Wisconsin Republicans Want More Local Tax Dollars Flowing to AT&T

The University of Wisconsin System is involved in a broadband stimulus project to expand fast and affordable broadband access to key community institutions. Just as they have in similar projects around the country, massive companies like AT&T are trying to derail any potential competition to their services.

From the Cap Times, "Surf and turf: Telecom industry protests UW-Extension broadband plan:"

The angst is over nearly $30 million that was awarded to build more than 600 miles of fiber optic cable that will bring high-capacity broadband connections to a range of key public entities and health care providers in the four communities, each of which has indicated a desire for more reliable broadband service and, not coincidentally, has a UW campus. This project’s budget is nearly $43 million when one adds in funds contributed from groups that will benefit from the infrastructure upgrade in each community.

[T]hose backing the undertaking argue it will bring faster and more reliable Internet service to public safety agencies, health care providers, schools and community organizations in Platteville, Superior, Wausau and the Chippewa Valley (Eau Claire) area.

Private telecom companies (led by AT&T) are protesting the project with a rejoinder we commonly hear in these issues:

Bill Esbeck, the executive director of the Wisconsin State Telecommunications Association, argues the project will duplicate an existing network and take revenues out of the pockets of local Internet providers. The group is asking for a state review of the plan and is considering legal action, says Esbeck.

Interestingly, both sides are mostly right. The public safety, health care, and educational institutions will see faster, more reliable, and less expensive broadband. Private existing providers (mostly AT&T), will lose some revenues.

Of course, those lost revenues would have come from the tax base in the form of local governments having to greatly overpay for telecom services.

The fiscally responsible path for local governments is to build and own (perhaps operate if they wish) their own broadband networks rather than leasing overpriced services from carriers like AT&T. Not only does this cut public expenditures for telecom immediately, it reverses the growth of future telecom costs. Companies like AT&T raise prices over time whereas technological progress allows those who own the network to cut costs over time. When the public owns the network, it has more flexibility and power and deal with future costs of broadband.

As for the network being duplicative… well, as we have said time and time again, this is the equivalent of dirt road owners arguing against interstate highways. Both Interstates and dirt roads allow you to go from point A to point B, but they have key differences. The U of W is building a far superior network to the current alternatives (using metrics like available capacity, cost, reliability, control, and future capability).

In a move unsurprising to anyone watching this occur in state after state, a number of elected officials immediately rushed to defend the prospect of AT&T losing revenue.

Last month four Republican lawmakers who sit on the Joint Committee on Finance sent a letter to the Democratic co-chairs of that committee asking for a review of the project because they believe the UW System may be violating the law if it moves forward with the broadband expansion.

So to be clear, these lawmakers are fighting to require local governments to pay higher prices to companies like AT&T for worse services. This is what passes for fiscal responsibility to state legislators around the country who seem more swayed by telecom lobbyists than any concern for the governed.

Karl Bode had a similar response to mine:

In other words it would be good for the local economy and residents -- it just wouldn't be good for AT&T, given they couldn't overcharge those institutions via the local AT&T-fueled BadgerNet service. Given BadgerNet charges local institutions $814 a month for 1 Mbps Internet connections, you can fairly quickly figure out exactly what AT&T's looking to protect -- and it isn't "community investment."

What galls me is the way big companies like AT&T cast themselves as trying to help the local provider, when they have driven thousands of local providers out of business either by abusing their market power or lobbying for laws that privilege the super large companies. This network in Wisconsin actually may help true local providers by bringing another big broadband pipe to town and lowering prices for backhaul.

Full disclosure: I should note here that I am a Gopher partisan and find the prospect of defending the U of W rather difficult in any circumstances.