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Tennessee Bill to Strike Anti-Muni Laws Tabled Until Next Session

Senator Janice Bowling and Representative Kevin Brooks have decided to table their legislative efforts to remove state restrictions in Tennessee. While backing for SB 1134 and HB 1303 was growing beyond the walls of the state Capitol, the sponsors decided to shore up stronger legislative support rather than risk derailing the bill entirely. 

Brooks told the Tennessean:

"We have had a lot of good progress, and we don't want to throw it all away," Brooks said. The votes were not there in the Senate, and he and co-sponsor state Sen. Janice Bowling, R-Tullahoma, have asked to roll the bill to the beginning of the 2016 calendar, giving them more time to garner support from their colleagues.

"We have pressed the pause button to keep it alive," Brooks said.

Communities around the state, including Bristol, went on record in support of the bill. The Tennessee Farm Bureau, representing 600,000 members, also backed the legislation

Energized by the recent FCC decision nullifying state laws restricting Chattanooga from expanding, Bowling, Brooks, and other local leaders thought the time was right to once again try to eliminate state barriers. The FCC decision has already been formerly challenged by Tennessee's Attorney General with the support of the Governor. Rather than depend on federal intervention to establish an environment that will encourage connectivity, SB 1134 and/or its companion HB 1303 would have solved the problem on the home front.

Economic development has been stifled by state barriers preventing municipal network expansions in the state but many constituents are plagued by lack of personal access. Incumbents who have spent millions lobbying to keep these restrictions in place during past legislative sessions, do not serve a number of rural areas. Those areas could benefit from municipal network expansions. From a March 6th Tennessean article:

"My district said we need help. We have some folks with little service, some folks with no service," Brooks said. "This is not about government intrusion; this is a bill about service exclusion."

Even though the legislation will not change state law this session, the FCC decision still stands for now. It may take years for the issue to be finally determined but hopefully the momentum will continue and more Tennessee voters will let their elected officials know they want to strike anti-muni laws from state books.

From an EPB Press Release:

“Thanks to a growing number of Tennesseans, who are contacting their representatives to communicate their critical need for broadband services, we made more progress this legislative session than ever before,” Senator Bowling said. “Next year, I hope the needs of the hundreds of thousands of Tennesseans with little or no broadband service will override the vested interests of the legacy carriers who refuse to serve them while lobbying to prevent community-based providers from meeting the needs of the people in our state.” 

WDEF News 12 covered the story:

We simply find it stunning that a majority of legislators in Nashville believe that their state is better off with slower Internet access. That is exactly what this is about - AT&T and Comcast have purchased another year of not having to worry about competition from the Tennessee General Assembly.

Chanute and Chattanooga Added to List of Rural Broadband Experiment Funds

A year ago, the FCC accepted applications from entities seeking Connect America funds for rural broadband experiments. After provisional awards and some eliminations, Chanute's FTTH project, Chattanooga's EPB, and a number of additional cooperatives are now on the list of provisional winners reports Telecompetitor.

According to the article, $27 million became available when 16 entities were eliminated for various reasons.

A recent Chanute Tribune article reports that the city's expected award will be approximately $508,000 if it passes the FCC's post-selection process. Mikel Kline, a consultant working closely with the city on its FTTH project told the Tribune:

It is Kline’s understanding that this $508,467 would be cost support for the city’s Fiber to the Home network over the next six years. It requires the city to become an eligible telecommunications carrier, and to finance and construct the fiber network.

This money can be used to pay operational costs or offset a portion of the debt on the city’s investment in the local infrastructure over the next six years.

Remember that Chanute has developed its fiber infrastructure incrementally over more than two decades. The community is moving ahead with its FTTH project to share the benefits of fiber with residents and more businesses after bringing better connectivity to schools, municipal facilities, and a growing number of businesses. 

Recently, the city applied for and received state approval to bond for deployment costs. A 1947 state law required the application be filed with the Kansas Corporation Commission, the state entity concerned with utility regulations. According to Kline, the city has also applied for eligible telecommunications carrier (ETC) status. This designation will allow the city, as a common telecommunications carrier, to obtain Kansas Universal Services Funds.

Read more about their accomplishments in our 2013 case study. We also interviewed Larry Gates and J.D. Lester from Chanute about the network in episode 16 of the Community Broadband Bits podcast.

Community Broadband Media Roundup - March 27

This article is so good, it was hard not to quote the whole thing. Do yourself a favor and check out the article for yourself-- this is exactly why we can’t trust big cable and telephone companies to serve our communities. 

New Homeowner Has To Sell House Because Of Comcast’s Incompetence, Lack Of Competition by Chris Morran at the Consumerist:

Only months after moving into his new home in Washington state, Consumerist reader Seth is already looking to sell his house. He didn’t lose his job or discover that the property is haunted. No, Seth can’t stay much longer because no one can provide broadband service to his address; even though Comcast and CenturyLink both misled him into thinking he’d be connected to their networks and in spite of the fact that his county runs a high-speed fiberoptic network that goes very near to his property.

