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TN Study Suggests Stamping Out State Barriers

The results of a statewide Tennessee survey on residential and business connectivity are in and they ain't pretty. Thirteen percent of the state - more than 834,000 people - don’t have access to 25 Megabits per second (Mbps) download and 3 Mbps upload, which is the FCC's definition of broadband. Authors of the study make a number of recommendations, the first of which is removing state barriers that stifle Internet infrastructure investment.

"...A More Open Regulatory Environment"

The study, commissioned by the state’s Department of Economic and Community Development (TNECD) earlier this year, includes feedback from more than 23,000 households and businesses. 

From page 13 of the report:

The State of Tennessee could consider lifting administrative burdens and restrictions to broadband infrastructure investment to fostering a more open regulatory environment. 

In the report, the authors provide detailed reasoning for why the state should embrace an open regulatory environment to encourage competition. They note that state barriers impact electric cooperatives, municipalities that operate electric utilities and cannot expand beyond their own service areas, and municipalities that do not operate electric utilities but can only build telecommunications infrastructure in unserved areas with a private partner.

The FCC came to the same conclusion in February 2015 and rolled back Tennessee state laws in order to encourage competition. Tennessee is leading the charge against the FCC's decision with North Carolina (even though NC's Attorney General criticized the law). The parties have filed briefs, attorneys have presented oral arguments, and now the Sixth Circuit Court of Appeals is considering the case.

The report goes on to recommend other policies, including dig-once, smart conduit rules, and one-touch make ready. Some of these policies have been challenged in other states by the big incumbents, such as the AT&T fight in Louisville against one-touch make ready. It’s no secret that Governor Bill Haslam has been content to let these same corporate gigantaurs effectively run the show in his state for some time now. 

Business Critical

Beyond recommendations, findings from the study were also revealing. The press release from the TNECD stated that the study shows fast, affordable, reliable connectivity is especially important to Tennessee’s businesses:

Businesses participating in the assessment reported broadband enabled 43 percent of all net new jobs and 66 percent of revenues. In addition, 34 percent of businesses classified broadband as essential to selecting their location, and 56 percent noted that it was essential to remain in their location. Sixteen percent of economic development agencies reported that businesses frequently chose not to locate in an area due to insufficient broadband. (emphasis ours)

Both business and residential participants cited reliability as the most important factor to them when analyzing their connectivity. Businesses also considered upload speed critical to their use of the Internet.

Urban vs Rural

While the survey determined that 13 percent of people in the state don’t have access to 25 Mbps / 3 Mbps, the “vast majority” were rural folks. According to the survey, 98 percent of urban participants DO have access. Those would include people who live in places such as Chattanooga, Pulaski, and Clarksville - all towns with municipal networks.

The survey found a correlation between access to the Internet and a number of factors, four of which were the most prevalent:

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  • The economic status of the community 
  • Number of ISPs (level of competition)
  • Type of connection
  • Population density 

Removing state regulatory barriers would allow a number of these rural areas to partner with municipalities that have already invested in Internet infrastructure. Nowhere else is this situation more apparent than in Bradley County. Cleveland Utilities (CU), the electric, water, and sewer provider in the county would like to partner with nearby Chattanooga EPB Fiber Optics to bring fast affordable, reliable connectivity to customers but state law forbids it. Bradley County and a number of other rural communities have appealed to state lawmakers because it is a matter of economic urgency and educational necessity for their children. They are still waiting.

Bills to eliminate the state barriers have been introduced but while the number of State Legislators supporting them has increased, the movement does not have the force to restore local authority...yet.

Break Down The Barriers 

Haslam referred to his administration’s report as “a starting point” and TNED Commissioner Randy Boyd cautioned that, “Not every option included in the report may be the answer for Tennessee, nor is there one simple solution.” 

It must be hard to hold the line as expert opinion and evidence chip away at the flawed logic behind Tennessee's state barriers. It's becoming increasingly apparent that the laws do not benefit the people of Tennessee; they are in place strictly for the big cable companies and telcos that operate there.

For the full report, visit the TNECD website.

