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Senator Lautenberg Asks FCC Chair About Muni Broadband Barriers

Free Press caught and isolated an excellent question from Senator Frank Lautenberg (D-NJ) to FCC Chairman Genachowski during recent hearings. The Senator notes that many Americans do not have sufficient access to broadband but 19 states have enacted barriers to make it harder for communities to build their own.

FCC Chairman said he thinks innovative municipal solutions should be encouraged and that he looks forward to working with the Committee to address the obstacles. 

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Recent Articles show ALEC and South Carolina Pushing to Limit Community Broadband

Community Broadband networks are increasingly getting the attention they deserve as an option for communities that want better, more accountable connections to the Internet.

We have long been warning about an AT&T-pushed bill in South Carolina to make it even harder for communities in that state to build the infrastructure AT&T has long neglected. But now The New Republic has also noticed -- in "Why are Telecom Companies Blocking rural America from Getting High-Speed Internet?"

The story starts by discussing rural and impoverished Orangeburg County, which received a stimulus award to help build the telecom infrastructure they need to succeed in the modern economy.

In an effort to improve the area’s economic prospects, county officials have worked in recent years to secure funding to refurbish roadways and sewer systems—but they also know that, in a globalized marketplace, old-school infrastructure is not nearly enough. That’s why, in 2009, Orangeburg County applied for, and received, $18.65 million in stimulus money to finally give the area access to high-speed broadband internet. County Administrator Bill Clark and his colleagues envisioned a municipal, or muni, network that could reach roughly a quarter of Orangeburg’s rural population, including just over three thousand households and one hundred businesses.

...

But the titans of telecom aren’t operating on quite the same wavelength. Since last January, AT&T, CenturyLink, and Time Warner have contributed just over $146,000 to politicians in South Carolina who back legislation that would cripple networks like Orangeburg’s. It’s only one example of a broader campaign by telecom companies to protect their cartel at all costs—even at the expense of keeping the country’s poorest on the wrong side of the digital divide for many years to come.

Same story, different state. We've seen the same efforts across the U.S., which is why nineteen states have created barriers to community broadband.

Meanwhile, the source of a lot of those barriers -- the American Legislative Exchange Council -- or ALEC has been getting attention for the many bad bills they have ushered through state legislators. ALEC is a front group for big corporations, including AT&T, Time Warner Cable, and other big carriers that allows them to wine and dine state legislators as part of a larger strategy to enact the laws they write to advantage themselves.

An article in the Republic Report says, "ALEC wants you to pay 750% more for High-Speed Internet."

It doesn't end there either -- ALEC is also presently pushing a slew of bills to gut state authority over telecommunications generally. So when AT&T or CenturyLink decide they don't want to serve high cost rural exchanges, they can just walk away. Or if their service is so bad it borders on unusable, the state Public Utilities Commission will not have the power to require them to fix it.

How Chattanooga, Bristol, and Lafayette Built the Best Broadband in America

Publication Date: 
April 9, 2012
Author(s): 
Christopher Mitchell

We are thrilled to finally unveil our latest white paper: Broadband At the Speed of Light: How Three Communities Built Next-Generation Networks. This report was a joint effort of the Institute for Local Self-Reliance and the Benton Foundation.

We have chronicled how Bristol's BVU Authority, Chattanooga's EPB, and Lafayette's LUS built some of the most impressive broadband networks in the nation. The paper presents three case studies and then draws lessons from their common experiences to offer advice to other communities. Here is the press release:

The fastest networks in the nation are built by local governments, a new report by the Institute for Local Self-Reliance and Benton Foundation reveals

Chattanooga, Tennessee, is well known for being the first community with citywide access to a “gig,” or the fastest residential connections to the Internet available nationally. Less known are Bristol, Virginia, and Lafayette, Louisiana – both of which now also offer a gigabit throughout the community.

A new report just released by the Institute for Local Self-Reliance (ILSR) and the Benton Foundation explains how these communities have built some of the best broadband networks in the nation. Broadband At the Speed of Light: How Three Communities Built Next-Generation Networks is available here.

“It may surprise people that these cities in Virginia, Tennessee, and Louisiana have faster and lower cost access to the Internet than anyone in San Francisco, Seattle, or any other major city,” says Christopher Mitchell, Director of ILSR’s Telecommunications as Commons Initiative. “These publicly owned networks have each created hundreds of jobs and saved millions of dollars.”

