Incumbent providers, grown lazy on a steady diet of public subsidies and monopoly rents, have done their best to cast this as a debate between efficient private competitors and inefficient government monopolies. But it is the incumbents that would rather regulate than compete. They resist municipal entry not because it is incompetent – no one resists incompetent competitors – or because it is unnecessary. Rather incumbents resist municipal entry because they recognize the ability of local government to offer a genuine competitive alternative to a high priced monopoly or duopoly services.
Pay Attention to the Man Behind the Curtain: Listen to AT&T's CEO, not Lobbyists
AT&T lobbyists in Georgia and South Carolina are arguing that local governments should not be allowed to build the networks that communities need, suggesting that the private sector is primed to make the necessary connections. But AT&T's CEO had a different message for investors a few weeks ago, in an earnings call on January 26:
The other is rural access lines; we have been apprehensive on moving, doing anything on rural access lines because the issue here is, do you have a broadband product for rural America?
We’ve all been trying to find a broadband solution that was economically viable to get out to rural America, and we’re not finding one to be quite candid. The best opportunity we have is LTE.
Whoa! LTE is what you more commonly hear called 4G in mobile phone commercials. The best they can do is eventually build a wireless network that allows a user to transfer just 2GB/month. That is fine for hand-held devices but it does nothing to encourage economic development or allow residents to take advantage of remote education opportunities.
But even the CEO admits they are not bullish on LTE as the solution:
[W]e’re looking at rural America and asking, what’s the broadband solution? We don’t have one right now.
Some may be wondering about "U-Verse" -- AT&T's super DSL that competes with cable in the wealthy neighborhoods of bigger cities. U-Verse cannot match the capacity or quality of modern cable networks but is better than older DSL technologies. But U-Verse is not coming to a rural community near you.
For those who missed the fanfare last year, AT&T's U-Verse build is done. AT&T's lobbyists have probably forgotten to tell Georgia and South Carolina Legislators that the over 20 million AT&T customers without access to U-Verse are not going to get it. But CEO Stephenson made sure investors weren't worried about AT&T continuing to invest in its wireline infrastructure:
In wireline, our U-verse build is now largely complete, so we have in place an IP video and broadband platform that reaches 30 million customer locations, which gives us significant headroom now to drive penetration.
Translation: AT&T will now focus on upselling customers in markets with U-Verse. If it doesn't run through your neighborhood already, you aren't getting it.
The rest are stuck on dial-up or DSL that AT&T's CEO has previously called obsolete (correctly). While AT&T's CEO has been honest about its inability to solve real broadband deployment gaps, AT&T's lobbyists have tried to advance a bill with the ludicrously low broadband definition of 200kbps and even more absurdly, the even slower definition of 190kbps.
The business model of AT&T and other big cable and DSL companies simply does not work in much of rural America. The question is why any state would foreclose the possibility of communities being self-reliant when major companies like AT&T candidly admit they have no solution and the best they can do is deliver an obsolete product.
State legislators need to pay more attention to what AT&T's CEO says and less what AT&T's lobbyists say.
Fast, affordable, and reliable access to the Internet is essential for communities to thrive in the digital age. Not every community wants to build a community networks and most undoubtdly won't. But that is decision they should make locally. Pending legislation in Georgia and South Carolina would take this decision out of the hands of these communities by enacting a host of new regulations on public networks that do not apply to the private sector. As in North Carolina, these bills effectively revoke local decision-making authority by creating impossible hurdles for communities that are already disadvantaged in the modern economy.