More Colorado Communities Shut Out State Barriers At The Voting Booth

Once again, local communities in Colorado chose to shout out to leaders at the Capitol and tell them, "We reclaim local telecommunications authority!"

Nine more towns in the Centennial State voted on Tuesday to opt out of 2005's SB 152. Here are the unofficial results from local communities that can't be any more direct at telling state leaders to let them chart their own connectivity destiny:

Akron, population 1,700 and located in the center of the state, passed its ballot measure with 92 percent of votes cast supporting the opt-out.

Buena Vista, also near Colorado's heartland, chose to approve to reclaim local authority when 77 percent of those casting votes chose to opt out. There are approximately 2,600 people in the town located at the foot of the Collegiate Peaks in the Rockies. Here is Buena Vista's sample ballot.

The town of Fruita, home to approximately 12,600 people, approved the measure to reclaim local authority with 86 percent of votes cast. Now, when they celebrate the Mike the Headless Chicken Festival, the Fruitans will have even more to cheer.

Orchard City, another western community, approved their ballot measure when 84 percent of voters deciding the issue chose to opt out. There are approximately 3,100 people here and a local cooperative, the Delta-Montrose Electric Association (DMEA) has started Phase I of  its Fiber-to-the-Home (FTTH) network in the region. According to an August article in the Delta County Independent, Delta County Economic Development (DCED) has encouraged local towns, including Orchard City, to ask voters to opt out of SB 152. With the restriction removed, local towns can now collaborate with providers like DMEA.

In southwest Colorado is Pagosa Springs, where 83 percent of those voting supported the ballot measure to opt out. There are 1,700 people living in the community where many of the homes are vacation properties. Whether or not to reclaim local telecommunications authority was the only ballot issue in Pagosa Springs.

Silver Cliff began as a mining town and is home to only 587 people in the south central Wet Mountain Valley. Voters passed the ballot measure to opt-out of SB 152 with 80 percent of votes cast.

In the north central part of the state sits Wellington, population approximately 6,200. The community has some limited fiber and their ballot initiative specifically states that they intend to study the feasibility and viability of publicly provided services. Their initiative passed with 83 percent of the vote:

WITHOUT INCREASING TAXES, WITH THE INTENT OF STUDYING FEASIBILITY AND IN THE FUTURE EVALUATING THE VIABILITY OF THE TOWN OF WELLINGTON POTENTIALLY PROVIDING SERVICES, SHALL THE CITIZENS OF THE TOWN OF WELLINGTON, COLORADO, ESTABLISH A TOWN RIGHT TO PROVIDE some or ALL of the SERVICES RESTRICTED SINCE 2005 BY TITLE 29, ARTICLE 27 OF THE COLORADO REVISED STATUTES, DESCRIBED AS "ADVANCES SERVICES," "TELECOMMUNICATIONS SERVICES" AND "CABLE TELEVISION SERVICES," INCLUDING ANY NEW AND IMPROVED HIGH BANDWIDTH SERVICES BASED ON FUTURE TECHNOLOGIES, UTILIZING COMMUNITY OWNED AND PRIVATELY OWNED AND CONTRACTED FOR INFRASTRUCTURE INCLUDING BUT NOT LIMITED TO EXISTING FIBER OPTIC NETWORK, EITHER DIRECTLY OR INDIRECTLY WITH PUBLIC OR PRIVATE SECTOR PARTNERS, TO POTENTIAL SUBSCRIBERS THAT MAY INCLUDE TELECOMMUNICATIONS SERVICE PROVIDERS, RESIDENTIAL OR COMMERCIAL USERS WITHIN THE Town ?

Another small community, Westcliffe with 568 people, also took the issue to the voters. Of those voting on Ballot Question A, 76 percent voted "yes" to reclaim local telecommunications authority. The town is located at the base of the Sangre de Cristo Mountains in Custer County.

Two weeks ago, we told you about Mancos where community leaders want to explore the possibility of using existing publicly owned fiber for better connectivity. In Mancos, the Board of Trustees of the community of 1,300 recognized that the bill was anti-competitive and passed a resolution urging voters to approve the opt-out. As the Town Administrator acknowledged, reclaiming local authority, "gives us a lot more leeway." Mancos wants to have the freedom to investigate public projects and public private partnerships. Voters agreed and 86 percent of those casting ballots approved the measure.