“Communities need 21st century telecommunications infrastructure to compete in the global economy,” said Charles Benton, Chairman & CEO of the Benton Foundation. “Hopefully, this report will resonate with local government officials across the country.”

Mitchell is a national expert on community broadband networks and was recently named a “Top 25 Doer, Dreamer, and Driver” by Government Technology. He also regularly authors articles at MuniNetworks.org.

The new report offers in-depth case studies of BVU Authority’s OptiNet in Bristol, Virginia; EPB Fiber in Chattanooga, Tennessee; and LUS Fiber in Lafayette, Louisiana. Each network was built and is operated by a public power utility.

Mitchell believes these networks are all the more important given the slow pace of investment from major carriers. According to Mitchell, “As AT&T and Verizon have ended the expansion of U-Verse and FiOS respectively, communities that need better networks for economic development should consider how they can invest in themselves.”

Broadband At the Speed of Light: How Three Communities Built Next-Generation Networks is available here.

About ILSR: Institute for Local Self-Reliance (ILSR) proposes a set of new rules that builds community by supporting humanly scaled politics and economics. The Telecommunications as Commons Initiative believes that telecommunications networks are essential infrastructure and should be accountable to residents and local businesses.

About Benton: The Benton Foundation works to ensure that media and telecommunications serve the public interest and enhance our democracy. We pursue this mission by seeking policy solutions that support the values of access, diversity and equity, and by demonstrating the value of media and telecommunications for improving the quality of life for all.

New Minnesota Networks Face Tough Challenges

MPR News recently ran two stories on the trials and tribulations of new and prospective broadband networks. Conrad Wilson's story about the continuing Monticello drama and Jennifer Vogel's account of factors affecting the American Reinvestment and Recovery Act (ARRA) projects give us a good idea of the many hurdles in the way of building new fiber-optic networks.

We have reported many times on the drama that has unfolded in Monticello. The municipally owned fiber-optic network has faced some withering challenges and yet perseveres.

Monticello asked for a modern communications network but the existing service providers, the cable and phone companies, insisted the city was "sufficiently wired." Conrad's reporting suggests otherwise:

Bill Tapper, who owns a cabinet company with clients around the world, recalls a time just a few years ago when the Internet was so slow it hurt business.

"The service we had in Monticello was horrible," he said. "My employees would sometimes take the data home where they had a better Internet connection than we did and do their uploads at night."

Tapper said he lost out on business, but at the time the established Internet service providers like phone and cable TV companies told Tapper and other frustrated business owners in town that the city was wired sufficiently.

Fibernet Monticello

After the community voted in favor of a publicly owned fiber-optic network, the incumbent provider, TDS, filed a lawsuit. The lawsuit strategically succeeded in stalling the development of the new network but did not destroy the project. Even though the incumbent provider describes pre-network status as "just fine before the city got involved," TDS took advantage of the delay they caused to began building their own fiber network.

Currently, subscribers in Monticello are benefitting from their high-speed fiber in ways beyond expanded and improved access. Because of the threat of competition, Charter is wooing the community with below rock-bottom (albeit temporary) rates.

But Minnesota has recently considered some legislation from State Rep. Linda Runbeck, R-Circle Pines, that would revoke local authority to decide if a community should build a network. She was quoted in the MPR story:

"You're putting the public sector right up against the private sector," Runbeck said. "It's clearly a very competitive industry ... It's a high risk industry. Why should we put that risk on the taxpayer?"

Why?? Perhaps because local employers were sending employees home to be more productive. Businesses need better connections that the few big cable and phone companies want to provide.

She states she will introduce the same bill next session and though her bill is dead this year, it continues to collect co-sponsors. Not a good sign for Minnesota's rural communities.

Jennifer Vogel's story on what has slowed the completion of some ARRA funded projects is a reminder of how hard it is to work in this space.

Because of the many projects funded by the ARRA, fiber is in demand and hard to obtain. Unsurprisingly, the price has increased, driving up the estimated costs of the 18 approved Minnesota projects. Contributing to the higher prices are problems with manufacturing, due to the earthquake loss of a major Japanese production plant a year ago.

