FCC questions state laws that block cities from building their own broadband network

McClatchy Washington BureauMarch 5, 2014 

— Frustrated with the sluggish speed and high cost of their Internet service providers, the residents of Wilson, N.C., decided a few years ago to take matters into their own hands – they would simply build their own connection.

The city council unanimously voted in 2006 to create a fiber-to-home network that today provides affordable high-speed Internet to homes and businesses, connects schools, and even supplies downtown Wilson with free Wi-Fi.

Incumbent companies Time Warner Cable and CenturyLink were forced to lower their prices and upgrade their service to remain competitive.

Four other communities in the state also launched municipal broadband. Such enterprises irked big-time providers enough that, after years of lobbying and a million dollars in campaign cash, North Carolina in 2011 passed a cable industry-backed law that makes it nearly impossible for any other municipality to do the same. (Time Warner Cable and CenturyLink did not return requests for comment.)

Two weeks ago, the Federal Communications Commission announced that it intends to take a close look at overruling such state laws, which restrict the ability of cities and towns to build their own broadband networks in 20 states across the country.

The legal restrictions on municipal broadband are an “obvious candidate” for the agency’s scrutiny as it seeks to enhance competition, FCC Chairman Tom Wheeler said in a statement.

“This is a very big deal,” said Christopher Mitchell, director of the Telecommunications as Commons Initiative at the Institute for Local Self-Reliance, a nonprofit advocacy group. “The question will be where to draw the line – will they remove all barriers or just the ones that are really onerous?”

State laws resulting from Internet service provider-sponsored bills vary in severity across the country. Florida restricts community broadband by placing special taxes as well as profitability requirements that make it difficult to approve networks like Wilson’s. In contrast, Pennsylvania does not allow municipalities to sell broadband services at all if a “local telephone company” already provides it, no matter how high the price or how poor the service.

“These restrictions are the result of intensive lobbying by incumbent Internet companies who don’t want to see any kind of competition,” said Matt Wood, policy director for the consumer group Free Press. “They have whole armies of people representing their interests.”

The FCC’s proposal to increase competition comes as the commission considers Comcast’s bid to buy Time Warner Cable. The acquisition would unite two of the country’s largest cable and broadband providers in what opponents say is effectively a monopoly on Internet service.

Public-private partnerships that make services like the hyped Google Fiber _ already available in Kansas City, Mo. _ possible could be shifting the balance of power away from the lobby for Internet service providers, known as ISPs. The same day the FCC said it would look at overruling state laws restricting public broadband, Google announced plans to bring its Fiber networks to an additional 34 cities.

The focus on possible ISP alternatives killed a Kansas bill last month that would have made it the 21st state with municipal Internet restrictions. The bill proposed by the Kansas Cable Telecommunications Association, whose members include Comcast, Cox and Time Warner Cable, outlawed community broadband services except in ambiguously defined “unserved areas.”

It encountered such swift and vocal criticism from prominent companies including Google that it quickly lost support and its state Senate committee hearing was canceled.

“The private sector alone cannot enable the United States to take full advantage of the opportunities that advanced communications networks can create,” Google and other companies opposed to the bill wrote in a letter, calling it “bad for Kansas communities, bad for the private sector, and bad for America’s global competitiveness.”

The controversial bill would have limited the type of public-private partnerships that brought Google Fiber to Kansas City. The pilot Fiber network there can provide Internet and television broadcasting up to 100 times faster than normal, free for seven years with a $300 installation fee.

The Kansas bill could have hampered Google Fiber’s expansion in the region the same way North Carolina’s 2011 law stops Wilson from connecting surrounding towns east of the Raleigh-Durham area to its fiber network.

The FCC’s examination of anti-municipal broadband laws is not likely to loosen the ISP giants’ grip on the market, but consumer advocates say the goal is to return control to cities and towns to make their own decisions.

“When the state is deciding on behalf of the city, you have to wonder about the true public interest here,” Wood said. “The real story is that communities are having this choice taken away from them.”

The FCC says it hopes to consider a formal set of new rules by late spring or early summer.

Email: vbergengruen@mcclatchydc.com; Twitter: @verambergen.

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