C'mon Already!

Last November nearly 50 local communities sent a message loud and clear to the state legislature that they want the freedom to make their own decisions about connectivity. Opting out of SB 152 does not mean a community will build a muni but allows them to explore the possibility of serving themselves or using their own fiber assets to work with private sector partners.

For these communities, there is no good that comes from SB 152. Its only purpose is to limit possibilities and restrict competition in favor of the big corporate providers who lobbied so hard to get it passed in 2005.

We've said it before and we'll say it again. Rather than force local communities to spend local funds on these referendums to reclaim a right that was taken away from them by the state in 2005, Colorado needs to repeal the barriers erected by SB 152.

Mancos Voters The Latest To Decide Local Authority In Colorado

Mancos, a rural community of about 1,300 in rural southwest Colorado, hopes to join over 50 other communities across the state that have reclaimed local telecommunications authority. On April 5th, the town will decide whether to exempt itself from SB 152, Colorado's 2005 state law that removed local choice from municipalities and local governments.

Located at the base of the Mesa Verde National Park, Mancos is best known for outdoor recreation and as the gateway to the park, home to the historic Mesa Verde Cliff Dwellings. Rangeland and mountains surround the community.

The Pine River Times Journal reports that Mancos is looking to utilize 3,300 feet of fiber optic assets already in place. The fiber now connects municipal facilities but community leaders want to have the option to use the network for businesses, residents, or to provide Wi-Fi to visitors. SB 152 precludes Mancos from using their publicly owned fiber for any of those purposes without first opting out.

On March 9th, the Town Board of Trustees approved a resolution encouraging voters to pass the ballot initiative that will reclaim local authority. They have information about the ballot question and what it will mean for the community on their website.

“It’s an anti-competition bill [SB 152],” [Mancos Town Administrator Andrea Phillips] said. “[Exempting out] gives us a lot more leeway.”

Mancos has no specific plans to develop a municipal fiber network but, like many other communities that opted out last November, they want the ability to do so or to work with a private sector partner. Nearby Dolores is collaborating with Montezuma County; the two have contracted jointly for a feasibility study. 

According a March 16th Pine River Times Journal article, Dolores and Montezuma County will put the issue to voters in November. Jim McClain, IT Manager for the county said:

“Opting out unties our hands in order to build up the system. It’s like we build the road, and then private companies provide the service on that road.” 

“When people and businesses are thinking of moving here, the first thing they want to know is if there is broadband.” 

In Mancos, the local Chamber of Commerce is considering the needs of visitors as well as residents.

“It’s all about economic vitality,” [Mancos Valley Chamber of Commerce Administrator Marie Chiarizia] said.

Mancos potentially could make broadband service available anywhere in the town if it’s exempted from SB 152, Chiarizia said. Outdoor events such as Mancos Days draw temporary vendors, and broadband access would allow those vendors to be able to take credit and debit cards more quickly, she said.

The Mancos Board of Trustees voted to contribute $4,100 to participate in the feasibility study on March 23rd. 

“To look to the future and become prosperous you have to look at the infrastructure of the town and offer these services...Mancos is a unique community unto itself, but this will help us promote our town better and place us on a competitive edge,” [Chiarizia] said.

TN and NC vs. FCC: Oral Arguments Scheduled for Thursday, March 17th

This Thursday, March 17th, attorneys for the FCC and the states of Tennessee and North Carolina will present arguments to the Sixth Circuit Court of Appeals on a case that could define parameters for publicly owned Internet networks. The proceedings begin at 9 a.m. eastern. Each side has 15 minutes to present.

As we reported a year ago, the FCC ruled that state barriers in Tennessee and North Carolina limiting expansion of publicly own networks are too restrictive and threaten the U.S. goal of expanding ubiquitous access. The FCC overruled the harmful state laws but soon after, both states filed appeals.

The cases were consolidated in the Sixth Circuit and a number of organizations, including ILSR, offered Amicus briefs. We have collected all the briefs and made them available for you here. As most of our readers will recall, the case focused on Chattanooga and Wilson, two communities that know the many benefits of publicly owned networks.