As we often see, the bigger providers were able to jump to the front of the line when fiber did become available:

"[T]he fiber that did show up went to the folks who order more large quantities on a regular basis," said Farmers general manager Kevin Beyer. In other words, the $10 million western Minnesota project couldn't compete with bigger players with more clout. "The first orders filled should have been ours since we ordered ahead of others," he said. "But the game got changed a bit. There was a reshuffling of who mattered."

USDA RUS Logo

A bureaucratic bottleneck caused by paper work and insufficient staff at RUS adds to the disruption; the result is major delays in many projects. The situation has left communities and private builders in a tricky situation. Rather than wait for federal funds, some project leaders are striking out on their own:

Halstad [Telephone in northwestern Minnesota] was selected early and chose not to wait for stimulus dollars to be in hand, therefore securing most of the needed fiber before the shortage took hold. "We just jumped on it," said Tim Maroney, Halstad's CEO. "We didn't wait for the money to come. We started the engineering and negotiations. We took a chance."

Not all projects are in a position to take a chance, especially public projects that are under tighter scrutiny and subject to a higher level of transparency. Public networks must also contend with attacks from the private sector, which we have seen several times in Lake County. At $66 million, the project is the largest ARA approved project in Minnesota. Mediacom, which only serves a few towns in the project area, has filed a complaint with the Department of Agriculture Office of Inspector General. (See a PDF of the press release here) and the Minnesota Cable Communications Association has started a fear, uncertainty, and doubt campaign to kill the network for many rural people who Mediacom never plans to serve.

Aggressive and territorial incumbents, material shortages, and bureaucracy, are all hurdles facing the new networks. Municipal networks have the added threat of state preemption which can, and does, put the skids on great ideas to bring high-speed broadband to more people. As these projects are completed and the social and economic benefits of community networks becomes realized, we hope some of those hurdles will disappear.

States Scream at Feds for Preempting, Then Preempt Cities

Here at muninetworks.org, we continually see instances of state government preempting rights of local government to make their own decisions on broadband. It was no surprise to us to read Josh Goodman’s recent Stateline.org article, GOP Legislatures Try to Limit Local Government’s Power.

Goodman takes a look at a disturbing trend in the relationships between local and state authority; a relationship that has local government walking on eggshells. More and more local governments are now contending with their own state legislatures stripping them of specific decision-making authority. Some decisions are better made at the state level, but the concept of a micromanaging, conservative GOP legislature seems contradictory. Any fan of state floor debate, has listened to countless hours of republican legislators berating democrats for trying to overstep into local concerns. Could it be a change of heart or perhaps a very targeted way to ensure local compliance with a party agenda?

Many of these state lawmakers have accused the federal government of adopting an imperious, one-size-fits-all mentality and of subverting the rightful powers of states. At the same time, many high-profile debates in the Tennessee Capitol over the last two years — on topics such as local wage rules and local non-discrimination rules, among others — have centered on the state trying to limit the power of localities to make decisions for themselves.

Rather than take a diplomatic and collaborative approach, these lawmakers prefer to nullify local authority rather than risk a community decision with which they would disagree. 

While Goodman’s article discussed a variety of legislative hijackings of local authority - local wage rules, zoning, sprinkler systems, his observations parallel our findings on community owned networks. We have reported on many examples of preemption as it relates to the establishment and development of municipal broadband. Recently we have examined state legislative initiatives in North Carolina, Kentucky, Minnesota, Georgia, and we have mapped where the level of government obstruction varies from non-existent to outright bans.

State preemption on broadband widens the proximity between the decision makers and the people who need access to information infrastructure, much to the advantage of cable and DSL lobbyists. Banning and obstructing establishment of community networks results in unserved and underserved connections in places where corporate providers don’t care to develop. It is estimated that online commerce accounts for 4.7% of our economy, a figure expected to grow exponentially.

A community bypassed by the private sector is at a significant economic disadvantage when their local government has no power to invest in a network. 

“What it [legislation] is trying to do,” [State Representative Republican Glen] Casada says, “is make sure that the environment across Tennessee is the same.”

While Casada may not have been discussing municipal broadband, we hear his statement as an accurate description of states’ attempts to homogenize, often to the benefit of larger corporations that seek advantages over main street businesses.

