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Local Authority Restrictions One of the "Worst Policy Ideas of 2014" According to Wonkblog

We are well into the new year; a look back at 2014 can be instructive if we strive to learn from our mistakes. A December article from the Washington post Wonkblog listed "11 of the worst policy ideas of 2014" and, of course, state barriers restricting local telecommunications authority was on the list:

Fed up with limited choices, high prices and shoddy service, many cities want to turn their back on large Internet providers by building their own municipal broadband service. Standing in their way are state legislatures, lobbyists for the telecom industry and even federal lawmakers who believe states should have control over what projects their cities invest in.

Fortunately, this is something that we can change - let's educate elected officials to ensure there are no new barriers and existing barriers are repealed!

Missouri Bill Creates New Barriers to Community Networks

Republican State Representative Rocky Miller began the new legislative session with a bill designed to yank authority from local communities that need better connectivity.  Even though the state already preempts local authority to sell telecommunications services and requires a referendum for cable, there is a current exemption for "Internet-type services." HB 437 [PDF] removes that exemption and would make it all but impossible for a local community to ensure they had access to the same types of services now available in Kansas City.

The bill prohibits communities from offering services if there are any private providers with no regard to the type or quality of those services. There can be no mistake that bills such as these are aimed directly at communities contemplating building their own gigabit networks because the existing service providers have refused to invest in the needed infrastructure.

Cities like Columbia, Nixa, and Carl Junction have taken proactive steps to encourage investment economic development growth that this bill would prevent. In Springfield, the city would have more than 1,000 fewer jobs without the city-owned SpringNet, which we have covered multiple times.

The Coalition for Local Internet Choice (CLIC) released this statement about the bill:

The state of Missouri is the latest legislature to attempt to erect barriers to the deployment of broadband networks that are critical to the future of its local economies and the nation, via House Bill 437. High-bandwidth communications networks are the electricity of the 21st century and no community should be stymied or hampered in its efforts to deploy new future-proof communications infrastructure for its citizens – either by itself or with willing private partners. It is ironic that while the International CES show in Las Vegas spotlighted hundreds of new devices and applications that require big bandwidth, legislation would be introduced in Missouri that would impair the development of networks that enable that bandwidth.

The hundreds of communities, companies, and private citizens that make up the Coalition for Local Internet Choice (CLIC) urge the Missouri legislature to reject this ill-informed effort to tie the hands of Missouri’s own communities.

Over the past year, the community of Columbia contended with incumbent CenturyLink's efforts to block its attempt to improve connectivity for local businesses. Consultants recently found that 84% of local businesses do not get the Internet speeds they need. While Columbia Water & Light now offers dark fiber, the consultants suggested developing an open access fiber network for commercial customers.

Miller's district includes Jefferson City, one of the communities where CenturyLink announced it would offer limited gigabit services.

HB 437 is not scheduled for a hearing yet, but we are watching and will post relevent updates.

Update: Missouri removed the referendum requirement for municipal cable in 2010. It is unclear but cities do not appear to have the authority to offer cable services in any circumstance presently.

CLIC Leadership on Gigabit Nation to Talk Breaking Down State Barriers

Jim Baller and Joanne Hovis, two leading voices in the drive to restore local authority, recently spoke with Craig Settles on Gigabit Nation. Baller and Hovis, the President and the CEO, of The Coalition for Local Internet Choice (CLIC) spent about an hour discussing how CLIC is finding ways to help businesses, individuals, and public entities work with elected officials to retain or regain the right for local authority.

From the Gigabit Nation website:

Listeners gather insights to working with willing incumbents, developing public-private partnerships, establishing their own networks when necessary, or creating other inventive approaches that work for their communities. Both guests share their many years of experience in helping communities obtain the many benefits of advanced communications capabilities. Baller and Hovis formed CLIC to give voice to the wide range of public and private interests that support local choice and to provide communities practical advice and the tools necessary to prevent new state barriers from being enacted and to remove existing barriers.


Check Out Internet Podcasts at Blog Talk Radio with cjspeaks on BlogTalkRadio

The FCC Is Our Best Shot to Restore Local Authority

For the first time in many years, we have an opportunity to repeal some particularly destructive state laws limiting investment in community networks. To be clear, this is our best shot. I've already covered the background and offered a blanket encouragement for you to post comments.

Chairman Wheeler has been looking for an opportunity to expand local authority by removing state laws that limit investment in Internet networks. The cable and telephone companies are marshalling their considerable forces to stop him. But we can, and must help.