So, when you raise your glass of green beer on Thursday to celebrate St. Paddy's, send some luck to our friends in Wilson, Chattanooga, and the FCC!

Seniors, Low-Income, Disabled Communities Pay the Price in St. Paul

For seniors, low-income residents, and the disabled in Saint Paul, Minnesota, a Comcast discount within the city's franchise agreement is not all it was cracked up to be. The Pioneer Press recently reported that, as eligible subscribers seek the ten percent discount guaranteed by the agreement, they are finding the devil is in the details - or lack of them.

This is a warning to those who attempt to negotiate with Comcast for better service. Comcast may make deals that it knows are unenforceable. 

"No Discount For You!"

For years, Comcast held the only franchise agreement with the city of St. Paul. In 2015, the city entered into a new agreement with the cable provider and, as in the past, the provider agreed to offer discounts for low-income and senior subscribers. Such concessions are common because a franchise agreement gives a provider easy access to a pool of subscribers.

It seems like a fair deal, but where there is a way to squirm out of a commitment, Comcast will wriggle its way out. 

Comcast is refusing to provide the discount when subscribers bundle services, which are typically offered at reduced prices. Because the contract is silent on the issue of combining discounts, the city of approximately 298,000 has decided it will not challenge Comcast's interpretation:

The company notes that the ten percent senior discount applies only to the cable portion of a customer's bill. Comcast has maintained that it is under no legal obligation to combine discounts or promotions, and that bundled services provide a steeper discount anyway.

Subscribers who want to take advantage of the discounts will have to prove their senior status and/or their low-income status. In order to do so, Comcast representatives have been requesting a copy of a driver's license or state issued i.d. 

CenturyLink Picks Up the Baton

In November, the city approved an additional franchise agreement with competitor CenturyLink. That agreement also provides that seniors, low-income households, and disabled residents are eligible to receive a ten percent discount. CenturyLink can, in the alternative, offer a discount of $5 off a subscriber's cable bill if a subscriber applies for the low-income discount. In order to receive this discount, the subscriber must prove they are enrolled in a public assistance program. CenturyLink is not compelled to provide both the $5 reduction and the ten percent discount under the terms of the agreement.

The CenturyLink contract states that bundling discounts will not forfeit the $5 discount but does not say the same for the alternative ten percent discount.

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Seniors on the Chopping Block

Discounts for low-income seniors are at risk in the CenturyLink contract reports the Pioneer Press. The contract offers the company an "out" by allowing it to exchange a senior discount to residents for free gigabit per second (Gbps) service at centralized locations. Rather than offering a ten percent discount to senior subscribers at their homes, CenturyLink can provide the high-speed connectivity to two St. Paul senior centers or to one senior center and a community center and present two training session per year on using the Internet.

My own parents, who are elderly and leave the house less frequently than they have in the past, depend on their Internet connection to stay in touch with their kids. A number of elderly folks are lower-income. Ten percent, a modest sum to a profit machine like Comcast, could be the tipping point for whether or not elderly people living on fixed incomes subscribe.

Would I rather have Mom trudging through the St. Paul snow to wait in line at the senior center to Skype in a noisy room filled with other seniors? No. Will Mom go to the senior center? Probably not. This trade-off is not equitable.

When You're All Lawyered Up, It's Easy to Break Promises

As franchise agreements expire across the country, communities like St. Paul will be negotiating new contracts or considering other options. Companies like Comcast and CenturyLink, backed by armies of lawyers, have turned backhanded negotiating into an art form. Cities like St. Paul employ smart, capable attorneys, but telecommunications is highly specialized; few communities have legal staff experienced in this field.

Lose The Big Companies, Gain Control

Contrary to the typical behavior of Comcast and CenturyLink, publicly owned networks have a history of lowering prices or increasing speeds for free. When we ask why, decision makers usually tell us they make the change because it's good for the community. Subscribers are the shareholders when a network is publicly owned.

Communities that invest in municipal networks shake off dependence on big providers like Comcast and CenturyLink. By investing in their own infrastructure, they spur economic development, save public dollars, and become more self-reliant. 