Much like the landscape in Tennessee, each community has unique needs and goals. Taking a one-size-fits-all approach may be a good way to advance the agenda of some special interests, but it will not serve the interests of Tennesseans, whether the issue is local wage rules, zoning, sprinkler systems, or access to broadband.

Explaining Arkansas' Changed Barriers to Community Broadband

A little less than a year ago, the 88th Arkansas General Assembly created HB 2033, later known as Act 1050 [pdf]. The law made a few changes to the Telecommunications Regulatory Reform Act of 1997 and, while “a few changes” may not sound like much, they don’t need to be much in order to have a significant effect on the prospect of municipal broadband in Arkansas. The language gets specific about municipal broadband, related services, and alters the possibilities in Arkansas.

WHO AND WHAT...

Prior law prohibited any government entity from offering, directly or indirectly, basic exchange services. So, an Arkansas town couldn’t create its own telephone company that offered the traditional concept of telephone service, as defined in statute.

Act 1050 expands the prohibition to data, broadband, video, and wireless. With the exception of those owning municipal electric utilities or cable television systems, Arkansas towns are now prohibited from offering broadband services to nonpublic entities.

EVERYBODY EXCEPT…

Prior law allowed an exception for government entities owning municipal electric systems or television signal distribution systems to be able to make telecommunications capacities associated with the facilities available to the public. Offering basic local exchange services was still prohibited.

Act 1050 actually opens up the uses of those networks that may have been created for the use of the electric system or television signal distribution system. The new language adds permission to use those capacities to provide, directly or indirectly, voice, data, broadband, video, and wireless. There is even an insertion that allows for like use in future constructed or acquired facilities. Reasonable public notice and a hearing are required, which is the normal course of action before making new investments.

SOME SPECIAL CONSIDERATIONS…

Prior law allowed exceptions to the restrictions for some government entities’ ability to create their own networks for specific purposes. Emergency, E911, and 911 were not subject to the restrictions.

Act 1050 adds law enforcement services to that list. Medical institutions and higher ed institutions are also given an exception to the restrictions, as long as the telecommunications services are strictly for medical, academic, research, and healthcare information technology. This is different from the past law, which used the broad “educational institutional” label.

ONLY IF YOU WANT TO…

New in Act 1050 is an entire subsection that lets government entities know that they can choose to purchase voice, data, broadband, video, or wireless telecommunications services from a private carrier even if the local government is operating a network that could serve them.

The new 2011 exception creates an environment that expressly allows municipal electric and cable television systems to provide a number of telecomunnications services, including broadband. However, the law is also more clear in preempting local authority for communities that do not own electric or cable television systems.  

The law permits municipal electric and television utilities to offer "voice" services but continues to ban "local exchange services," an unclear distinction. We read it to suggest that the munis can offer basic VOIP but may face lawsuits if they do much more.  

People like the convenience of paying for internet, television, and phone all in one bill and the large telecom companies know it. Without the ability to offer basic exchange services, municipal networks may be at a strategic disadvantage relative to private competitors. Because of the continued ban on providing basic exchange services and the contradictory exception to allow "voice" services, the future is unclear. It is often this very ambiguity that prevents communities from considering creating their own networks.

While not coming out and banning municipal networks, Act 1050 continues the hostile environment for publicly owned networks. However, there is now a fairly clear path for muni electric utilities to build the networks communities need, if they so choose.

Big Bucks: Why North Carolina Outlawed Community Networks

Less than a year after North Carolina became the 19th state to create barriers to community networks, effectively outlawing them, the non-partisan organization Follow the Money has crunched the numbers and found that private telecommunications interests donated quite heavily to lawmakers that pushed their bill through the Legislature:

According to a report by the National Institute on Money in State Politics, Dialing Up the Dollars: Telecommunication Interests Donated Heavily to NC Lawmakers, Republican lawmakers and those who held key leadership positions, sponsored the bill, and/or who voted in favor of the bill received considerably more campaign contributions from the telecommunication donors than did their colleagues. For example, lawmakers who voted in favor of HB 129 received on average 76 percent more than the average received by those who voted against the bill. The four primary sponsors of the bill received an average of $9,438 each, more than double the $3,658 given on average to lawmakers who did not sponsor the bill.