New homeowner selling house because he can’t get Comcast Internet: 

"I accidentally bought a house without cable," writes man who works at home.
by Jon Brodkin, Ars Technica

While Comcast, the country's biggest cable company, tells the federal government it faces so much competition that it should be allowed to merge with the second biggest cable operator, a government database designed to tell consumers what options they have for Internet service is offering inaccurate information.

The National Broadband Map lets you enter any address in the US to find out what Internet access options are available. The database shows 10 options at Seth's house, including mobile and satellite, but they're all either inadequate for home Internet service or unavailable. 

Google Fiber will leave the duopoly intact and only change the players
by Jesse Harris, Free UTOPIA

TN AG Appeals FCC Decision on Chattanooga, Wilson
(no surprises here)

Tenn. AG Wants Court to Set Aside Municipal Broadband Ruling
by Erik Schelzig, Associated Press

Tennessee fights for its right to squash municipal broadband expansion: FCC faces first lawsuit over vote to preempt state laws that limit competition.
by Jon Brodkin, Ars Technica

Tenn. Attorney General VS. FCC
by NewsChannel 9- WTVC

Tennessee trying to overturn FCC ruling which allows EPB to expand high-speed Internet
by Andy Sher, Times Free Press

Tennessee sues FCC to stop expansion of municipal broadband
by Chris Welch, The Verge

TN v FCC - Petition for Review from TN Attorney General Herbert Slatery
Full Document: Scribd

Net Neutrality 

Internet providers sue FCC in first net neutrality cases
By Andrew Zajac and Todd Shields, Bloomberg News

The filings of both US-Telecom and Alamo acknowledge that their complaints were filed quickly, and possibly too early, because of uncertainty about procedural deadlines.

"We believe that the petitions for review filed today are premature and subject to dismissal," said Mark Wigfield, an FCC spokesman.

The FCC said its rules would take effect after being published in the Federal Register, which hasn't happened yet. 

Republicans Blast FCC's 'Politically Motivated' Net Neutrality Rules
by Wendy Davis, Media Post

AT&T Uses Title II regulation to get out of millions in fees
by Jeff Gamet, Mac Observer

 

Alabama

Gigabit internet service officially launched on areas of Sand Mountain
by Laura Christmas, WHNT News

Farmers Telecommunications Cooperative introduced an internet connection that company leaders say has the fastest speeds in the state — gigabit access — and they’re making it available on parts of Sand Mountain.

Officials say the ultra-fast internet service is the first in Alabama.

Note from ILSR: Opelika, Alabama, was the first to launch the service in the state, but we congratulate Farmers Telecomunications Cooperative for an impressive investment nonetheless.

If a Tiny Telco in NE Alabama Can Go All Fiber, Why Can’t Every Telco?
by Online Reporter

Like others that have deployed all fiber, Johnson said the gigabit service “can transform our communities through advanced learning tools, new entertainment options and telemedicine.” Like many others, he also said its all-fiber network “future proofs our investment for whatever emerging applications our increasingly device-enabled subscribers demand.”

Rainsville company launches new high speed internet service
by Tim Reid, WAAY-TV

New Hampshire

Northampton should explore additional Internet choices
by John Kapitzky, GazetteNet

New York

Municipal broadband would boost Erie County's economy, advocates claim
By Brian Meyer, WBFO, BUffalo

Tennessee

AT&T opposes municipal broadband bill
by Jamie McGee, The Tennessean

Bowling said she understands that connecting Tennesseans in low-density areas is a challenge for privately owned companies. But their profit margin concerns should not prevent municipalities with high-speed fiber networks from connecting residents. The original legislation restricting municipalities' broadband reach was filed in 1999, giving the corporate sector 16 years to reach those rural communities asking for fiber connection from municipalities, she said.

"We've got to get this essential utility if we want to make rural Tennessee economically viable and sustainable," she said. "It's absurd to think that you can compete in the 21st century without high-speed broadband."

AT&T Completes Upgrades Amid Municipal Broadband Debate
by News Channel 9, WTVC

The expansion in Tennessee comes amid a legislative and legal fight over municipal broadband. AT&T opposes pending legislation seeking to allow city-owned Internet providers from offering their product outside their normal service area.

More Broadband News

FACT SHEET: Next Steps in Delivering Fast, Affordable Broadband
by White House Office of the Press Secretary

Data Overload! The Latest Developments in Telecom Policy Matter for Apartments
by Betsy Feigin Befus, Multi-Housing News

Apartment firms say residents and prospects will not sign a lease, or renew one, without access to robust broadband. Not only is reliable Internet access a must, residents want a choice in providers.

