The Star Tribune ran my opinion piece on Monday, March 15
The vast majority of Minnesotans, like the rest of the country, are served by only two broadband suppliers: the cable or telephone company. These companies generally want to maintain their monopolies because they can postpone upgrades while keeping prices and profits high. Just about everyone else just wants a better choice among providers.
The result of this structure is that we pay much higher prices for slower internet connections than our peers in Europe and Asia.
Here in Minnesota, Monticello has broken the mold. It has transitioned from relying on an overpriced and slow DSL network to now offering the best broadband in the entire state. Monticello residents can choose between a symmetrical 20 Mbps connection (extremely fast) from the City for $35/month or the incumbent telephone company’s new 50 Mbps downstream and 20 Mbps upstream option for $50/month. They have better packages than Comcast’s best residential offers in the Twin Cities – and available at half the price!
Entering the local telecommunications market is quite difficult. Building a network costs hundreds of millions for large cities and tens of millions for communities from 10,000 to 50,000. Once the network is built, the costs of adding new customers actually decreases as the number of subscribers increases. This cost structure gives incumbents tremendous advantages because they can drop their prices precipitously if a new entity – public or private – tries to build a competing network. To date, incumbents have largely succeeded in fending off competition.
Given the sorry state of broadband in many communities, especially rural ones, it should be no surprise that many cities and counties have started to build their own networks. And happily, they’ve done so with great success. Creating competition forces incumbents to invest and cut prices, generating significant community savings as well as other advantages from a network that operates in the public interest.
Unfortunately, there are additional barriers for communities attempting to build their own state-of-the-art broadband networks. As a result of lobbying by incumbents, some eighteen states have created obstacles to publicly owned networks.
The need for any state barrier to community networks is dubious. Most states see no need for them because incumbents already have tremendous advantages. The incumbent cable and telephone companies long ago amortized the network construction costs and have benefited from decades of government subsidies and protection as a regulated monopoly.
Their size advantage translates into lower costs for programming and equipment. If we value competition, policy should actually protect new market entrants from incumbents, not the other way around.
Minnesota has one of the oldest obstacles to community networks. As a result of a law passed in 1915, a community must achieve a 65% supermajority on a referendum to operate a “telephone exchange”. But in the modern age, virtually all fiber-optic networks offer “triple-play” services (telephone, broadband, and television) to generate the revenues needed to pay the debt of building the network.
Though some other states have referendum requirements, Minnesota is unique in making it so high. The process invites deep-pocketed companies to put hundreds of thousands of dollars into “Vote No” campaigns. They swamp communities with misleading information, preying on the complicated nature of these networks to convince at least 36% to vote against a public network.
Last year, Minnesota’s most rural county, Cook, generated a 56% yes vote on the question to build a modern network but could not move forward because the majority did not surpass the high 65% bar. They wanted a network because Qwest had no plans to improve its woefully unreliable network that offered few homes broadband. In January, a single fiber cable failure isolated the County from the world for twelve hours. For half a day, businesses could not process credit cards, people could not dial 9-11, and US Border Protection had to rely on Canadians for communications. Shortly thereafter, Senator Bakk and Representative Dill introduced a bill to allow a simple majority referendum to authorize a public network, lowering the bar from 65%.
Unfortunately, incumbent lobbyists have tried to weaken the bill, attaching additional hurdles for communities to overcome before building their own network. Minnesota should make it easier for communities to build this essential infrastructure, not harder.
Last year, the Governor’s Broadband Task Force recommended a goal of universal access to much faster broadband than commonly available today. As legislators enact those goals into law this session, they should empower communities to meet them; incumbents have neither the motivation nor resources to build these networks in much of Minnesota.
James (Jim) Baller’s trailblazing career was honored at the 50th Anniversary Gala of the Institute for Local Self-Reliance (ILSR) in Washington D.C. this week where he was presented with a Lifetime Achievement Award.
Construction on a new city-owned fiber network in Cabot, Arkansas will soon bring affordable broadband access to every city resident and business in the state’s “Strawberry Capital.” The network comes courtesy of a partnership with Connect2First, the broadband subsidiary of local power company First Electric Cooperative Corporation, which continues to build on its significant presence across Arkansas.
In a setback to efforts aimed at enhancing broadband access across Wisconsin, the state Senate this week dealt a blow to three key bills aimed at improving various aspects of broadband provision.
Longmont, Colorado’s community-owned NextLight broadband network has now crossed north of Colorado Highway 66, outside of city limits. Longmont officials say this latest expansion is being financed entirely by subscriber revenues and money set aside for capital projects, with no bonding or other supplementary funds involved.
Language added to a New York State budget bill is threatening to undermine a municipal broadband grant program established by Gov. Kathy Hochul’s office earlier this year. Buried near the bottom of the Assembly budget proposal is a Trojan horse legislative sources say is being pushed by lobbyists representing Charter Spectrum, the regional cable monopoly and 2nd largest cable company in the U.S. that was nearly kicked out of New York by state officials in 2018 for atrocious service.
Four different Alabama electric cooperatives receive nearly $35 million in grant funding to expand fiber access to more than 11,092 rural Alabama homes and businesses. Meanwhile, the big incumbents operating in the state, Charter and Mediacom rake in lion's share of the rest of the state's federal Capital Projects Fund.