Recall that Time Warner Cable pushed this bill for years with some help from AT&T, CenturyLink, and others that stood to benefit by limiting broadband competition. But the Legislature wisely refused to enact it... until 2011.

Now we have a better sense of what may have shifted the balance. Consider this:

Thom Tillis

Thom Tillis, who became speaker of the house in 2011, received $37,000 in 2010–2011 (despite running unopposed in 2010), which is more than any other lawmaker and significantly more than the $4,250 he received 2006–2008 combined. AT&T, Time Warner Cable, and Verizon each gave Tillis $1,000 in early-mid January, just before he was sworn in as speaker on January 26. Tillis voted for the bill, and was in a key position to ensure it moved along the legislative pipeline.

Running unopposed for office, he collected more money from the cable and phone companies than any other Representative and almost 10 times as much as in the previous two cycle combined. As Speaker, he set the agenda and decided priorities. At a time when communities need as many broadband options as possible, he pushed a bill to limit competition.

It does not prove corruption, but in the immortal lyrics of C&C Music Factory, it "makes you go, hmmmm."

Senator Apodaca, one of the lead supporters of the bill in the Senate, received $21,000 from telecom political action committiees. Only one other Senator came close to that total -- Senate President Pro Tempore Phil Berger. Most Senators collected well under $10,000.

How did others in leadership positions do?

Senate President Pro Tempore Phil Berger received $19,500, also a bump from the $13,500 he received in 2008 and the $15,250 in 2006. He voted for the bill.

Senate Majority Leader Harry Brown received $9,000, significantly more than the $2,750 he received in 2006 and 2008 combined. Brown voted in favor of the bill.

Democratic Leader Martin Nesbitt, who voted for the bill, received $8,250 from telecommunication donors; Nesbitt had received no contributions from telecommunication donors in earlier elections.

Oppose HB 129

None of this data suggests quid pro quo corruption. We are not saying that these people only supported this bill because they got thousands upon thousands of dollars from those who wanted it passed.

Nonetheless, the Legislature decided to prioritize a bill to revoke local decision-making authority from communities to make them more dependent on a small number of cable and DSL companies that just happened to give tens of thousands of dollars to key lawmakers.

Hmmmmm.

No use crying about it now. The question is where we go from here. Time to hold their feet to the fire -- after the bill passed, CenturyLink claimed "Thanks to the passage of House Bill 129, CenturyLink has gained added confidence to invest in North Carolina and grow our business in the state."

Can anyone attest to CenturyLink increasing investment in North Carolina? Almost certainly not. AT&T has admitted it won't continue the U-Verse rollout it once promised state legislators.

Let's collect the stories of people denied fast, affordable, and reliable access to the Internet due to laws limiting local authority. Always feel free to share such stories with us.

Charter Fights Dirty to Kill Competition in Monticello

When Monticello, Minnesota, decided to build its community fiber network -- Fibernet Monticello -- it expected the incumbents to lower their prices and fight to keep subscribers. But Monticello had no idea the lengths to which they would go.

The telephone incumbent, TDS, delayed the project for a year with a frivolous lawsuit and then built its own fiber-optic network while dramatically lowering its prices. We have yet to find another community in North America with two citywide FTTH networks going head to head.

Because of the city's network, Monticello's residents and businesses have access to better connections than the biggest cities in Minnesota can get.

Now, Charter has weighed in by cutting its rates to what must be below cost to gain subscribers. It reminded us of a shoot-out, so we created this infographic to explore what is at stake.

The Good, the Bad, and the Ugly in Minnesota

Download a higher resolution PDF here.

Charter has taken a package for which it charges $145/month in Rochester, Duluth, Lakeville, and nearby Buffalo (MN) and is offering it for $60/month - price guaranteed for 2 years. A Monticello resident supplied us with this flyer, which this person had received multiple times at their home over the course of a month. (See below for the full flyer).

Charter's rate sheet

This is either predatory pricing or the cable industry is out of control with its rate increases. If that package costs Charter more than $60/month to supply, then it is engaging in predatory pricing to drive competitors out of the market. Consider that Charter may be taking a loss of $20/month ($240/year) from each household that takes this offer. They can do that by cross-subsidizing from nearby markets where they face very little competition.

If that package costs $60 or less per month to Charter, then it has an incredibly high profit margin and the fundamentals of the market have to be questioned.

