In terms of fiber-enabled cost savings, 120 businesses in Bristol reported an average of $2,951 in savings per year, while, in Reedsburg, 33 cited annual cost savings averaging $20,682. Twenty Jackson businesses reported cost impacts due to fiber, with one large organization reporting a total of $3 million in savings. The other 19 Jackson respondents reported a net average cost increase of $3,150 per organization.
Community Broadband Preemption Map
Eighteen states in the U.S. have enacted barriers to either make it difficult or impossible for communities to build publicly-owned networks. The map below displays states with barriers based on our analysis of whether they have an outright ban, a de facto ban, or various barriers to communities owning this essential infrastructure.
As peer nations surpass U.S. capabilities in broadband networks - the key infrastructure in the 21st century - eighteen states have decided to make it more difficult for their communities to build for themselves what the private sector will not. FDR's rejection of such policies in his time bears repeating:
I therefore lay down the following principle: That where a community--a city or county or a district--is not satisfied with the service rendered or the rates charged by the private utility, it has the undeniable basic right, as one of its functions of Government, one of its functions of home rule, to set up, after a fair referendum to its voters has been had, its own governmentally owned and operated service.
Click on a state with barriers to reveal the nature of the barrier, our commentary, and a link to the statute(s) described.
States should not prevent or discourage local communities from investing in essential infrastructure where they recognize a need. Such policies reduce a community to begging the private sector to build a network. Without the ability to build their own networks, communities face significant disadvantages - from paying higher prices on phone, television, and Internet access subscriptions to reduced health and educational opportunities.
Just as the public sector played an essential role in extending electricity and telephone service to everyone, America should once again trust in cooperatives, nonprofits, and local governments to ensure everyone has affordable, fast, and reliable access to the Internet.
Many of the current policy problems we face in this area are a result from unrealistic expectations of the private sector to invest in and properly manage these information networks as they transitioned from a nicety to an essential infrastructure. From network neutrality to universal access, private companies have divergent interests from the public good. Though policy can -- and should -- encourage robust private sector competition at the service layer (services like telephone, television, and Internet access have become distinct from the network layer - where bits are moved), the nature of building the physical networks themselves make true competition all but impossible. Without competition, the private sector is inclined to avoid investment and charged inflated prices to maximize profits.
Just as with the physical road networks upon which we have depended for nearly one hundred years, information networks should be operated in the public interest. Though municipalities, cooperatives, and nonprofits have all proven they can offer impressive services at affordable prices, other publicly owned networks have looked to the private sector to offer services over these publicly owned networks. Some networks both offer services and allow the private sector to compete equally on the same network. Either way, what matters most is who is making the rules - and do those rules favor what is best for the community or merely what produces the most short-term revenue?
Either Congress or the Federal Communications Commission should preempt states from restricting local, community owned networks. And soon.
Special thanks to Jim Baller, who has compiled and analyzed barriers to community networks. That work facilitated our analysis above.
Comments
Additional Utah Restrictions
Utah has some additional restrictions that cause significant headaches. Per Utah Code 10-18-302, "not more than 50% of the average annual debt service of all revenue bonds described in this section to provide service throughout the municipality or municipal entity may be paid from the revenues described in Subsection (3)(a)(ii)." Not being able to bond for more than 50% of the total cost of the network is crippling at best. One of the reasons UTOPIA has struggled so much is that the shared portions of the network ate up a significant chunk of the first round of money, yet that scale of project is required to effectively attract service providers. That UTOPIA manages to get anything done with this restriction is a small miracle.
Additional Louisiana Restrictions
The Louisiana law (at RS 45:844.47) additionally forbids _any_ public-private partnership. This was decisive in shutting down New Orleans public WiFi network and forcing them to give what the community had built and supported over to a private owner who subsequently got out of the business, abandoning the network. This provision strips the patina of ideology off such laws--it is intended to preserve the status quo ante and to protect the incumbents from _any_ competition whatsoever. There is no "free enterprise" involved.