Steamboat Springs Gets a Grant for Fiber for the Future

Last we checked in with Steamboat Springs they had just finished a connectivity project. Now the community is taking another step to improve local connectivity in this northwest Colorado ski resort town.

The goal is to connect large community anchor institutions throughout town with a fiber backbone which could become the basis for a larger network. Several community anchor institutions have pooled their resources and pledged $748,000 while also securing a matching grant to install 9 miles of fiber across the small town of 12,000. Funding is in place, but the agreement between the institutions must be finalized before sending out an official request for proposals to find a company to install the fiber.

Matching Grants & Community Connectivity

The Colorado Department of Local Affairs (DOLA) intends to match the community’s contributions towards the project. DOLA will provide $748,000 in grant money for the fiber backbone. According to Routt County Manager Tom Sullivan in Steamboat Today, the fiber design will have splice points to allow a private providers to provide last-mile connectivity to residents’ homes and businesses from the fiber backbone.

So far, the large institutions pitching in for the 9 miles of fiber are: Routt County’s public safety complex, Yampa Valley Electric Association, the city of Steamboat Springs Mountain Fire Station, Yampa Valley Medical Center, Colorado Mountain College, and the Steamboat Springs School District. Several of these institutions had previously collaborated with the Northwest Colorado Broadband group and the Steamboat Springs Chamber Resort Association on the community's first connectivity project.

The Carrier Neutral Location

The first publicly owned project in Steamboat Springs was a Carrier Neutral Location (CNL). It's a space owned and maintained by a neutral party where providers can connect to each other to provide redundancy. It's especially useful for middle- and last-mile providers to connect to one another. The facility drives down the cost of bandwidth for community anchor institutions and service providers because they no longer require a separate facility for connections. Put another way, it aggregates the demand for bandwidth and leads to cost-savings.

In Steamboat Springs, the CNL is a room in a school district building. The CNL has allowed local anchor institutions to negotiate tenfold savings. For more information on CNLs, check out our podcast with Tim Miles, the Technology Director at Steamboat Springs and South Routt School Districts.

Voting Matters

In November 2015, citizens opted out of SB152, a state law prohibiting local governments from developing municipal network to improve Internet connectivity. Without that vote, the latest project would not have become a reality due to the state barrier. Now Steamboat Springs has the option to continue developing its infrastructure for high-speed Internet for the whole community, including residents’ homes.

Missouri Legislature Off to Another Anti-Muni Session: Pick Up Your Phone and Call!

If you pay attention to state laws affecting municipal networks in Missouri, you are experiencing an unsettling feeling of deja vu right now. On January 7, Representative Lyndall Fraker introduced HB 2078, a bill much like last year's Senate anti-muni bill. Fraker is Chair of the House Utility Infrastructure Committee, where  the bill is now awaiting a hearing, so it has a good chance of being heard sooner rather than later. 

Your Phone Call Required! 

Time to call Members of the Committee, especially if any of them represent you, and let them know that you expect them to vote against this bill. It is anti-competitive, opposed to local authority, and prevents new investment. Bad bill! 

Preventing Partnerships to Maintain The Status Quo

This bill would not only make it extremely difficult for local communities to invest in publicly owned Internet networks, but would complicate and delay public-private partnerships. A number of communities across the country already own infrastructure and are exploring ways to partner with private providers who want to use it to serve schools, businesses, and residents. If a community wants to lower telecommunications costs or obtain better services, this legislation would have them first jump through a series of obscure, expensive, and cryptic hoops. This legislation creates barriers that serve no purpose except to erect hurdles that discourage local communities from finding better providers.

The requirements in HB 2078 and its companion bill SB 946 are clearly intended to limit competition - to maintain the existing de facto monopolies and duopolies within Missouri. As we have seen in places like Westminster, Rockport, and in Missouri's North Kansas City, partnerships are filling a gap in places where incumbents don't feel justified investing or communities are not ready for their own high-quality Internet networks. A key benefit to allowing partnerships is the establishment of competition in areas where there is only one provider who has no reason to work to please its subscribers.

