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Minnesota Providers Push for Draconian Limits on Public Networks in Minnesota

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By christopher on March 4, 2010

Minnesota is one of the eighteen states that have enacted specific barriers to prevent the public sector from building networks (protecting incumbents from any competition). It presently has the uniquely high - 65% - referendum requirement on communities that want to build a network that will offer telephone services (which thereby includes all fiber-to-the-home triple play networks).

However, up in Cook County, they could not meet that threshold. They had a referendum in which 56% voted yes - a majority but not satisfactorily large for a 1915 MN law. State Representative Dill and Senator Bakk realized this was crazy - state law set too high a bar for the County they represented. Cook would be unable to build the network they need - remember that the whole County was isolated following a single fiber cut because Qwest does not invest in communities where profits are scant (let's not blame Qwest though - private companies are not supposed to be charities and they should not be expected to build the essential infrastructure communities need).

Rep Dill and Sen Bakk introduced a bill to reduce the 65% to 50% referendum but the private providers must have thrown some sort of tantrum. Before the bill could even be heard, incumbent providers had reached some sort of a deal with Rep Dill and Sen Bakk, agreeing that they would not oppose the bill if it only applied to Cook County. Cook would be able to build its network, but all other local governments, many very rural and in similar but not equal severity, would be stuck with the 65% referendum requirement if they wanted to build a similar network. In the House, this "compromise" has flown through multiple committees with little debate.

In the Senate, some fought back, wondering if perhaps massive incumbent providers shouldn't be the ones to determine if communities can build modern networks -- especially when the providers won't. So the bill was introduced in the Senate. It was quickly amended to the incumbent demanded-text, but was then amended back again to a 50% majority for all MN (better than the 65% in current law). This was all in the Senate Committee dealing with Telecom. Confused yet?

It was next forwarded to the Committee dealing with Local Government, where the providers had created a new, super secret compromise with a number of Senators. Providers agreed to the 50% language for all, if they got some draconian additional language that made it incredibly difficult for communities in other ways. Just before the meeting, Qwest's lobbyist was hanging with some of the cable co lobbyists - that combination never bodes well for those of us that want competition.

As a side note, the 65% to 50% requirement should not require appeasing the incumbent providers. They already have tremendous advantages -- including decades of generous government subsidies and massive scale. The idea that Qwest, a massive company operating in 14 states, needs to be protected from a small community in outstate Minnesota baffles me. We need more competition, the incumbents shouldn't be able to attach conditions, further privileging their advantages in the market.

The Committee offered an amendment (attached here) that represented the provider "compromise." In return for incumbents not opposing the change to law, communities would have a 50% referendum requirement in addition to a variety of additional requirements, some far more onerous than the 65% referendum represented. In particular, the local governments would have to provide detailed business plans to their competitors, word the referendum in a specific manner not previously required by law, and subject any agreement between the local government and an entity related to the network to competitive bidding requirements -- which would totally disrupt the freedom of communities to choose their partners based on criteria they feel most important.

In short, the Committee took a bill intended to lower the barrier to entry for communities to build the networks they need, and they RAISED it. One might expect such a significant shift was debated, perhaps hotly. It was not. I was the lone testifier about the amendment but I might as well have sung a song. There were no questions, no discussion. Just like that, it was over. Few had known of the amendment's existence, let alone read it. Without so much as a word, the Committee announced its intention to create more barriers for community networks -- the one hope for competition and modern infrastructure in Minnesota outside the metro area.

More on this to come -- I certainly hope some of the Senators come to their senses. I do not know where the bill is headed next because its status is not yet updated, some 24 hours after the Committee adjourned.

These are the comments I intended to offer on the bill before it was hijacked by the amendment:

I am Christopher Mitchell, a researcher at the Institute for Local Self-Reliance. We are a 35 year old non-profit in Minneapolis that focuses on policies that encourage community development. Five years ago, we developed an interest in telecommunications because we recognized these networks are a necessity for communities. My research has focused on community networks, particularly fiber-to-the-home deployments.

