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Cable Companies Lose Big at FCC, Barriers to Community Broadband Struck Down

For Immediate Release: February 26, 2015

Contact: Christina DiPasquale, 202.716.1953, Christina@fitzgibbonmedia.com

BREAKING: Cable Companies Lose Big at FCC, Barriers to Community Broadband Struck Down

Two southern cities today persuaded the Federal Communications Commission to recognize their right to build their own publicly owned Internet networks where existing providers had refused to invest in modern connections. The 3-2 FCC vote removes barriers for municipal networks in Chattanooga, Tennessee and Wilson, North Carolina, to extend their high-quality Internet service to nearby areas.  

Said Christopher Mitchell, Director of Community Broadband Networks at the Institute for Local Self-Reliance:

“Cable companies lost their bet that millions spent on lobbying to stifle competition was a wiser investment than extending high-quality Internet to our nation’s entrepreneurs, students and rural families. 

“Preventing big Internet Service Providers from unfairly discriminating against content online is a victory, but allowing communities to be the owners and stewards of their own broadband networks is a watershed moment that will serve as a check against the worst abuses of the cable monopoly for decades to come.”

The FCC decision sets an historic precedent for towns working to offer municipal broadband networks in twenty states that have enacted limits or bans on local governments building, owning, or even partnering to give local businesses and residents a choice in high speed Internet access. Three-quarters of Americans currently have either no broadband or no choice of their Internet provider. 

Christopher Mitchell, the Director of Community Broadband Networks at the Institute for Local Self-Reliance, has traveled to over 20 states and spoken with over 100 community groups looking to provide high-quality Internet for their residents. He has also advised members of the FCC on related telecommunications issues in the lead-up to the decision.

For interviews around the FCC decision, please contact Christina DiPasquale at 202.716.1953 or at christina@fitzgibbonmedia.com. To view a map tracking local government investments in wired telecommunications networks and state laws that discourage such approaches, please visit: http://www.muninetworks.org/communitymap.

Municipal broadband networks (munis):

  • Create thousands of new private sector jobsA collaborative muni effort in Georgia between five towns, is credited with bringing over 6,000 new jobs to the region by building and sustaining their network. The muni in Springfield, MO convinced online travel company Expedia to move to the town and has 900 local jobs because their network allowed the company to stay and expand.
  • Protect consumers by offering competitive pricing. During the period of 2007-08, Time Warner Cable increased rates up to 40 percent in some of the areas in Raleigh, NC, while not increasing rates in nearby Wilson—which has a strong muni. Chattanooga’s muni grew from a basic connection of 15 Mbps, when it was first founded, to 100 Mbps today–without raising prices once. The slowest connection available in Chattanooga from the utility is 10 times faster than the average American connection.
  • Provide higher speed Internet that allows for increased business activity. The largest employers in Wilson, NC rely on the municipal broadband network for their transactions. The muni in Springfield, MO, attracted John Deere Remanufactured and the McLane Company to the area. 
  • Do not rely on taxpayer financing, like large private telephone companies. Most municipal networks are financed through methods that do not involve raising taxes: revenue bonds, interdepartmental loans and savings created by ending expensive leased services. Dakota County in MN has saved $10 million over 10-15 years by building their own network and ending leases. Over $2 million in revenues from the Thomasville, GA network contributed to the town’s ability to eliminate its local fire tax.
  • Receive broad support from voters, regardless of party affiliation. Roughly 3 out of 4 cities with citywide munis reliably vote Republican and polling shows that 2 out of 3 Republicans, Independents, and Democrats prefer that decisions about how to best expand their Internet access be made by local governments.
  • Foster the strength of local businesses. Politically conservative communities in Chanute, KS, and Lafayette, LA, have munis that are working on the deployment of fiber networks to encourage economic development by allowing businesses to market themselves and compete online in the global marketplace. Lafayette has added over 1,000 tech jobs in 2014 alone.
  • Expand educational opportunities. The muni in Longmont, CO, is now providing 10 times the bandwidth that their school district previously received from a private provider at an annual savings of $100,000. Munis in Carroll County, MD, and Chanute, KS, have both allowed schools they service to offer new distance learning classes in multiple locations via video streaming. The city of Rockport, ME, partnered with a nonprofit college to bring students upload speeds 200 times faster than Time Warner Cable’s package for the area.

Opelika Speaks From Experience: Support Local Authority!

Opelika has offered FTTH to residents and businesses for less than six months but already it is singing the praises of local choice. Mayor Gary Fuller is now speaking out in an opinion piece in AL.com, encouraging the FCC to allow Wilson, Chattanooga, and other communities to have the same opportunity as Opelika.

Mayor Fuller points out that local telecommunications authority is an organic outgrowth of local self-reliance:

Cities have always been at the heart of economic expansion, entrepreneurialism, and local connection to citizens, charged with ensuring high-quality education for our children, caring for our sick and elderly neighbors, and laying the foundation for shared prosperity. As we look to the years ahead, high-speed broadband will only become more and more important to the quality and vitality of our community. 

That's why in Opelika, I led the charge to become the first city in Alabama to offer this cutting edge technology, both to residential and business customers. As a result, Opelika citizens now have access to fast, reliable broadband speeds that will turn possibilities into real opportunities. Businesses now have more opportunities to expand and grow, work more effectively and efficiently, and compete in a larger market. 

As one of over 450 communities that have invested in the infrastructure for better connectivity, Opelika can speak from experience. Mayor Fuller encourages all FCC Commissioners to support the notion of local choice:

The important fact is that every city must have the power to make the best decisions for their residents, free of interference. That's why the Federal Communications Commission should join Chairman Wheeler in preserving these two communities' right to self-determination. 

In Opelika, our citizens are building a stronger more prosperous city based on local Internet choice. If more cities have those same opportunities, someday soon it may not be so strange for a 30,000-person city to offer blazing fast Internet.

Check out Opelika's recent marketing videos and listen to Chris interview Mayor Fuller back in Episode #40 of the Community Broadband Bits podcast.

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.