According to HB 2078, before a community can even consider offering any type of service:

"...the competitive service is not being offered to fifty percent of the addresses by any combination of service providers within the boundaries of such city, town, or village."

In other words, existing de facto monopoly status in places where there is only one provider can be easily preserved by the Missouri State Legislature if this piece of legislation passes.

State Lawmakers Impose Their Will On Local Decisions

The bill also dictates specific criteria for feasibility reports, waiting periods, and fiscal impacts. HB 2078 directs the city on specific loan requirements, limits borrowing to $500,000, and dictates interest terms. Along with other restrictions, the bill shackles local governments to the point where investing in better infrastructure is not practical.

Give the Locals What They Want!

Once again, state lawmakers are stepping over the line when they should be stepping back from it. Missouri has existing barriers that discourage publicly owned networks and negatively impact rural communities overlooked by large corporate providers. Rather than perpetuate this harmful state of affairs, state lawmakers should look to the future, strike down the state's existing barriers, and give local communities full authority to decide their own connectivity future.

Are You From Tennessee? Your Opinion Matters!

For the past several months, we have covered the plight of North Carolina and Tennessee. These states have passed laws that prohibit local governments from expanding beyond their municipal electric utility service area to bring better connectivity to neighboring communities. Even though nearby towns ask places like Chattanooga or Tullahoma to provide services, they are prevented from doing so.

Today we bring to you this news story from Anderson County, Tennessee. Local officials are encouraging residents to tell the state about their horrible connectivity. With a bill in the state legislature to remove the restriction and the state embroiled in a court case to challenge the FCC's decision to roll back the state barrier, local governments are using the survey to connect people with lawmakers.

In Anderson County, some local government agencies have hardcopies of the state’s survey for those without Internet access. Any Tennessee resident with Internet access can take the survey online here

"It's the slow circle of death that you see wheeling around there, and it's waiting and waiting and waiting," -- Steve Heatherly, Anderson County Chamber of Commerce Chairman

Op-ed: Next-Generation Networks Needed

The Knoxville News Sentinel published this op-ed about Tennessee's restrictive broadband law on January 9, 2016.

Christopher Mitchell: Next-Generation Networks Needed

Four words in Tennessee law are denying an important element of Tennessee's proud heritage and restricting choices for Internet access across the state.

When private firms would not electrify Tennessee, public power came to the rescue. In the same spirit, some local governments have built their own next-generation Internet access networks because companies like AT&T refused to invest in modern technology. These municipal networks have created competition, dramatic consumer savings and a better business climate in each of their communities.

The four words at issue prevent municipal electric utilities from expanding their successful fiber optic Internet networks to their neighbors, a rejection of the public investment that built the modern economy Tennessee relies upon.

Current law allows a municipal utility to offer telephone service anywhere in the state, but Internet access is available only "within its service area." This limit on local authority protects big firms like AT&T and Comcast from needed competition, and they have long lobbied to protect their de facto monopolies. To thrive, Tennessee should encourage both public and private investment in needed infrastructure.

These municipal systems have already shown they can bring the highest-quality Internet services to their communities. Chattanooga's utility agency, EPB, built one of the best Internet networks in the nation. Municipal fiber networks in Tullahoma, Morristown and more have delivered benefits far in excess of their costs while giving residents and local businesses a real choice in providers.

Many of these networks are willing to connect their neighbors — people and businesses living just outside the electric utility boundary. If Chattanooga wants to expand its incredible EPB Fiber into Bradley County with the consent of all parties, why should the state get in the way?

Consider that Tennessee metro areas almost always have at least one high-speed Internet option. Those with municipal networks have a real choice in providers. Nashville is slated for Google Fiber. But there is no such hope on the horizon in rural areas, despite the billions of dollars that have been spent on subsidies to providers like AT&T.

While AT&T's lobbyists scheme to prevent competition, the federal government subsidizes AT&T operations with more than $500,000 per month in Tennessee alone. So much for the "private" sector.

When it comes to municipal networks, taxpayer dollars are rarely used. Private investors often finance municipal networks by purchasing long-term bonds and are repaid by the revenues from the network. The Tennessee Valley Authority strictly oversees municipal utilities to ensure they are not cross-subsidizing telecom services with electrical ratepayer revenues.