We have spent years analyzing these state barriers for ways to restore local authority. The FCC, using its Section 706 power, is our best shot. The carriers have far too much power in the state capitals, which means that even when we have public opinion squarely on our side, the carriers easily kill state bills to restore local authority.

Anyone who thinks we have a better shot at rolling back state barriers individually in the states rather than with this FCC is wrong. Really wrong. Between Art Pope and Time Warner Cable lobbyists, there is no hope for any legislation that would threaten cable monopolies in North Carolina.

These petitions on municipal networks are not some FCC smokescreen related to the network neutrality proceeding. In fact, we at ILSR remain publicly frustrated with the FCC's failure to act more strongly in protecting the open Internet. But Chairman Wheeler, for reasons that seem somewhat personal to him, is particularly motivated to remove the anti-competitive laws passed by big cable and telephone company lobbyists. It strikes a chord with him and I, for one, am glad to see him taking action on it.

Anyone who claims action on municipal networks is some sort of trade for giving up on network neutrality is, once again, really wrong. For one thing, a trade requires two parties and I have yet to identify a single entity that would trade meaningful open Internet protections for rolling back a few barriers to municipal networks. Haven't found one. Not even us.

Further, restoring local authority on municipal networks is not a trade for the FCC later preempting local authority over the rights-of-way because once again, no one is ready to take that deal. Advocates of local decision-making authority tend to oppose preemption as a matter of course.

In the case of the current FCC proceedings, it must be noted that the FCC is actually being asked to preempt preemption, which is to say the principle remains that local authority should be respected. The FCC will remove state restrictions on local authority; no community will be required to take action it prefers not to.

This is a key opportunity. The FCC's Section 706 Authority allows it to remove barriers investment. No one is talking about creating new regulations.

For those still skeptical about these petitions, let me suggest this: If this is all some elaborate game of 3D chess masterminded by FCC Chairman Tom Wheeler, let's call him on it. Let's assemble a great record of how local governments can increase investment in next-generation services and states should not revoke their authority to decide for themselves how to invest or partner to improve and expand Internet access. In the worst case scenario, we will have compiled a great case for our position.

The Coalition for Local Internet Choice has posted instructions on how to file. File anytime between now and August 29. We are still working on a resource with recommendations and such for MuniNetworks.org and will publish them soon.

Chattanooga and Wilson Comment Period Open; Tell the FCC You Support Local Authority

Last week, the communities of Chattanooga and Wilson, North Carolina, filed petitions with the FCC. Both communities requested that the agency remove state barriers preventing expansion beyond their current service areas. On July 28, the FCC established a public comment calendar for the request. It is imperative that all those with an interest in better access take a few moments to express their support for these two communities.

Opening Comments are due August 29, 2014; Reply Comments will be due September 29, 2014. That means you need to submit comments by the end of this month. If you want to reply to any comments, you can do that in September.

This is a pivotal moment in telecommunications policy. For months municipal network advocates have been following Chairman Wheeler's stated intentions to remove state barriers to local authority. Within the past few weeks, federal legislators - many that rely on campaign contributions from large providers - pushed back through Rep Marsha Blackburn (R-TN). Blackburn introduced an amendment to a House appropriations bill preventing FCC preemption if the amendment becomes law.

ILSR and MuniNetworks.org encourage individuals, organizations, and entities to file comments supporting the people of Wilson and Chattanooga. These two communities exemplify the potential success of local Internet choice. We have documented their many victories on MuniNetworks.org and through case studies on Wilson [PDF] and Chattanooga [PDF].

Now is the time to share your support for local decision-making. This is not about whether any given community should build its own network so much as it is about whether every community can decide for itself how to best expand and improve Internet access, whether by investing in itself or working with a trusted partner.

ILSR will be filing comments in support of Wilson's and Chattanooga's petitions. As a service to those who plan to express their support for local authority, we will continue to provide information, guidance, and resources throughout the comment period. In the near future, there should be a guide to help you submit comments. But if you are really enthusiastic or already know the process, here are some links.

File comments electronically for Wilson's petition at Proceeding 14-115; Chattanooga's petition is Proceeding 14-116. Petitions and exhibits are available at the filings pages or at the links below.

Local Government Groups: "We Need Local Authority"

As the FCC considers the role of local authority in expanding Internet access, FCC Chairman Tom Wheeler is hearing from coalitions opposing state barriers on municipal networks. On July 3, Executive Directors from the National Association of Telecommunications Officers and Advisors (NATOA), the National League of Cities (NLC), and the National Association of Counties (NACo) sent Wheeler a joint letter of support [pdf].