I support this bill because it lowers a significant barrier to building the telecommunications infrastructure needed by Minnesotans. People in rural areas have found themselves unable to enjoy modern broadband technologies because building these networks is incredibly expensive and offers little hope of profits for the private sector absent public subsidization.

Just as many rural communities built their own electrical networks to ensure they could partake in the essential utility of their day, some have now started to build these broadband networks. The private sector is unable in many cases and unwilling in others, to build the necessary networks. Communities must already overcome many barriers to build a network.

Some, like the high cost of building a network, are inevitable. But the 65% supermajority, unique in the nation, is not.

The 65% referenda requirement invites providers who do not want to deal with competition to spend heavily, knowing that they only have to convince or confuse a minority of voters to maintain the status quo.

In truth, ILSR believes Minnesota should join the majority of states that have enacted no state barriers to public ownership of networks. In a time when the State itself has recognized the value of greatly increasing access to broadband networks, it should not be creating additional barriers to discourage the people most motivated to build them. After all, local governments are already structurally accountable to their citizens. If they cannot build these networks, the odds are that no one will.

To the extent we want to encourage competition in policy, barriers to public ownership have the opposite effect. Too many of our rural areas cannot attract even a single broadband provider. They will certainly never see the benefits of competition unless freed to build their own network.

One hundred years ago, we saw the results of expecting the private sector alone to build the electrical infrastructure. Some 90% of farms had no access. Though private utilities argued then that electricity was too complicated for local governments, the public sector stepped up and ensured all Americans could benefit from that essential technology.

I urge the Committee to reduce, or ideally remove, this barrier to essential infrastructure.

Photo by Jackanapes, used under creative commons license.

New Hampshire Bill Would Allow Communities to Build Networks

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By christopher on February 10, 2010

The Design Nine blog alerted me to a bill in New Hampshire that would modify state law to allow communities to build publicly owned networks. It appears they may currently invest in a network in unserved areas -- though few places are entirely unserved. Most places have pitifully slow and overpriced DSL available to at least some residents. This bill would expand their authority to build networks.

Unfortunately, I have no sense of how likely this is to pass. The story in the Concord Monitor suggests it is seeing intense opposition from the usual sources - the private companies that want to decide alone who gets access to the Internet at what speed and at what price.

Unfortunately, the proponents of the change appear poised to limit themselves to a purely open access model - a limitation that could greatly hurt them as they build a network. Communities must be free to choose a business model that works, not have it imposed by a "compromise" at the legislature.

Requiring open access actually compromises the vitality of the network. Open access is an incredibly powerful idea - introducing real competition where people have long had no choices. But no community has yet made it work financially from the start. The early years are brutal for a network where the owner cannot provide services -- there are difficulties in aligning the incentives for those involved and generally insufficient revenue to make debt payments in the early years.

Communities must fight for the right to offer services, even if they would prefer not to. Offering services generates more revenue when it is most needed - the early years. Allowing Comcast and FairPoint to define the business models of communities is poor policy. The New Hampshire legislation - HB 1242 - is available here.

We wish communities like nDanville and the Wired Road luck as they expand to citywide networks on an entirely open access basis. However, existing experience suggests that communities should focus first on getting the numbers to work and then opening the network to greater competition down the road.

Community Broadband Preemption Map

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Eighteen states in the U.S. have enacted barriers to either make it difficult or impossible for communities to build publicly-owned networks. We have developed an interactive map that 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. Clicking on the map displays details about the barrier, our commentary, and a link to the statute(s).

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.
Just as with the physical road networks upon which we have depended for nearly one hundred years, broadband information networks should be operated in the public interest. These eighteen states and their barriers to public ownership are one of the reasons the U.S. is rapidly becoming less competitive relative to peer nations in the economy of the 21st century.
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Statewide Video Franchising: Bad for Communities

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By christopher on August 27, 2009

Folks who are mostly interested in broadband are probably unfamiliar with video franchising laws. Many people still apparently believe that cable companies are able to get exclusive franchises from the city (granting them a monopoly on providing cable television). However, that is not true and has not been true for many years.