Corporate and community operations also hinge on dependable Internet service. From online marketing and leasing to revenue management software and on-site amenities, the apartment industry needs high-capacity connectivity

U.S. Now 27th Globally With Average Speed of 33.9 Mbps
by Karl Bode, DSLReports

While cable operators have been relatively busy upgrading networks, their DSL competitors have not. In fact, companies like AT&T and Verizon have been busy backing away from markets they don't deem worth upgrading, giving cable less serious competition than ever before. So while higher speeds are great, less serious competition means higher prices and worse customer service. And when it comes to companies like Time Warner Cable and Comcast, they already offer the worst customer service across any industry. Fast is great -- we all love fast connections -- but it's increasingly only a part of the conversation in an industry that often doesn't really want to seriously talk about price or availability.

Map: The state of broadband in the states
By Niraj Chokshi, Washington Post

“Many of the efforts to increase connection speeds are being taken at a local/municipal level and may not have an immediate state-wide impact upon completion, but are part of ongoing initiatives that are becoming more widespread across the country,” the company noted.

Throughout the fourth quarter a number of municipalities announced the rollout of gigabit-speed Internet, including those in Arizona, California, Kansas, Michigan, Mississippi, New Hampshire and Oregon.

USDA Announces Funding for Broadband Projects in Arkansas, Iowa and New Mexico

Unions Try To Pressure Verizon Into Expanding FiOS
by Karl Bode, DSL Reports

 

Obviously impacted by Verizon's decision to back away from its fixed-line networks, the Communications Workers of America have launched a new "Where's My FiOS? campaign aimed at putting public pressure on Verizon to expand FiOS further -- and therefore spend a little more money on installations and union employees.

"When it received its franchise from New York City in 2008, Verizon promised FiOS would be available to every NYC resident by 2014," a union flyer being circulated in the city complains. "Now the company says it’s completed its obligations. But customers in many parts of New York City still can’t get FiOS. Instead, Verizon has cut 8500 jobs in New York State and slashed its workforce in New York City by 37% over the last decade."

Tennessee Files Appeal to FCC Order Scaling Back State Barriers

The State of Tennessee has filed the first appeal to the recent FCC Opinion and Order [PDF] reducing state barriers to municipal broadband. Governor Bill Haslam appears determined to keep his constituents in the Internet slow lane.

The state filed the short petition on March 20th arguing [view the petition on Scribd.]:

The State of Tennessee, as a sovereign and a party to the proceeding below, is aggrieved and seeks relief on the grounds that the Order: (1) is contrary to the United States Constitution; (2) is in excess of the Commission’s authority; (3) is arbitrary, capricious, and an abuse of discretion within the meaning of the Administrative Procedure Act; and (4) is otherwise contrary to law.

Haslam expressed his intention to explore the possibility of filing the appeal earlier this month reported the Times Free Press. In February, the Governor and Tennessee Attorney General Herbert Slatery signed a letter from a number of state officials to the FCC urging them not to change state law. U.S. Rep from Tennessee Marsha Blackburn and her Senate counterpart Thom Tillis introduced legislation to fight the Order just days after the FCC decision.

State Senator Janice Bowling, a long time advocate for local choice, and Rep. Kevin Brooks have taken the opposite perspective, introducing state legislation to remove restrictions to achieve the same result as the FCC Order with no federal intervention. Their bill has been publicly supported by the state Farm Bureau and local municipalities such as the City of Bristol.

Hopefully, at the next election Tennessee voters will remember how their state elected officials and their Governor stand on improving connectivity in the Volunteer State. The good folks at Tech Dirt expressed a similar sentiment

But here's the larger question: if you're a resident of Tennessee who likes having fast, affordable, competitive broadband, are you happy about your tax dollars being used to sue the FCC in an effort to uphold a law written by the big broadband players, focused on blocking such competition? It seems like the current Tennessee Attorney General, Herbert Slatery, has painted a giant target on his back for a challenger who actually wants to support the public in Tennessee.

Explaining the FCC Muni Order Removing State Barriers - Community Broadband Bits Episode 143

After anticipating this moment for many months, we have a ruling from the FCC that has restored local authority to build and expand networks in North Carolina and Tennessee. Though we have already pulled out the key passages for readers, we wanted to discuss the decision with Jim Baller of Baller, Herbst, Stokes, & Lide.

Jim worked with Wilson and Chattanooga in crafting their petitions and sat down with me last week at the Iowa Association of Municipal Utilities Broadband Conference in Des Moines last week.

We went over the key issues in the ruling, including why the FCC had authority to take action, how the state laws limited investment in advanced Internet networks, the impact of the ruling, and what comes next.

See our other podcasts with Jim as well as articles that we tagged him in here. Read the FCC's Memorandum and Order here [pdf].

Read the transcript from our conversation here.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below.

This show is 30 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Thanks to Persson for the music, licensed using Creative Commons. The song is "Blues walk."