From the letter:

The diversity of cities and counties in America also reflect differing values and needs. As such, Local governments should have the flexibility to address broadband and Internet access in a way that meets the needs of the people they serve.

The importance of Internet choice at the local level has never been more important. In many places in the U.S, locally-driven projects—including innovative partnerships with private sector companies—have demonstrated that local creativity and local authority is a viable means by which new next-generation broadband infrastructure can emerge.

The letter was close on the heels of a parallel Resolution passed by the U.S. Conference of Mayors (USCM) at their June 22nd Annual Meeting. From the final Resolution:

BE IT FURTHER RESOLVED, that the US Conference of Mayors recommends that the FCC preempt state barriers to municipal broadband service as a significant limitation to competition in the provision of Internet access.

Governing Looks at What the Comcast - Time Warner Cable Merger Could Do to Munis

The debate surrounding the proposed Comcast Time Warner Cable merger continues. The Department of Justice and the FCC ruminate over the deal while the media speculates about the future.

Governing recently published an article on potential side effects for the municipal network movement. Tod Newcombe reached out to Chris for expert opinion.

From Governing:

Partially thanks to Comcast and other cable giant's lobbying, 19 states have already passed laws that ban or restrict local communities from setting up publicly owned alternatives to the dominant provider in the area. Municipalities that pursue publicly owned broadband often cite several reasons for their efforts, ranging from lack of competition and choices in the area to a desire for faster speeds at lower costs. But Mitchell fears the lobbying power of a combined Comcast-Time Warner would choke off what little leverage remains for local governments when it comes to gaining state approval to build publicly owned broadband networks.

Unfortunately, the cable company cyclops borne out of this deal would create a ginormous lobbying monster. Comcast and Time Warner Cable wield significant political influence separately; a marriage of the two would likely damage the municipal network movement. The Center for Responsive Politics reports Comcast spent over $18 million in 2013; Time Warner Cable spent over $8 million.

Chris told Governing:

"Judging by the amount of opposition to the merger, I think people are seeing that we're at a tipping point and that there are ways they can make investments at the local level and control their own destiny," said Mitchell. "A lot of people and local businesses understand that the Internet is really important and that we can't trust it to a few corporations. But I don't see that level of understanding from most elected officials yet."

Circuit Court to FCC: You Can Restore Local Authority to Build Community Networks

As we noted yesterday, the DC Circuit of Appeals has decided that the FCC does not have authority to implement its Open Internet (network neutrality) rules as proposed several years ago.

But the court nonetheless found that the FCC does have some authority to regulate in the public interest, particularly when it comes to something we have long highlighted: state barriers to community owned networks. For example, see North Carolina and recent efforts in Georgia.

States have been lobbied heavily by powerful cable and telephone companies to create barriers that discourage community owned networks. Nineteen states have such barriers (see our map with the states shown in red), largely because communities have nowhere near the lobbying power of massive cable and telephone companies, not because the arguments against municipal networks are compelling.

For those who remember a certain Supreme Court decision called Nixon v Missouri, the Court has once weighed in the matter of state barriers to community networks. In the '96 Telecom Act, Section 253 declares "No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service."

However, the Supreme Court decided in 2004 that Congress was insufficiently clear in its intent to preempt state authority - that "any" did not mean "any" but rather meant something else. In making this decision, it ignored a legislative history with plenty of evidence (see Trent Lott for instance) that suggested Congress meant "any" to mean "any."

ANYway, we lost that one. States were found to have the right to limit the authority of communities to build their own networks. But we have long felt that a different grant of authority gave the FCC the power to overrule state limits of local authority to build networks, Section 706.

Preemption Map

And this is where yesterday's decision comes in. Circuit Judge Silberman concurred in part and dissented in part - but more importantly for us, he explained Section 706. Read along with your own copy from here [pdf].

The statute directs the Commission to “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans . . . by utilizing . . . price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.”

As I said, we have long felt the FCC had the power to remove state barriers that limit local authority to build fiber networks under its section 706 authority but we did not know whether the courts would read it in the same way. In describing the difference between its authority to promote competition vs. its power to remove barriers to infrastructure investment, he notes:

An example of a paradigmatic barrier to infrastructure investment would be state laws that prohibit municipalities from creating their own broadband infrastructure to compete against private companies.