Most cable companies still have a de facto monopoly because it is extremely difficult to overbuild an existing cable company - the incumbent has most of the advantages and building a citywide network is extremely expensive. This is not a naturally competitive market; it is actually a natural monopoly.

However, most people want a choice in providers (something that goes beyond a single cable company and a satellite option or two depending on whether you rent/own and your geographic location. In talking with many local officials and the National Association of Telecommunications Officers and Advisers (NATOA), it seems that almost every local government wants more competition in its community too.

This is where telephone and cable company lobbyists have stepped in - more successfully at the state level than at the federal level. They have convinced legislators that the barrier to more competition is local authority over the franchise (the rules a company agrees to in return for the right to use the community's Right-of-Way in deploying their network). These rules include red-line prohibition (you cannot refuse to serve poor neighborhoods), an affordable "basic" tier of service, local public access channels, broadband connections at public buildings, etc.

Some states have listened to the lobbyists and enacted statewide franchising - where local communities are stripped of the authority to manage their Right-of-Way and companies can offer video services anywhere in the state by getting a state franchise from the state government. Every year, we gather more data that this practice has hurt communities, raised prices, and barely spurred any competition. Most of the competition it is credited with spurring came from Verizon's FiOS deployments, which would have occurred regardless of state-wide franchise enactment.

This touches directly on broadband because the statewide franchises often give greater power to companies like Verizon to cherry-pick who gets next generation broadband. Wealthier neighborhoods will increasingly get access to faster networks as private companies are allowed to cherry pick. This practice not only leaves poorer parts of town behind, it makes them even harder to serve when those areas cannot be balanced with higher-revenue sections producing sections of town (who already have service).

Recently, this issue resurfaced with new evidence that state-wide franchising was little more than a giveaway to private companies who are increasingly profits at the expense of communities who still have no choice in providers.

Both Phillip Dampier at Stop the Cap and Karl Bode at DSLReports have deeply linked posts on this matter that cover Michigan, Tennessee, and Wisconsin. Stop the Cap also delves into how Comcast spends in millions lobbying - you didn't think we get hit for rate increases every year for nothing, did you?

The Detroit Free Press ran Brian Dickerson's "With Regulation like this, who needs Monopoly?"

Now, three years after AT&T's champions in the Legislature crowed that Comcast's reign as the 800-pound. guerrilla of Michigan cable service was over, Comcast remains the state's dominant provider, maintains a de facto wire-line monopoly in most its franchise areas, charges higher rates for basic cable service, and has far fewer legal obligations to the subscribers and communities it serves.

What most of this comes down to is accountability. Local governments are accountable to the citizens. Companies like Comcast and AT&T are accountable to their shareholders. There is no perfect arrangement, but I would err on the side of a network being accountable to the community.

Photo courtesy of photocamp.

Link: 
State Wide TV Franchising Not Living Up To Lobbyists' Promises

What Can States do?

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By christopher on August 12, 2009

What can states do?

Many states want to improve broadband access for their citizens. Some states genuinely want to act and others are content to give some money to industry-front group Connected Nation and form a Task Force in order to give the appearance that they are doing something rather than actually taking action.

However, the problem is difficult because in a time of severe budget crunches, states may not have the funds to invest directly in infrastructure or help communities do so themselves. There are some options - and I recently highlighted one: Virginia's Broadband Infrastructure Loan Fund.

The Virginia Resources Authority (VRA) now has a revolving loan fund to help communities build the broadband infrastructure they need. Unfortunately, the fund has started empty but they are in search of grants to get started until the state can seed it.

Even without the revolving loan fund, which keeps a very low interest rate for loans, the VRA is available to help communities that want to approach the capital markets for infrastructure funds. Communities may not have sufficient experience in this arena or may just benefit by having the VRA combine multiple small needs into a larger package at a better rate.

Elsewhere, the Vermont Telecommunications Authority was supposed to serve a similar function but seemed to be immediately captured by Fairpoint and turned into a tool for private companies.