Bristol City Council Passes Resolution Supporting Bill to End Tennessee Muni Barriers

At its March 3rd City Council meeting, elected leaders in Bristol voted 4 - 1 to adopt resolution 15 - 8 reported TriCities.com. The resolution officially supports state legislation removing state barriers that prevent municipal electric utilities from offering Internet service beyond their electric service footprint. State Senator Janice Bowling and Representative Kevin Brooks are sponsoring SB 1134 and its companion HB 1303 [PDF].

Bristol Tennessee Essential Services (BTES) is one of the state's gigabit FTTH networks but like Chattanooga, is limited by state geographic restrictions. The recent FCC decision to overturn Tennessee and North Carolina state barriers has removed that legal provision but Bowling and Brooks want to make sure it happens and that Tennessee is able to embrace smarter policy without FCC intervention.

Bristol recognizes that its gigabit network provides a rare advantage in Tennessee. From the City Council agenda on the issue:

The service is an essential element of economic development, enhances educational opportunities, increases regional and global competitiveness, and provides a better quality of life. While we enjoy the benefits of being a “Gigabit Community”, there are many areas of Tennessee that lack access to high-speed broadband service. The ability to extend this service beyond the municipal electric service territory will provide an opportunity for customers to choose their provider and ensure a high quality of broadband service at a competitive price.

At the meeting, members of the Council noted that eliminating the restriction would allow BTES the ability to bring service to areas left behind by traditional providers. TriCites.com reported:

“This is David-versus-Goliath situation in that little, tiny BTES versus companies like Charter and AT&T have had the opportunity for years to develop places like Mountain City, Kingsport and Johnson City,” said Councilwoman Michelle Dolan. “Removing these restrictions would allow us to go into the cities that Charter and AT&T have not developed and for the city it’s a win-win situation.”

A PDF of the Resolution is available online and as a download below.

Community Broadband Media Roundup - March 20

FCC Outlines Plan To Crush Awful State Protectionist Broadband Laws: from the it's-about-time dept by Karl Bode, Tech Dirt

While net neutrality rules are designed to protect consumers from a lack of last-mile competition, the agency's moves on municipal broadband are intended to actually strike at the issue of limited competition at the root. As we've noted a few times, ISPs (with ALEC's help) have passed laws in twenty states preventing those towns and cities from deciding their own infrastructure needs for themselves. 

It's pure, unabashed protectionism: the bills do little more than protect regional duopolies from change while hamstringing local communities desperate for better service. Usually the laws are passed under the auspices of protecting taxpayers from themselves, ignoring that the bills' sole purpose is to protect duopoly revenues. 

TV and Internet Service Providers Deliver the Worst Customer Experience: Fifth Annual Temkin Experience Ratings Evaluates 293 Companies Across 20 Industries

The poster child for poor customer experience in these industries - Comcast - was not only the lowest-scoring TV service and Internet service provider, but it was also one of the lowest-scoring companies in the entire Ratings. It ranked 289th overall out of 293 companies for its Internet service and ranked 291st overall for its TV service.

Of the 17 companies that received "very poor" ratings (below 50%) across the 193 companies, five of them were from these two industries: Comcast for TV (43%), Comcast for Internet (45%), Time Warner Cable for Internet (47%), Charter Communications for TV (48%), and Time Warner Cable for TV (48%).

"Internet and TV service providers are awful to consumers. The lack of competition continues to fuel this bad experience epidemic," states Bruce Temkin, managing partner of Temkin Group.

 

California

Broadband coming to Orleans by Jessie Faulkner, Times Standard

The Karuk and Yurok Tribes have been collaborating to bring the speeded-up service to the Klamath River communities of Orleans, Weitchpec, Wautec, Johnsons as well as Orick. A $6.6 million California Public Utilities Commission grant, awarded in October 2013, is financing the project. The tribes provide matching funds.

Colorado

Fort Collins eyes starting broadband Internet service by Nick Coltrain, The Coloradoan

If the city of Fort Collins made a sound while examining the possibility at offering its own Internet service, it'd be the chirps and whirrs of a 56K modem — Almost connected but with no guarantee of success. 

Minnesota

Businesses would be able to tie into countywide broadband by John Gessner, Sun This Week

Scott County has a high-speed, fiber optic network available for businesses and Internet service providers to tap into.

Neighboring Dakota County doesn’t. One result? Up to 10 companies that were wooed by Dakota County communities instead chose Scott County for its access to limitless bandwidth, according to Craig Ebeling.

Fiber Optic Project Moves Forward: KDUZ

Ten city councils and a standing room only crowd packed the United Farmers Cooperative Berdan Center on Monday for a public hearing and adoption of a tax abatement resolution to fund a loan to the Renville-Sibley County Fiber Joint Powers Agency for the RS Fiber Cooperative.

Maine

Broadband companies showing interest in Sanford by Ellen W. Todd, Sanford News

The City of Sanford, in collaboration with the SREGC, intends to finance and own a fiber-optic network connecting 80 community institutions and private enterprises — businesses, the hospital, municipal facilities, the mill complex, industrial parks, schools — in Sanford-Springvale.