For those readers who might be interested: the entirety of the (un)fair competition act, with additional restrictions passed in the year following its enactment runs from RS 45:844.41 to RS 45:844.56
Check out, just for fun, RS 45:844.56 which tries to allow offended incumbents to abrogate contracts (contra explicit clauses in the state constitution forbidding such) in a naked attempt to scare localities into thinking that raw retribution by the current providers is legalized.
Or right before that, in the complicated enforcement clause (RS 45:844.56) the most egregious silliness is concealed from those who are not familiar with the Louisiana Constitution. That clause is complicated because the constitution specifically forbids the state public service commission to regulate local community utilities. So a convoluted route to getting the regulations from the PSC is capped by the fiction that the legislative auditor (YES! the legislative auditor) is actually making the decision. That contortion too is of doubtful constitutionality...but...
Sidelight: the legislative auditor, an employee of the legislature, gets to devise a "list" of private corporate auditors that the local community has to pick from to help enforce said rules. That could be a list of one. Can we say corruption? Opportunity for self-dealing? The sudden influx of AT&T and Cableco "business" to said private entity?
There's more, of course, including a bit of craziness that requires the municipality to charge its customers for rental fees on poles it owns, but that should be enough to give the general flavor of the law.
Open access is a way around this problem
In Virginia, two open access networks have been in operation for years despite the fact that the state was an early leader in making it difficult for local governments to get involved in telecommunications. nDanville (www.ndanville.net) is starting its third year of operation and has been very popular with businesses in the city of Danville, and The Wired Road (www.thewiredroad.net) has been in operation for eighteen months. Neither network has been challenged by incumbents because all services are provided by private sector companies, and the incumbents were all invited to use the networks. nDanville is owned and operated by the City, and The Wired Road is a regional authority with two counties and a small city (Galax) as the primary partners.
There are lots of governance and ownership options available that can avoid legal restrictions. It is just a matter of being aware of how to structure governance in a way that avoids fights with incumbents. It is easy to do, and restrictive laws need not be a barrier to community-owned telecom infrastructure.
Open Access one of the incumbents' tools...
Andrew,
While I understand the ideological attractions of open networks, in point of fact the requirement that public networks be open is one of the tools that the incumbents have successfully used to insure that public networks fail.
Most open networks in the US are the result of such forced openness, not the free choice of the communities who were forced to play by those rules. Open networks are reasonably implicated in the failures or struggles of a number of public networks by those on the scene.
The idea that Virginia which absolutely forbids public participation in the lucrative cable business (so none of your examples can support their network with that tool) and which has a clause which forbids any non-cable "telecom" business from charging less than an incumbent [§ 56-484.7:1 Para C] is a VERY poor example to hold up as giving "lots of governance and ownership options." Those two restrictions alone cut out ANY competition for cable services and ANY competition for any other 'telecom' service if the incumbents choose to offer an equivalent service.
I cannot imagine that it is "easy" to avoid such restrictions...all the solutions are left in the meager spaces where the private sector has not (yet) decided it wants to invest. Competition is forbidden. If there was no incumbent objection to the public involvement in the projects you mention it can only be because no one in the private sector was offering any competition or wanted to...Projects which amount to using public resources to provide an infrastructure for private gain are dubious and no responsible community would offer such subsidies if they had the honest choice to build and own their own project.
The people of Viginia are very poorly served by such "solutions." And by such rationalizations.
The real solution is to repeal such laws; it is no solution to make light of law enacted specifically to forbid the alternatives that made BVU such a success.
The Florida law is more like
The Florida law is more like a "de facto" ban than just a "barrier." In addition, to the requirement to turn a profit within 4 years, the law also prohibits below-cost pricing by municipal providers (meaning that municipalities cannot respond to predatory pricing by incumbents in competitive markets). It also limits revenue bond maturities to 15 years (meaning that the longer bond term typically required for municipal broadband systems would require a referendum). Finally, the law requires municipalities to first provide private providers with the opportunity to provide the system that the municipality intends to provide. Collectively, these requirements make it close to impossible for a municipality to secure financing to build a municipal broadband system in Florida (unless the municipality's right to operate a broadband system was grandfathered by Florida law).
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