One of the most basic things a state should do is ensure it has not created barriers to public investments in broadband networks. It may be a few years old, but the American Public Power Association created a list of laws blocking or retarding community broadband networks. These should be repealed. Those arguing that the public sector has too many advantages should read our discussion about the level playing field.

Capitol photo by Rob Pongsajapan

New Network Neutrality Bill

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By christopher on August 4, 2009

Representatives Markey and Eshoo have introduced a House bill to preserve network neutrality on the Internet - a means to ensure users are able to choose what sites they visit rather than allowing gatekeepers like AT&T or Comcast to influence the decisions by speeding up or slowing down some sites.

Imagine if AT&T subscribers could access Google twice as fast as Yahoo (or another start up search engine) because Google cut deals with AT&T for preferential treatment. The Internet as we know it would change substantially and innovation would slow because those who could afford to cut deals with major service providers would attract most viewers.

It is important to note that public ownership largely solves the problems that make this bill necessary. Companies that maximize profits above all else are willing to degrade the Internet in order to pad profits whereas networks that put the good of the community above profits tend not to interfere with user freedom. However, we find that for an issue this important, having it reinforced both federally and locally is a good idea.

The bill currently has no additional listed cosponsors. To my knowledge, bills like this tend to do well in the House but die in the Senate. Video from Save The Internet:

I have included the text of the bill below for convenience, but did not include the formatting. You can see it nicely formatted via THOMAS or check out the Free Press' Seven Reasons Why We Need Net Neutrality Now.

A BILL

To amend the Communications Act of 1934 to establish a national broadband policy, safeguard consumer rights, spur investment and innovation, and for related purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Internet Freedom Preservation Act of 2009'.

SEC. 2. FINDINGS.

The Congress finds the following:

(1) Our Nation's economy and society are increasingly dependent on Internet services.

(2) The Internet is an essential infrastructure that is comparable to roads and electricity in its support for a diverse array of economic, social, and political activity.

(3) Internet technologies and services hold the promise of advancing economic growth, fostering investment, creating jobs, and spurring technological innovation.

(4) As the Nation becomes more reliant upon such Internet technologies and services, unfettered access to the Internet to offer, access, and utilize content, services, and applications is vital.

(5) The global leadership in high technology that the United States provides today stems directly from historic policies that embraced competition and openness and that have ensured that telecommunications networks are open to all lawful uses by all users.

(6) The Internet was enabled by those historic policies and provides an open architecture medium for worldwide communications, providing a low barrier to entry for Internet-based content, applications, and services.

(7) Due to legal and marketplace changes, these features of the Internet are no longer certain, and erosion of these historic policies permits telecommunications network operators to control who can and who cannot offer content, services, and applications over the Internet utilizing such networks.

(8) The national economy would be severely harmed if the ability of Internet content, service, and application providers to reach consumers was frustrated by interference from broadband telecommunications network operators.

(9) The overwhelming majority of residential consumers subscribe to Internet access service from 1 of only 2 wireline providers: the cable operator or the telephone company.

(10) Internet access service providers have an economic interest to discriminate in favor of their own services, content, and applications and against other providers.

(11) A network neutrality policy based upon the principle of nondiscrimination and consistent with the history of the Internet's development is essential to ensure that Internet services remain open to all consumers, entrepreneurs, innovators, and providers of lawful content, services, and applications.

(12) A network neutrality policy is also essential to give certainty to small businesses, leading global companies, investors, and others who rely upon the Internet for commercial reasons.

(13) A network neutrality policy can also permit Internet service providers to take action to protect network reliability, prevent unwanted electronic mail, and thwart illegal uses in the same way that telecommunications network operators have historically done consistent with the overarching principle of non-discrimination.

(14) Because of the essential role of Internet services to the economic growth of the United States, to meet other national priorities, and to our right to free speech under the First Amendment of the Constitution of the United States, the United States should adopt a clear policy preserving the open nature of Internet communications and networks.

SEC. 3. INTERNET FREEDOM.

Title I of the Communications Act of 1934 (47 U.S.C. 151 et seq.) is amended by adding at the end the following:

`SEC. 12. INTERNET FREEDOM.