Last year, the SREGC commissioned a study on the feasibility of bringing broadband (fiber-optic) communications access to the city. The company that did the study — Tilson Technology Management company of Portland — concluded that broadband access has the potential to add “between $47 and $192 million to the Sanford-Springvale region’s economic output over the next ten years.” 

Montana

Lawmakers consider issuing bonds for broadband expansion by Alison Noon, The News Tribune

New Hampshire

Editorial: Fast internet could be a boon for Concord

Creating a truly high-speed, affordable municipal internet network could be a pipe dream – or it could be a pipeline to a more vibrant Concord with a booming economy and a growing population of young entrepreneurs and knowledge workers.

New York

County touts pros of Municipal Broadband System WKBW-7

Erie County's Broadband Committee released a new report Wednesday touting the pros of building a Municipal Broadband System.

Erie County Legislator calls for faster internet by Mark Belcher, News 4 Digital Producer

“A municipal broadband network could be our generation’s great infrastructure project, like the Erie Canal or the Hoover Dam,” Burke said.

Cayuga County's high-speed Internet needs, state broadband initiatives discussed at Wednesday Morning Roundtable by Robert Harding, Auburn Citizen

According to Batman, what started out as a few towns became a larger collaboration to find a high-speed Internet service provider for the area. He said the group contacted these companies with a few ideas, including a public-private partnership. 

Unfortunately, there wasn't a lot of interest in such a venture.

"It simply is not a viable alternative," Batman said. "It simply is too expensive to serve me and my neighbors without financial incentives and support."

North Carolina

Community broadband debate centered in a North Carolina town by Renne Schoof, McClatchy Washington Bureau

“You don’t realize how fortunate you are to live in an urban setting in my district until you go into a remote area and have no access to broadband or to cellular telephone,” he said.

Tennessee

Rural Tennessee counties need broadband and internet service too by Dave Shepard, Columbia Daily Herald

The battle is typical of the Big Guys (telecommunications companies) verses the Little Guys (Municipal Electric Providers). My rural district which is comprised of 3 rural counties, Dickson, Hickman, and Maury, need expanded broadband service to make us competitive for industrial and business recruitment. We need expansion of broadband service into unserved areas to help our students do homework assignments and our residents to connect to a high speed internet service for business and pleasure. This service is already available to our state’s residents in densely populated areas all over the state of Tennessee.

My rural counties and constituents need broadband and internet service too, and I plan to vote to help them get it.

BTES adopts resolution to support legislation of municipal broadband by Tammy Childress, Bristol Herald Courier

The Bristol Tennessee Essential Services board adopted a resolution Wednesday to support legislation for municipal broadband.

City County approved a similar resolution earlier this month.

Center for Public Integrity and Reveal Radio Get Into the Trenches of Local Choice

The Center for Public Integrity has followed the local choice debate closely. Their team has travelled to Tennessee and North Carolina to talk to lawmakers, visited communities seeking high-speed networks, and dug deep into the source of influential campaign funds. Allan Holmes and his team have assembled a collection of articles and audio that offers the right amount of history, backstory, and anecdotes to properly understand these issues.

Holmes published an article last August that took a deep look at telecommunications laws at the state level. Along the way, he spoke with State Senator Janice Bowling from Tullahoma. MuniNetworks.org readers know that the community is known for LightTUBe, the fiber network offering an oasis of high quality connectivity in an otherwise broadband desert. At the time, the Wilson and Chattanooga petitions were still fresh but Tennessee communities had long dealt with the problem of poor connectivity from incumbents. From the August article:

“We don’t quarrel with the fact that AT&T has shareholders that it has to answer to,” Bowling said with a drawl while sitting in the spacious wood-paneled den of her log-cabin-style home. “That’s fine, and I believe in capitalism and the free market. But when they won’t come in, then Tennesseans have an obligation to do it themselves.”

Holmes wrote about economic development in Tullahoma, a factor that seems directly tied to the presence of its municipal network:

Employment in Tullahoma lagged statewide job growth before theLightTUBe was turned on. Since the recession ended in 2009, two years after the city began offering broadband, the city has outpaced job growth in Tennessee. The city added 3,598 jobs from April 2009 to April 2014, a 1.63 percent annual growth rate, about double the statewide rate, according to the Bureau of Labor Statistics.

For perspective, Holmes visited Fayetteville, North Carolina, where community leaders have tried and failed to initiate community network deployment. Even though the community has a generous store of fiber assets, state laws prevent municipalities from offering connectivity. Local officials see the nonsense behind the law, pushed through by telecom lobbyists.

For Steven Blanchard, chief executive of Fayetteville’s Public Works Commission, prohibiting Fayetteville residents from using the fiber network that’s already there doesn’t make sense.

“Why shouldn’t we be allowed to sell fiber if it runs by everyone’s house?” Blanchard said. “They are already paying for the fiber to be there, so why not allow them use it for telephone and Internet and capture back a lot of the cost they put in to have it there?”