To the extent municipal networks affect taxpayers, the taxpayers benefit. EPB just announced that in 2015 alone, its payments in lieu of taxes exceeded $19 million to the 17 jurisdictions in which it operates.

When local businesses connect to municipal fiber, more of their money stays in the community. Compare that to how much communities without a real choice send to AT&T and Comcast headquarters in distant states. And thanks to the competition, residents and businesses pay less. Morristown estimates a $3.4 million annual aggregate savings from lower bills.

The state should encourage communities to be more self-reliant and to build resilient regions rather than taking the side of distantly-owned monopolies. The state should be focused on how to encourage investment in next-generation Internet networks, not limit it.

 

Christopher Mitchell is the director of the Community Broadband Networks Initiative at the Institute for Local Self-Reliance. He is on Twitter: @CommunityNets.

Op-ed: Spanish Fork Proves Utah Law is Counter-Productive

The Salt Lake Tribune published this op-ed championing local investment in Internet infrastructure on December 11, 2015.

 

Op-ed: Spanish Fork’s success shows municipal Internet networks work

By Christopher Mitchell

For nearly 10 years, large telephone and cable companies have claimed municipal Internet networks are so risky that local government authority should be restricted. But after 15 years of experience, we can only conclude that the cure is worse than the disease.

Utah has three municipal networks, where local governments invested in Internet infrastructure to provide choices in a monopolistic environment. But only two of those networks are regularly discussed and used as examples of why local governments shouldn't be in this business: iProvo and UTOPIA, which were not able to meet their financial targets.

The network missing from the conversation is Spanish Fork Community Network, which has just finished paying off its debt and has generated millions of dollars in surplus revenue for the community. The network is now upgrading from community cable to community gigabit fiber optics.

Of the over 450 municipal networks tracked by the Institute for Local Self-Reliance, Spanish Fork's experience is above average. The vast majority of municipal networks deliver benefits well in excess of costs and do not require subsidies to operate.

It may come as a surprise, but iProvo and Spanish Fork are nearly twins, separated at birth and raised in dramatically different environments. Both were conceived at the same time — the same consultant did the feasibility study for each. But Spanish Fork, being smaller and more nimble, was able to move forward before Utah's Legislature weighed in to restrict local decision-making.

Comcast and the predecessor to CenturyLink crafted the legislation, which was revealed in a brilliant 2011 BusinessWeek article aptly entitled "Pssst … Wanna Buy a Law?" by Brendan Greeley and Alison Fitzgerald.

Since then, any new Utah municipal network has been subject to numerous requirements unlike anything private providers face, including a de facto requirement to use a wholesale-only arrangement.

Provo wanted to use the same business model as Spanish Fork, which we now know was tremendously successful. Whereas Spanish Fork could directly offer services to local businesses and residents, Provo was required to wholesale to other companies that delivered services.

Google has since taken over Provo's network and may soon be building in Salt Lake City, ensuring some competition for Comcast and CenturyLink in the short term at least. Whether they remain for the long term or not is their decision to make, independent of what is best for the community. Where the network is available, the services and prices will be determined from California, not Utah.

This powerlessness to ensure universal high quality access to the most important utility of the 21st century is a legacy of Utah law, which discourages locally-rooted networks. Utah should embrace the leadership from FCC Chairman Tom Wheeler, who has pushed a pro-competition agenda to bring a real choice in high speed Internet access to local businesses and residents.

Ensuring universal high-speed Internet access requires all hands on deck, not only the private companies. We are seeing new local approaches out of smart communities like Ammon, Idaho, where an incremental approach to the wholesale-only model is very promising.

But that model shouldn't be imposed on communities by the state. Especially when those state laws are written by the very industry voices that seek to limit competition. The record is clear — laws revoking local authority to create Internet choice have increased the risk to taxpayers, limited investment in better networks and have only benefited cable and telephone companies monopolies headquartered outside the state.

Christopher Mitchell is the director of Community Broadband Networks at the Institute for Local Self-Reliance in Minneapolis (MuniNetworks.org).