`(a) Internet Freedom Policy- It is the policy of the United States--

`(1) to protect the right of consumers to access lawful content, run lawful applications, and use lawful services of their choice on the Internet;

`(2) to preserve and promote the open and interconnected nature of broadband networks and to enable consumers to connect to such networks their choice of lawful devices, as long as such devices do not harm the network;

`(3) to promote consumer choice and competition among providers of lawful content, applications, and services;

`(4) to ensure that consumers receive meaningful information regarding their communications services;

`(5) to ensure the ability to use or offer lawful broadband content, applications, and services for lawful purposes, as has been the policy and history of the Internet and the basis of user expectations since its inception;

`(6) to guard against discriminatory favoritism for, or degradation of, lawful content, applications, or services by network operators based upon their source, ownership, or destination on the Internet;

`(7) to preserve the freedom of independent Internet content, application, and service providers to compete and innovate;

`(8) to foster an evolving level of capacity available throughout communications networks to support competition and innovation for lawful Internet content, applications, and services, including applications and services that require substantial downstream and upstream bandwidth; and

`(9) to ensure that the Internet remains an indispensable platform for innovation in the United States economy, thereby enabling the Nation to provide global leadership in online commerce and technological progress.

`(b) Duties of Internet Access Service Providers- With respect to any Internet access service offered to the public, each Internet access service provider shall have the duty to--

`(1) not block, interfere with, discriminate against, impair, or degrade the ability of any person to use an Internet access service to access, use, send, post, receive, or offer any lawful content, application, or service through the Internet;

`(2) not impose a charge on any Internet content, service, or application provider to enable any lawful Internet content, application, or service to be offered, provided, or used through the provider's service, beyond the end user charges associated with providing the service to such provider;

`(3) not prevent or obstruct a user from attaching any lawful device to or utilizing any such device in conjunction with such service, provided such device does not harm the provider's network;

`(4) offer Internet access service to any person upon reasonable request therefor;

`(5) not provide or sell to any content, application, or service provider, including any affiliate provider or joint venture, any offering that prioritizes traffic over that of other such providers on an Internet access service; and

`(6) not install or utilize network features, functions, or capabilities that impede or hinder compliance with this section.

`(c) Commission Action- Not later than 90 days after the date of enactment of the Internet Freedom Preservation Act of 2009, the Commission shall promulgate rules to ensure that providers of Internet access service--

`(1) fulfill the duties described in subsection (b);

`(2) disclose meaningful information to consumers about a provider's Internet access service in a clear, uniform, and conspicuous manner and in conformity with the duties described in subsection (e);

`(3) generally, to the extent feasible, make available sufficient network capacity to users to enable the provision, availability, and use of an Internet access service to support lawful content, applications, and services that require high bandwidth communications to and from an end user; and

`(4) not operate Internet access services in an anticompetitive, unreasonable, unfair, discriminatory, or deceptive manner.

`(d) Reasonable Network Management- Nothing in this section shall be construed to prohibit an Internet access provider from engaging in reasonable network management consistent with the policies and duties of nondiscrimination and openness set forth in this Act. For purposes of subsections (b)(1) and (b)(5), a network management practice is a reasonable practice only if it furthers a critically important interest, is narrowly tailored to further that interest, and is the means of furthering that interest that is the least restrictive, least discriminatory, and least constricting of consumer choice available. In determining whether a network management practice is reasonable, the Commission shall consider, among other factors, the particular network architecture or technology limitations of the provider.

`(e) Transparency for Consumers- With respect to any Internet access service or private transmission capacity offered to the public, each Internet access service provider shall provide to consumers and make publicly available detailed information about such services, including information about the speed, nature, and limitations of such services. Each Internet access service provider must publicly disclose, at a minimum, network management practices that affect communications between a user and a content, application, or service provider in the ordinary, routine use of such broadband service.

`(f) Stand-Alone Internet Access Service- Within 180 days after the date of enactment of the Internet Freedom Preservation Act of 2009, the Commission shall promulgate rules to ensure that an Internet access service provider does not require a consumer, as a condition on the purchase of any Internet access service offered by such provider, to purchase any other service or offering. The Commission shall adopt any other rules it determines necessary to make such requirement effective and meaningful for consumers.