The footnotes cites this Wired article for further information. It's "kind of a big deal."

We now have a clear roadmap: Section 706 gives the FCC the authority to remove barriers to infrastructure investment and to promote competition. Restoring local authority to build networks achieves both. The Nixon v. Missouri decision is irrelevant, based on a different section of law. And we have plenty of evidence that when allowed to build their own networks, communities can do a wonderful job... that is what we have been documenting for years.

New York Times on Internet in America, Genachowski Legacy

Eduardo Porter has an important column today in the business section of the New York Times, "Yanking Broadband From the Slow Lane." He correctly identifies some of the culprits slowing the investment in Internet networks in our communities.

The last two paragraphs read:

Yet the challenge remains: monopolies have a high instinct for self-preservation. And more than half a dozen states have passed legislation limiting municipalities from building public broadband networks in competition with private businesses. South Carolina passed its version last year. A similar bill narrowly failed in Georgia.

Supporting these bills, of course, are the nation’s cable and telephone companies.

Not really "supporting" so much as creating. They create the bills and move them with millions of dollars spent on lobbyists and campaign finance contributions, usually without any real public debate on the matter.

Eduardo focuses on Google Fiber rather than the hundreds of towns that have built networks - as have most of the elite media outlets. Google deserves praise for taking on powerful cable and DSL companies, but it is lazy journalism broadly that has ignored the networks built by hundreds of towns - my criticism of the press generally, not Eduardo specifically.

FCC Logo

The person who deserves plenty of criticism is former FCC Chairman Genachowski. From the article:

According to the F.C.C.’s latest calculation, under one-third of American homes are in areas where at least two wireline companies offer broadband speeds of 10 Mbps or higher.

We have 20 million Americans with no access to broadband. The rest are lucky to have a choice between two providers and even then, most still only have access to fast connections from a single provider.

When the National Broadband Plan was unveiled, we were critical of it and believed it would do little to improve our standing. Even its architect, Blair Levin, is annoyed at how Genachowski failed to implement even the modest proposals put forth.

Back in the NYT piece, we find this:

Mr. Genachowski contends that broadband deployment is on the right track. He points to the growing number of high-speed broadband deployments like Google Fiber and municipal projects around the country, as well as to AT&T’s announcement that it will expand the footprint of its U-verse network — the number of homes to which service is available — to 33 million. This uses fiber part of the way and, AT&T claims, can attain up to 75 Mbps.

Absurd. First of all, the supposed AT&T expansion is playing with numbers. If anyone actually gets U-Verse from this new deployment, it will be fewer than 1.5 million people but we really have no way of knowing because neither the states or the FCC really keeps track of these deployments. They just take AT&T's word for it.

As for 75 Mbps, talk about cherry picking data. Most people live far enough away from the DSLAM or have old enough copper wires that they will not even come close to that number. And this is only for downstream - the upstream capacity remains a fraction of that. This is a fantasy in a fantasy but these numbers are repeated by media sources because they come from AT&T.

I'm rather surprised Genachowski did not also take credit for AT&T's pretend fiber press release in Austin or the overblown CenturyLink pilot in Omaha. Communities engaged in the hard work of building a network received scant attention until they had a ribbon cutting where Chairman Genachowski would appear suddenly supportive and trying to take some measure of credit.

FCC Revolving Door

Genachowski likely felt more comfortable with AT&T, CenturyLink, and a few other big corporations because they share his preference for press releases rather than doing the hard work that needs to be done. We look forward to seeing which of these firms he joins as a lobbyist of some sort ... after a stint at a nonprofit to make it less obvious, of course. Wouldn't want to be as obvious as former FCC Commissioner Baker.

Lest I go too far in attacking our former FCC Chairman, we do remain thankful that once in awhile he did stand up the big corporations and meekly request a reasonable concession.. Most recently, he spoke out against legislation in Georgia to revoke local authority to build networks. For years, FCC Commission and acting Chair Mignon Clyburn has fought to preserve local authority and we were pleased to see her get some backup from the then-Chairman. He didn't actually use his power to actually do anything, but it was nice of him to think of us.

As we move forward with the new FCC under Chairman-nomineer Wheeler, we hope to see real progress on expanding fast, affordable, and reliable Internet access to everyone. Given his industry background, we cannot help but be nervous. And the utter disaster Obama has been for a public interest media and telecom agenda does not help either.