Traditional economic theory tells us that very large profits anywhere will attract new market entrants. Yet the private sector refuses to provide competition aside from the common duopoly of DSL/cable. And these companies use their incredible lobbying power to push bills such as Minnesota HF 2695 that would ban communities from building their own networks.

Unfortunately, building their own networks is often the only way for communities to create real competition and investment in next-generation networks. But communities then have to face dirty tactics from these massive companies bent on maintaining their marketshare using any means necessary.

The aggregate benefit to Monticello is very large right now. Prices for telephone, cable, and broadband have all dropped, keeping millions of dollars in the local economy. But Fibernet Monticello has missed its revenue targets because TDS and Charter care more about driving competition out of town than a fair fight.

The question is whether dirty tactics will successfully run Fibernet Monticello out of business, allowing TDS and Charter to resume gouging subscribers with their ordinarily high rates. If they do, it will be ironic that FiberNet Monticello, which brought the fastest residential speeds in the nation to a small Minnesota town while lowering the prices everyone pays for telephone, broadband, and cable, will be regarded as a failure.

Minnesota Legislation Would Revoke Local Authority over Broadband

We have heard rumors that the Minnesota Cable Communications Association (MCCA) has ramped up its lobbying efforts in the capitol over the past few weeks and now we know why -- Representative Runbeck is today introducing MN HF 2695, a bill undoubtedly written by the cable companies.

Update: Apparently MCCA is denying they are behind this bill. Given how blunt the bill is, I'm inclined to take them at their word. I would expect a bill by MCCA to be more strategic, refusing to admit they wanted to revoke all authority outright. Nonetheless, this bill is still a giant gift to the incumbent cable operators in the state.

Much of Minnesota lacks access to next generation broadband networks -- the kind of networks needed for economic development and maintaining a high quality of life. Minnesota law already discourages communities from building their own next-generation networks but they still have the authority to choose.

This bill would deny them a choice. If passed, MN HF 2695 would be a power grab by the state on behalf of big cable companies to prevent any threat of broadband competition, denying communities local self-determination on matters of essential infrastructure.

MCCA has been trying to kill a broadband stimulus project on the North Shore that would connect thousands of people who have no access to modern broadband because it overlaps in places with Mediacom turf. Mediacom recognizes that if it can kill the network owned by Lake County, it will have no competition to worry about for the foreseeable future.

Private telecom companies are not about to go overbuild rural areas or pick a fight with Mediacom. The only legitimate hope for a real choice in broadband in Minnesota is in areas where communities choose to do it themselves.

We believe communities should be free to make that choice. The cable companies, and a number of elected officials in Minnesota, believe that communities should not be trusted with that decision.

Resource: Useful Flyers in Georgia Legislation

After AT&T began pushing a bill in Georgia to revoke local authority to decide to build a publicly owned broadband network, the Georgia Municipal Assocation (GMA) and the SouthEast Assocation of Telecommunications Officers and Advisors began reaching out to Georgia's legislators to explain how the private sector has left serious gaps in broadband coverage, which stopped the bill. Below are two flyers they report being particularly helpful.

GMA, SEATOA, and the Institute for Local Self-Reliance are among the vast majority that believe communities should decide locally if a community network makes sense to bring next-generation connections to local businesses and residents.

Georgia is a conservative state and AT&T had enlisted the support of the Senate Majority Leader in pushing their anti-competition broadband bill. Unfortunately for AT&T, their CEO was too candid on calls with Wall Street, contradicting AT&T's lobbyist talking points in Georgia.

Georgia Flyer1

Note, that AT&T was originally trying to define broadband at the absurd 200kbps level but a substitute bill would have bumped it up to a still-too-low 768kbps, which is referenced above.

The other flyer that apparently made a difference with legislators is here:

Georgia Flyer2

Rememeber that elected officials often think of broadband in binary terms. You have it or you don't. In their mind, if you have options aside from dial-up, the problem is solved. These are people that often do not know what is needed to attract economic development, work efficiently from home, or successfully compete remote education courses.

Graphics that explain why we need next-generation networks rather than simply expanding last-century DSL can be remarkably helpful.

Before talking with elected officials, consider adapting one of these flyers or even just using it to explain why communities should be free to decide locally if a network is a smart investment for them.