`(g) Other Services- Not later than 180 days after the date of enactment of the Internet Freedom Preservation Act of 2009, the Commission shall complete all actions necessary to--

`(1) promote an ever-increasing level of Internet access service to end users;

`(2) ensure that such evolving level of service provided to end users is capable of supporting lawful content, applications, and services and provides ample bandwidth for such traffic to and from an end user;

`(3) promote both facilities-based and nonfacilities-based competition to enable information service providers to have marketplace choices for transmission capacity to reach end users;

`(4) define the term `private transmission capacity services';

`(5) clarify whether private transmission capacity services may not be subject to the duties described in subsections (b)(5) and (b)(6);

`(6) ensure that private transmission capacity services do not undermine the purposes of this Act and do not diminish or degrade the level of Internet access service offered to the public by the same provider; and

`(7) ensure that private transmission capacity services are not offered in an anticompetitive, unreasonable, discriminatory, or deceptive manner.

`(h) Implementation- Not later than 180 days after the date of enactment of the Internet Freedom Preservation Act of 2009, the Commission shall--

`(1) prescribe rules to permit any aggrieved person to file a complaint with the Commission concerning any violation of this section;

`(2) establish enforcement and expedited adjudicatory review procedures consistent with the objectives of this section, including the resolution of any complaint described in paragraph (1) not later than 90 days after such complaint was filed, except for good cause shown;

`(3) prescribe rules with respect to the reasonable network management practices described under subsection (d) for all Internet access services; and

`(4) prescribe rules with respect to the appropriate disclosure obligations under subsection (e) for private transmission capacity services.

`(i) Enforcement-

`(1) IN GENERAL- The Commission shall enforce compliance with this section under title V, except that--

`(A) no forfeiture liability shall be determined under section 503(b) against any person unless such person receives the notice required by section 503(b)(3) or section 503(b)(4); and

`(B) the provisions of section 503(b)(5) shall not apply.

`(2) SPECIAL ORDERS- In addition to any other remedy provided under this Act, the Commission may issue any appropriate order, including an order--

`(A) directing an Internet access service provider to pay damages to a complaining party for a violation of this section or the regulations promulgated pursuant to this section; or

`(B) to enforce the provisions of this section.

`(j) Illegal Conduct- Nothing in this Act shall be construed or interpreted to affect any law or regulation addressing prohibited or unlawful activity, including any laws or regulations prohibiting theft of content.

`(k) Definitions- For purposes of this section, the following definitions apply:

`(1) INTERNET ACCESS SERVICE- The term `Internet access service' means a 2-way transmission offered by an Internet access service provider that transmits information between 2 or more points and that has as its primary, but not exclusive, purpose the enabling of data to be sent or received from the Internet.

`(2) INTERNET ACCESS SERVICE PROVIDER- The term `Internet access service provider' means a person or entity that operates or resells and controls any facility used to provide an Internet access service directly to the public, whether provided for a fee or for free, and whether provided via wire or radio, except when such service is offered as an incidental component of a noncommunications contractual relationship.

`(3) USER- The term `user' means any residential or business subscriber who, by way of an Internet access service, takes and utilizes Internet access services, whether provided for a fee, in exchange for an explicit benefit, or for free.

`(4) REASONABLE NETWORK MANAGEMENT- The term `reasonable network management' shall be defined by the Commission through regulations.'

Photo from Wikimedia Commons.

North Carolina - Netroots activism blocks effort to ban municipal Internet services

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Publication Date: 
May 13, 2009
Author(s): 
Fiona Morgan
Publication Title: 
Indyweek

This article wraps up the 2009 efforts of private companies to pass what some have termed the Incumbent Protection Act - an effort by private companies to use the State Legislature to prevent communities from building the fast broadband networks in which the private companies themselves refuse to invest.

Article
Full Article - Netroots activism blocks effort to ban municipal Internet services
The next Telecom Battles at the Legislature
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