The article also provides an excellent resource for those curious to know how much North Carolina and Tennessee state lawmakers received from the telecommunications industry. Public Integrity's graphs paint an alarming picture of corporate influence on state policy. Unfortunately, it is easy to look at the graphs, purse one's lips, and think, "so THAT'S the reason why."

In a more recent piece Public Integrity's Jared Bennett interviews Holmes about his experiences reporting on the right for local authority. "Behind the municipal broadband battle" is a collection of brief interviews with people in the trenches. Holmes offers context for each interview.

In the Bennet piece, Holmes shares conversations he had with a number of business owners, residents, and community leaders in Tullahoma and elsewhere:

JB: In the past the president has framed this as a jobs creation issue. And that’s what it sounds like when you talk about companies like Agisent and Matt Johnson’s company, but is that what you found through your reporting?

AH: Yeah, you even talk to big investors, venture capitalists, about the importance of having broadband in a city and you find out that, yeah, Obama is right. We talked to Cameron Newton in Tullahoma. He was an investment banker in New York and for a very large bank in Charlotte, and now he’s a venture capitalist and we sat down in his office in Tullahoma to ask him about the importance of broadband to a city.

“Manufacturing in the U.S. is very, very different than it used to be, and it’s changing rapidly. And now you’re having much more automation. The next move in manufacturing is to additive manufacturing, which is 3D printing. None of that equipment is going to be isolated so in other words it’s all going to be connected. So if you don’t have broadband accessibility, if you don’t have fiber in your community, where are these manufacturing plants going to go? Well, they are going to go to areas that do have it.”

The Center for Public Integrity also produced this Reveal Radio story, "Duking It Out With Telecom Giants." Host Al Letson presents Holmes's journey into money in state politics, threats from incumbents, and the power of the telecom industry.

FCC Opinion and Order Striking Down Local Authority Limits in TN and NC: Highlights

The FCC has found that it has the authority to remove aspects of Tennessee and North Carolina law that limit local authority to build or expand Internet networks. In short, states seem to retain the authority to restrict municipalities from offering service at all. However, if states allow local governments to offer services, then the FCC has the power to determine whether any limitations on how they do it are a barrier to the deployment of advanced telecommunications services per its authority in section 706 of the Telecommunications Act.

The FCC has removed a restriction in Tennessee law that prevented municipalities with fiber networks from expanding to serve their neighbors, per a petition from Chattanooga.

In North Carolina, the FCC has removed multiple aspects of a 2011 law, HB 129, that effectively outlawed municipal networks by presenting local governments with a thicket of red tape, including territorial restrictions on existing networks. The city of Wilson had petitioned the FCC for this intervention. 

Listen to our podcast with Jim Baller about this decision.

See the Institute for Local Self-Reliance Press Release on the Opinion and Order for more. If you don't want to read the full order, we pulled out some key paragraphs and sorted them for your benefit!

 

Key Paragraphs in the FCC Decision

We selected some of the most important passages with references to the original Memorandum Opinion and Order. Look for these passages as you read the original FCC doc [PDF].

Communities Around Chattanooga and Wilson Need Better Connectivity:

43. Numerous commenters favor preemption because they wish to obtain service from EPB or Wilson but are unable to do so, and the maps and data discussed above illustrate that communities surrounding EPB’s and Wilson’s current areas of broadband service have far fewer choices for advanced telecommunications capability than the national average. This suggests that further expansion could generate improved levels of investment and competition in these locations. (pp 23-24)

See charts on pages 15 and 16, 21 and 22 showing areas around Wilson and Chattanooga lag national average on Internet access for both basic and advanced services.

 

Characterizing the North Carolina Barriers to Municipal Networks:

3. In North Carolina, the restriction takes the form of a series of costly hoops through which a service provider must jump.  Although characterized as intended to “level the playing field” with private providers when passed, it is clear that the combination of requirements effectively raises the cost of market entry so high as to effectively block entry and protect the private providers that advocated for such legislation from competition.  (p. 4)

14. We also find that North Carolina’s H.B. 129 falls within our authority to preempt under section 706.  H.B. 129 does not prohibit service by municipal entities — indeed it explicitly permits service. (p. 6)

113. Taken together, these purported “level playing field” provisions single out communications services for asymmetric regulatory burdens that function as barriers to and have the effect of increasing the expense of and causing delay in broadband deployment and infrastructure investment. (p. 51)

62. However, even if we focus on taxpayer protection, as some request, the evidence before us suggests that the Tennessee and North Carolina laws before us actually increase the likelihood of failure because of the barriers that they erect to the successful deployment of broadband infrastructure (p.31)

98. … Indeed, the North Carolina Department of State Treasurer Local Government Commission recognized this in the legislative history of H.B. 129 when it noted that “the boundaries set forth in the PCS weaken the financial viability of [the Greenlight and Fibrant] broadband systems.” (p.45)

