Blog Post

If state barriers to broadband drop, what happens next?

About twenty states have legal barriers to public-owned broadband networks. But with nearly 400 community-wide and partial-reach public networks operating successfully — some since before the year 2000 — advocates ask how high would the number be if these barriers didn’t exist.

Community stakeholders agree that removing laws hindering municipal and public power utility networks would be a huge win for constituents needing faster, better internet access. But everyone should have realistic expectations of what a world without barriers would look like because, just by itself, removing them may not open the floodgates to hundreds of new networks.

How we got these roadblocks

In states that include Pennsylvania, Arkansas and Louisiana, state laws imposing barriers to public entry are a major contributor to the sad condition of U.S. broadband. In July, the cities of Chattanooga, Tennessee, and Wilson, North Carolina raised the stakes and petitioned the FCC to rescind their respective states’ prohibition laws. FCC Chairman Tom Wheeler accepted these with promises that the FCC would take a hard look at them, and leaves advocates hopeful the FCC will follow through.

Anti-muni network laws have a long history but also a couple of potential cracks in the legal dam. In 1995, at the behest of telecom incumbents, the Texas legislature passed a law prohibiting municipalities and municipal electric utilities from providing telecommunications services, directly or indirectly. A year later, Congress included in the Telecom Act of 1996 a provision – Section 253 — that barred states from enacting laws that prohibited “any entity” from providing any interstate or intrastate telecommunications service. Based on this provision, the City of Abilene challenged the Texas law, but lost before the FCC and on appeal to the federal Court of Appeals for the DC Circuit.

In 1997, Missouri also banned public entities from providing telecom services. Cities in the state challenged this at the FCC, lost and then appealed to the Eighth Circuit Court of Appeals, which unanimously ruled in cities’ favor. The Supreme Court took the case and resolved the split between the DC and Eighth Circuits against the cities, letting the Missouri law stand. Emboldened, incumbents and ALEC to passed or tried to pass similar laws in a series of states up through 2014.

The Chattanooga and Wilson petitions focus on a different section of the Act of 1996 that could nullify states’ laws. Section 706 says if the FCC finds telecommunications capabilities are not being deployed to “all Americans” on a reasonable and timely basis, the FCC must “take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.”

Jim Baller, an attorney with the Baller Herbst Law Group in Washington, DC, who serves as lead counsel to Chattanooga and Wilson in the proceeding before the FCC, believes that cities have a good chance of winning this time around. “‘All Americans’ means exactly that, including the those who can’t get it because of the Tennessee and North Carolina laws in issue. It follows that Section 706 requires the FCC to take immediate action to remove these barriers.”

With the election season over, and Republicans controlling the Senate as well as the House, it will be interesting to see how the FCC proceeds. However that gambit plays out, the resulting publicity is galvanizing a national discussion on state prohibitions. Eight Colorado communities deciding Tuesday to return authority to their local governments to pursue options for public ownership of networks will further fan the flames.

What happens if/when prohibition is over?

In 2008, 35 North Carolina communities were anxious to pursue public networks, but that state’s law obliterated interest. If Wilson’s petition succeeds, the number of North Carolina cities wanting to move forward should be greater, and Tennessee has a list of communities already asking Chattanooga to expand services to these un-served areas.

Colorado’s state law negated municipalities’ authority to make their own broadband decisions. Tuesday’s election saw three counties and five cities, some heavily Republican, others heavily Democratic, passed votes by 70% or greater to reclaim that authority. Expect other states also to exert strong political pressure to advance broadband even as restrictions continue.

Stakeholders may face other challenges even if prohibitions disappear. “In Iowa, the main barrier is financing,” said Curtis Dean, broadband services coordinator for the Iowa Association of Municipal Utilities. “Those cities that voted to become broadband utilities [a state requirement] but haven’t built a network yet don’t have a lot of money sitting around.” Telecom attorney Ken Fellman believes most Colorado cities would explore broadband options, particularly if a Google or Gig.U offered to step in to help with funding. Even communities in widely conservative Louisiana would consider government-owned networks if someone else paid.

Some communities also need resources to help operate the networks since quite a few likely do not have staff with this expertise. Cities such as those in the UTOPIA project in Utah, likely will turn to public-private partnerships in which a partner such as Macquarie recruits vendors and contractors to take on these tasks.

National consortia are providing knowledge resources communities in the trenches need. The Coalition for Local Internet Choice represents a wide range of public and private interests that support the authority of local communities to make broadband choices that are best for their constituents. Next Century Cities has a broader mission of providing support and resources to help communities pursue a variety of paths to better broadband, They have partnered with the Southeast Tennessee Development District to host “Envisioning the Gigabit Future,” a  November 18 field hearing on the importance of next-generation Internet to community outcomes, and the need for unfettered community choice.

Local governments and public utilities in many of the 20 states with legislative barriers have chafed under the burdens brought on by large incumbents’ obsession with killing competition. But with the concerted efforts from the FCC above and communities below to pressure state legislators to mitigate or remove these laws, it seems possible many more communities will join the 400 successful public networks across the United States.

Craig Settles is a consultant who helps organizations develop broadband strategies, host of radio talk show Gigabit Nation and a broadband industry analyst. Follow him on Twitter (@cjsettles) or via his blog.

5 Responses to “If state barriers to broadband drop, what happens next?”

  1. While it is true that several of these networks had big problems, and two or three were sold to private companies, there are over 140 citywide public networks that are operating and only one project that falls in the struggling category. Another 260 partial-reach public networks exist. The successes greatly outnumber the failures.

  2. Most of these laws simply prohibit cross-subsidies.

    I.e., the city can’t raise or place a surcharge on water/sewer bills, or any other utilities it offers, in order to build out a broadband network.

    Keep in mind many city-owned broadband efforts have failed after spending millions of dollars (not an insignificant amount in a municipal budget).

  3. If people actually spend some time learning about networks that have been around for 8 or 9 years or longer, such as Thomasville, GA, Santa Monica, CA, Wilson, NC and quite a few more, they’ll see that these networks haven’t swelled from patronage, but the munis and public utilities run pretty lean ships. Furthermore, they have evolved their technology over time to keep pace with their communities’ growing demands. People’s lack of knowledge about the big picture of community broadband success stories yet willingness to present unsubstantiated claims against the whole of public-owned networks is pretty abysmal and adds little value to the conversation.

  4. So picture a future where you local government depends on local access revenues for an increasing percentage of their revenue and the payroll has swelled from political patronage. Do you really think that you, the citizen, will have a choice of last-mile providers or new technologies? Can you give me an analogous situation where innovation, efficiency and choice have flourished?

    Both choices are dragons. The question is which is harder to slay.

  5. In some developing nations there was this trend more than a decade ago when dialup was still alive and faster connections too costly to make neighborhood networks or even smaller. Sure it was not all that legal, just 1 guy with a PC paying for the connection and setting up “illegal”cables to his subscribers but the system provided what the users needed, a faster and cheaper connection.
    Micro ISPs like that (slightly more legal) should be factored in too , can be useful and could gain some traction at some point if the proper regulatory conditions are created. Big ISPs in the US are not providing the service their clients need so any viable alternatives could gain traction.
    Maybe someone like Google Fiber could go for a business model like that , they focus on the backbone and let micro ISPs (or building owners , street associations) deal with the last mile while setting certain minimal standards.