As this NYT article confirms, communities are smart to pursue their own strategies in solving this problem, not waiting for DC to sort anything out. And if DC can be bothered to take any action on telecom, it would be smart to start by removing barriers for communities that want to invest in themselves.

Utah State Auditor Reviews UTOPIA, Ignores State Role in Handicapping Network

Just this week, the Office of the Legislative Auditor General of the State of Utah released a report to the Utah Legislature on UTOPIA. The report, titled A Performance Audit of the Utah Telecommunications Open Infrastructure Agency rehashes prior criticisms of UTOPIA and tells the abridged story of the Auditor's understanding of UTOPIA's financial troubles.

While one can accept the report as truthful, it certainly is not comprehensive. Jesse Harris, of FreeUTOPIA notes that leaving out certain pieces of information taint the presumed impartiality of the report. From Jesse:

The Legislative Auditor General has published an audit of UTOPIA, and, as expected, it drags a fair amount of ancient history back into the spotlight.  The report concludes that additional accountability will alleviate the problems that UTOPIA has experienced, but it missed the mark on a number of points.

The Audit Scope and Objectives are spelled out in the beginning as:

Members of the Utah Legislature asked for an audit of UTOPIA so residents of UTOPIA member cities might know how the organization has used its funds. Legislators also asked for a review the organization’s general management practices. To address their concerns, we developed an audit plan to review the following areas:

  • The size and use of UTOPIA’s debt financing
  • The causes leading to UTOPIA’s current financial 
condition
  • UTOPIA’s management and board governance practices

While there are many bar graphs, pie charts, and dollar signs in the report and it seems to meet the scope and objectives, financial information alone does not explain UTOPIA's troubles. The first place to look is close to home.

From the beginning, UTOPIA has had to overcome difficult odds in a hostile legislative environment. As we note on our Community Broadband Map, the State of Utah effectively requires that community networks function as wholesale-only. The mandate puts them at a significant financial disadvantage from the beginning, severely limiting the amount of revenue they can collect early in the life of the network.

Another state law prevents community networks from bonding for more than 50% of the cost of the network. The only choice, thanks to the Utah Legislature, was to plan on using revenue from the early phase to complete further expansion of the network. The 50% rule, combined with the wholesale-only requirement prevents the robust expansion needed to breath life into a new network. Auditor staff failed to examine the effects of these two laws taken together.

The auditors gloss over efforts by the incumbents to deliberately disrupt UTOPIA. For instance, Qwest dedicated its significant might to preventing UTOPIA to access poles that it had a right to use. From the audit:

After eighteen months, UTOPIA and Qwest finally resolved their dispute over access rights. By that time, however, UTOPIA staff report that the agency’s construction contractors had moved on to other locations and the financial resources had been committed elsewhere. As a result, the financing was no longer available to complete the partially built neighborhoods. The result is a patchwork of service with some neighborhoods receiving services and with other, adjacent neighborhoods without service. 

UTOPIA Logo

It should read, "Qwest was able to delay UTOPIA's rollout by 18 months by forcing an unnecessary court proceeding. During that time, UTOPIA had little choice but to strand some of its investment and move on to areas where Qwest could not use legal tactics delay UTOPIA." The audit uses neutral language to avoid the important question of why they had a dispute to resolve -- it was because Qwest was using dirty tricks to bleed UTOPIA dry. And it worked.

There is no separation between pre-2008 and present UTOPIA. There are many examples of what hindsight can label as bad management decisions, but not enough examples of the implemented fixes. The report casually mentions a few - "stranded assets" being recovered and connected and efforts to better market the service to increase subscription rates. The Auditor could have and should have included more instances of remedial management action to give an up-to-date picture for the state legislature.

The Auditor's four recommendations revolve around management policy, practice, and greater accountability. Accountbility is always a good thing, but adopting those recommendations may or may not improve UTOPIA's financial health.

The report should have also included a recommendation to the Utah State Legislature - to remove state barriers and let local communities decide for themselves if they need, want, and can invest in broadband. Perhaps if UTOPIA was not restricted from day one, this report would not exist today.

In all, the report only considers part of the reasons for UTOPIA's struggles. There is no balancing discussion of the benefits UTOPIA has brought to its communities in return for the public money they have had to spend on the network. Those connected to the network have access to some of the fastest connections in the nation at very competitive prices. Residents and businesses can choose among more providers than literally 99% of America

None of this excuses the prior management of UTOPIA, which indeed made many mistakes. But to focus only on those mistakes only explains a piece of how UTOPIA arrived in such a deep financial hole.