103. We therefore find that the exemption for “unserved” areas contained in 160A-340.2(b), is not consistent with our analysis of marketplace realities–both with respect to when H.B.129 was enacted, and especially with respect to our recent findings in the 2015 Broadband Progress Report reflecting evolving technology and consumer expectations. Under H.B.129, an area qualifies as “unserved” if at least 50 percent of the households do not have access to service at download speeds of at least 768 kbps while, in sharp contrast, under the Commission’s current benchmark companies receiving Connect America funding for fixed broadband must serve consumers with speeds of at least 10 Mbps for downloads and 1 Mbps for uploads;and areas are “unserved” by advanced telecommunications capability if they do not have access to service with speeds of at least 25 Mbps / 3 Mbps. As a result of the significantly lower speed thresholds adopted in H.B.129 compared to any of the above standards, very few areas in North Carolina will qualify as “unserved” despite the fact that many areas do not meet the standards articulated above. Given that Congress has directed us to carefully evaluate broadband deployment in our role as the regulator of interstate communications by wire, we find that our speed thresholds are the appropriate metric by which to evaluate whether an area is “unserved,” not the standard contained in H.B.129. (p.47)

 

Characterizing the Tennessee Barrier to Municipal Networks

13. The territorial restriction in Tennessee Code Section 601 serves only to restrict municipal electric providers from providing broadband service on fiber networks that they are already authorized to build statewide…  It serves only to effectuate state communications policy preferences by enforcing inefficiency and protecting incumbents from competition. (p.6)

62. However, even if we focus on taxpayer protection, as some request, the evidence before us suggests that the Tennessee and North Carolina laws before us actually increase the likelihood of failure because of the barriers that they erect to the successful deployment of broadband infrastructure. (p.31)

 

Municipal Networks Improve Internet Access Services and Competition

Footnote 139: We note that EPB vastly increased the broadband speeds available to those within its service territory while generating revenue from its broadband service without cross-subsidization from its electrical service, indicating that there was substantial unmet demand.  (p.25)

47. … In other cases, even in the absence of market failure, communities may find that meeting additional unmet demand for broadband serves important policy priorities.  For instance, the municipal provider may have both the incentive and means to serve those broadband needs that are so widely dispersed in the community they would not show up on the balance sheet of any private firm. (p.25)

 

Relevant to Barriers in Other States

16. While the present Memorandum Opinion and Order (Order) only addresses the EPB and Wilson Petitions, the Commission will not hesitate to preempt similar statutory provisions in factual situations where they function as barriers to broadband investment and competition. (p.6)

60. Some commenters argue that municipal entry distorts the marketplace because the municipality functions as both regulator and competitor and could use its authority anti-competitively. This argument fails because these commenters are unable to identify any compelling evidence that this is an actual problem in Tennessee or North Carolina (or elsewhere). (p.31)

62. However, even if we focus on taxpayer protection, as some request, the evidence before us suggests that the Tennessee and North Carolina laws before us actually increase the likelihood of failure because of the barriers that they erect to the successful deployment of broadband infrastructure (p.31)

79.[Regarding potential barriers to telecom-related services that may not solely be Internet access] -  … that “a provider’s ability to offer video service and to deploy broadband networks are linked intrinsically… We recognize that providers may not always have a business case for building a network unless they can optimize revenue by bundling multiple services. (p.39)

Footnote 329: As discussed above with reference to EPB and Tennessee, the restrictions on the provision of bundled services undermines a provider’s ability to provide broadband successfully due to the strong customer preference for bundled offerings (p.53)

 

Regarding FCC Authority to Preempt State Laws:

146. To put it plainly, section 706 authorizes the Commission to displace state laws that effectuate choices about the substance of communications policy that conflict with federal communications policy designed to ensure “reasonable and timely” deployment of broadband. (p.62)

141. … Before addressing whether section 706 authorizes preemptions of laws regulating municipalities as broadband providers, we first address whether it authorizes preemption under any circumstances; for example, whether it would reach state laws that regulate broadband provision by purely private entities.  Take, as an illustration, a hypothetical state law that prohibited cable-based broadband providers from offering broadband capacity greater than that offered by wireless broadband providers.  We think that the answer in that instance would be clear. Such a law would prevent cable-based broadband providers from competing based on superior bandwidth, which in turn could cause such providers to conclude that they could not make an economic case for increasing the capacity of their network in certain communities. (p.59)

143. … And section 706(b) uses at least equally urgent language, requiring us to continually reappraise deployment, and mandating that we “shall take immediate action” when necessary by “removing barriers to infrastructure investment and by promoting competition in the telecommunications market. (p.60)

