. These systems are cable of 10 gig as soon as there’s a demonstrated need for it.

    The argument for apps enablement at a gig compared to the 50-100 Mbps per user that’s available today over VDSL+ and DOCSIS 3 hasn’t been made. If I were you, I’d focus more on demand creation than increasing supply beyond current demand.

    • Phillip Dampier

      (Mr. Bennett always fails to disclose he works for an organization that receives telecommunications industry money.)

      Craig was referring primarily to AT&T’s ancient copper infrastructure, on which the company barely delivers DSL and has now thrown its hands up declaring it has no solution to the rural broadband problem.

      But here is where Richard’s argument completely falls apart:

      The cable companies he claims can do wonders when there is a “demonstrated need for it” cannot apparently meet that demand right here, right now.

      Companies like Comcast, Cox, and Suddenlink have all declared a lack the capacity to meet the broadband needs of their customers today, requiring them to slap arbitrary usage caps on their broadband products. The “demand creation” is already there and the nation’s largest cable companies have spectacularly proven they cannot meet it.

      Curious that, because community-owned fiber networks do not seem to have the same “broadband shortage” the nation’s largest cable company does. EPB in Chattanooga can deliver 1Gbps in the same city Comcast can barely provide 50Mbps (with a 250GB usage cap). AT&T DSL comes in closer to 7Mbps, and their “advanced” U-verse maxing out at about half the speed of Comcast (with 150 and 250GB usage caps on DSL and U-verse respectively).

      So the provider we need to ban or at least hamstring at all costs is the community-owned gigabit broadband network that doesn’t share the capacity problems of Comcast and AT&T.

      Nothing exposes the true corporate agenda of the companies pushing these anti-broadband bills more clearly than this reality.

      Who knew America’s phone and cable companies were in the broadband shortage business?

      • Do you have a job, Phillip? I ask because you’re so interested in other people’s employment and so dodgy about your own. The fact is that I’m a consultant, just like Craig, and my primary client is a non-profit who is supported by a number of IT industry supporters, more on the equipment side than on the telecom side. The equipment providers are happy with municipal networks because they represent another market.

        That has nothing to do with my point, which is once again that cable is currently a 5 Gigagit per second system, including all the things that it does today. Capacity constraints on cable networks are upstream of the copper portion, in the middle miles between the copper access network and the Internet Exchanges. If the cable companies replaced copper with fiber, these bottlenecks would still exist.

        New fiber networks are very lightly loaded because they offer a service that few people want or need. They’re literally a waste of taxpayer money, for the most part.

        Deal with the facts, not the personalities. If you can. And no, I don’t want fries with that.

    • Don Flewelling

      Copper wires might be ok… the average small gauge twisted copper pair is not comparable to the capacity that a coax. I don’t believe that cable companies are delivering 5Gbps service on telco lines. Some clarification is in order here.