FCC weighs laws blocking local internet providers from compe
Source: Sam Thielman
FCC chairman Tom Wheeler warns that federal intervention in local internet ‘not a step to be taken lightly’. Photograph: Jose Luis
Federal Communications Commission (FCC) chairman Tom Wheeler has a problem. By 2015, the regulator wants at least one city in every state to have super-fast internet. The companies that provide that service? Not so much.
As he contends with calls from from no less than President Obama to mandate net neutrality, Wheeler is reviewing a challenge to state laws that have blocked municipalities from starting �C or expanding �C their own internet services. The attack is led by municipally owned internet service providers (ISPs) in Chattanooga, Tennessee, and Wilson, North Carolina: cities with lightning-fast internet speeds of one gigabit a second, about 50 times better than the US average. Neighbors in rural counties want to sign up, and that’s where the trouble starts.
Chattanooga’s EPB and Wilson’s Greenlight are challenging state laws similar to those that exist in 20 states that restrict or bar local governments from offering broadband, so setting precedent is one goal here. The bans have been lobbied for, furiously, by cable and telecoms firms that argue competition from public networks is unfair to private industry, while companies like Netflix have lobbied against them.
Consumers are begging for the services. “We feel it’s as necessary as water,” John “Thunder” Thornton, the developer behind a 9,000-acre property near Chattanooga, recently told the Times Free Press. “If I could move our mountain and office to a location that was within EPB’s footprint, I would do it in a heartbeat, but we’re held hostage due to the current legislation.” Eighty-nine percent of those polled by the paper said EPB should expand its service.
It’s not hard to see why. A dozen counties in eastern Tennessee have no access to broadband at all, and four more never get above 3mbps. Even where commercial operators have a presence, the EPB’s networks are faster. The population in rural Tennessee isn’t dense enough to quickly repay the kind of investment a commercial provider would need to make to lay fiber-optic cable for the first time. Though there are about 85,000 potential customers with no broadband access at all, they’re spread over a gigantic area. An additional 173,000 don’t get the web at “minimum speed targets being used by the FCC,” according to the EPB.
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“If they want us to come there,” the EPB’s Danna Bailey said, “they should be able to make that choice on the local level.”
Incumbents disagree. AT&T spokesman Michael Balmoris says municipal broadband is both doomed to failure and so successful it threatens private actors: “Although many GONs [government-operated networks] have failed, or at least failed to live up to expectations,” Balmoris wrote, “GONs can nonetheless discourage private sector investment because of understandable concerns by private sector entities of a non-level playing field.” Ultimately, telecoms know how to avoid competition: invest locally �C in politicians.
The state house of representatives in Tennessee, a 99-seat body (27 Democrats, one independent and 71 Republicans), has deep ties to AT&T. Of the 99 members, 96 have accepted donations from the telecom ranging from $500 on the low end to $10,000 for the 61st district’s Charles Sargent Jr, first elected in 1997, who chairs the state’s ways and means committee.
In Tennessee, no bill that would allow the EPB’s internet service to expand has ever made it to a vote. When such a bill was last up before the state house in 2011, representative Curry Todd (the recipient of $6,200 from AT&T and $6,500 from Comcast in installments over the years) opined that municipal providers “are losing tremendous amounts of money” for taxpayers, citing Memphis Networkx, which ran into trouble in the early 2000s.
A single thinktank, called the Coalition for the New Economy, has produced an influential body of writing from which Todd and others appear to be cribbing. The Coalition’s most widely quoted white paper (The Hidden Problems with Government-Owned Networks) lists damning factoids but omits some vital details �C the EPB does indeed charge $350 for its 1gb-per-second service, but it also offers much lower rates. Other parts of the report don’t add up. It says the EPB owes more than it’s worth, citing a 2010 report that it says shows it “currently has $57m in notes payable to the EPB’s electric system and current assets of only $52.9m.” But the EPB’s own report says it had net assets of $264,069 in 2010 and $258,956 in 2012. And as of the 2014 annual report, net assets are listed as $288,189.
Stop the Cap, a pro-municipal-broadband news site, accused the Coalition for the New Economy of being funded by AT&T. Neither the Coalition nor the author of the report responded to requests for comment.
Clearly, consumers want EPB and Greenlight, but that doesn’t mean that those companies’ challenges to the state will succeed. Two commissioners, Ajit Pai and Michael O’Reilly, favor conservative economic policy with minimal intervention; Jennifer Rosenworcel and Mignon Clyburn favor stricter rule-making.
So the whole thing likely comes down to Wheeler. “[S]tate laws that directly conflict with critical federal laws and policy may be subject to preemption in appropriate circumstances,” Wheeler wrote Pennsylvania congressman Mike Doyle in August. “I recognize that federal preemption is not a step to be taken lightly without a careful consideration of all relevant legal and policy issues.”
But President Obama didn’t buy it when cable companies pled unfair competition �C will tacking “states’ rights” onto the argument make it more convincing?
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