11. We find that section 706 authorizes the Commission to preempt state laws that specifically regulate the provision of broadband by the state’s political subdivision, where those laws stand as barriers to broadband investment and competition.  A different question would be presented were we asked to preempt state laws that withhold authority to provide broadband altogether.  But where a state has authorized municipalities to provide broadband, and then chooses to impose regulations on that municipal provider in order to effectuate the state’s preferred communications policy objectives, such as the protection of incumbent ISPs, such laws fall within our authority to preempt.  (p. 5)

147. But where a state has authorized municipalities to provide broadband, and then chooses to impose regulations on that municipal provider in order to effectuate the state’s preferred communications policy objectives, we find that such laws fall within our authority to preempt.  To take an example, where a state allows political subdivisions to provide broadband, but then imposes regulations to “level the playing field” by creating obligations apparently intended to mirror those borne by private providers, it does so in order to further its own policy goals about optimal competitive and investment conditions in the broadband marketplace.  The states here are deciding that incumbent broadband providers require protection from what they regard as unfair competition and regulating to restrict that competition.  This steps into the federal role in regulating interstate communications.  Where those laws conflict with federal communications policy and regulation, they may be preempted.  We thus interpret sections 706(a) and 706(b) to give us authority to preempt state laws that regulate the provision of broadband by political subdivisions, provided that the law in question serves to effect communications policy and would frustrate broadband deployment “on a reasonable and timely basis . . . to all Americans.” (p.62)

148. Such a law is focused solely on policy preferences, and not core state control of political subdivisions.  In short, a state law that effectuates a policy preference regarding the provision of broadband is not shielded from all scrutiny simply because it is cast in terms that affect only municipal providers. (p.63)

12. And unlike Nixon v. Missouri Municipal League, the question here is not whether the municipal systems can provide broadband at all, but rather whether the states may dictate the manner in which interstate commerce is conducted and the nature of competition that should exist for interstate communications. (p.5)

167. Once the state has granted that power, however, we do not believe a state is free to advance its own policy objectives when they run counter to federal policy regarding interstate communications. (p.70)

Within North Carolina, the John Locke Foundation has been a persistent critic of local government efforts to encourage competition against the cable and telephone company incumbent providers. It has made many claims in its effort to ensure communities have no power to build their own networks or to use their assets to partner with independent entities for superior Internet access. The FCC saw fit to directly respond to some of these claims.

 

John Locke Foundation Has Misrepresented How Municipal Networks are Funded

69. Morganton and Salisbury, North Carolina.  The John Locke Foundation (JLF) describes the cities of Morganton and Salisbury as examples of municipal broadband that “delivers harm, not help, to the competitive environment” in North Carolina. With respect to the “CoMPAS” (City of Morganton Public Antenna System) system in Morganton, JLF asserts that such harm to the community is evident in two actions by the city council.  The first harmful action, JLF claims, was the council’s decision to allow CoMPAS to borrow funds from two municipal funds. The same report on which JLF relies also states, however, that CoMPAS no longer operates at a loss and its loan repayments to those two funds will be complete in fiscal year 2014. Based on all the information in the report, there does not appear to be any evidence of harm to the community from the municipality’s decision to temporarily borrow money from two of its own reserve funds.  JLF’s second example of purported harm is the alleged cross-subsidization of CoMPAS cable rates by increases in taxes and electricity rates.  Significantly, the news report cited by JLF does not claim that any cross-subsidization actually occurred.  On the contrary, it reports that Morganton’s City Manager (a certified public accountant) said it had not occurred. (p.35)

Mount Vernon Mayor: Local Authority Has Been Good For Our City

As the time approached for FCC Commissioners to choose to allow Wilson and Chattanooga to serve surrounding communities, leaders from municipalities with publicly owned networks shared their experiences. Jill Boudreau, Mayor of Mount Vernon, Washington, published her community's experience with their muni in GoSkagit.com. 

As in the recent testimonial from Opelika Mayor Gary Fuller, Mayor Boudreau described how Mount Vernon's network has created a quality of life where high-tech has enhanced local medicine, encouraged new businesses, and created and environment rich with competition.

Mount Vernon's open access network provides infrastructure for nine service providers. Some of these providers offer services only to businesses, while others also serve government, retail providers, and specific industries such as the medical community. Hundreds of public and private customers receive fast, affordable, reliable connectivity through these providers and the city's publicly owned network.

We first introduced you to Mount Vernon in 2013. The community began deployment in 1995 and have added incrementally to the network to serve nearby Burlington and the Port of Skagit. Government facilities, schools, hospitals, and businesses save millions while utilizing top-notch technology. Businesses have relocated to the area to take advantage of the network and enjoy the high quality of life in the relatively affordable area with its abundance of outdoor recreation.

Mayor Boudreau recognizes that Mount Vernon's success may not be easy to come by for every community but believes each should have the ability to decide that for themselves. She writes:

When it comes to community growth and prosperity, next-generation Internet is vital infrastructure just like a road or sewer pipe. Though what we’ve built in Mount Vernon may not work in every city, each community should have the choice to pursue fast, affordable and reliable broadband in the way that works for them.