The debate over muni broadband expansion

As communities across the country continue to clamor for high-speed broadband, the number of critics speaking out against municipal broadband is growing.

At the heart of the debate is whether governments or private industry should have jurisdiction over broadband. Those who favor private industry point to the historical success of capitalism, while “broadband populists,” as a new report by the Information Technology and Innovation Foundation (ITIF) calls them, favor government regulation and operation much like other city services.

That group “really push[es] a comprehensive narrative that the U.S. broadband -- private-sector broadband -- has failed the country, that we are falling behind other countries in our broadband performance,” said Doug Brake, telecom policy analyst at ITIF and coauthor of “How Broadband Populists Are Pushing for Government-Run Internet One Step at a Time,” released in January.

The populists think “we have these rapacious broadband monopolists that are not upgrading and just harvesting rents from the entire population,” Brake said. “We see that narrative as being incorrect on almost all the points that it puts forward.”

Broadband populists have a two-pronged approach and use small tactical debates to achieve their overall goal, Brake said. On one hand, they support the bottom-up solution of government-owned infrastructure with internet service providers delivering services on top of it -- even while acknowledging the limitations of that approach.

“We think that that model does not fundamentally support long-term innovation,” Brake said. “That’s competition just based on price and customer service. It’s not competition based on the technology itself.” He said he’d rather see ISPs incentivized to pour money into research and development of the next generation of broadband, for instance.

The second prong involves advocating at the Federal Communications Commission to “put private-sector ISPs in a box,” Brake said. He sees FCC’s 2015 adoption of Title II of the Open Internet rules, which reclassifies ISPs as common carriers, as “essentially a first step toward a far more heavily regulated utility model of broadband delivery."

"To be clear, the FCC decided not to adopt these for now,” Brake said. “But now they have the legal authority under the [Open] Internet Order and under the reclassification to Title II to be able to implement unbundling, where operators would be forced to open up their infrastructure to competing service providers.”

The pro-industry argument that Brake makes in his report is that the private sector can offer reasonable prices, adequate speed and continued innovation, all proven through past performance. “At a higher level, this system has worked well, has brought us a long distance in the 10-plus years of commercial internet service,” Brake said.

But Christopher Mitchell, director of community broadband networks at the Institute for Local Self-Reliance, points to another example: Ammon, Idaho. With a population of just 13,000, it’s served by a cable company and DSL.

“Yet in the first neighborhood that’s eligible for the municipal fiber network, I think it’s like three out of four people are signing up to pay thousands of dollars for a connection to their home. That’s a market signal that people want better networks,” Mitchell said. “I certainly see that there’s growing attacks on the idea of local government stepping up, but in our experience, local governments are only doing this because local businesses and residents are demanding something better.”

Network speed and reliability are sticking points for Mitchell. If an internet connection is flaky, productivity drops, putting small businesses that have to compete against larger ones with better connectivity at a disadvantage, he said.

“Anybody who’s waiting for a network transaction to finish,” wants a faster connection, he said. “Small businesses are regularly harmed by productivity losses because people are waiting for downloads and uploads to finish.”

Additionally, the big phone and cable companies aren’t interested in expanding into rural areas, so the local government is often the only entity that’s interested in providing broadband, Mitchell added.

Karen Jackson, Virginia’s secretary of technology, agrees. “For municipalities, sometimes the only chance you have of serving these areas is to do it yourself or to contract for the services,” Jackson said. “Sometimes taking your own future in your own hands is the only way.”

But unlike water, broadband is not an service that municipalities are used to managing. To that end, Virginia’s Center for Innovative Technology created a toolkit to provide information and assistance to municipalities looking to implement broadband. But a bigger help might come from subsidies.

Jackson said she sees nothing wrong with government entities, including the federal government, providing subsidies for better connectivity. She cited programs such as FCC’s E-rate, which connects schools and libraries to broadband at discounted rates.

“If we can incent furtherance of broadband into the unserved areas either by providing relief on barriers such as access to towers or we can provide funding, which in this day and time is pretty rare, then we need to go do what we need to do,” Jackson said. “We’re moving into an age now where broadband is ceasing to be a luxury, and it’s starting to be an essential service.”

Currently the commonwealth’s budget funnels $2.5 million to $3 million to broadband deployment in unserved areas of Virginia, Jackson said.

Virginia Del. Kathy Byron (R-Lynchburg) offers another view of broadband in the state. The Virginia Broadband Deployment Act  -- now the Virginia Wireless Services Authority Act --  that she introduced in January would make it more difficult for municipalities to offer internet service. (The Virginia legislative session that will consider the bill is currently under way.)

“This bill encourages local governments to try to partner with existing providers to extend broadband to unserved areas by leveraging one of the fastest networks in the country,” Byron said in a Jan. 18 op-ed that ran in The Roanoke Times. “Even in the rare situations where it’s determined that’s not feasible, municipalities still have a pathway to build their own networks to reach unserved residents. But, that pathway would include accountability provisions to protect the investment of taxpayers.”

The debate is unlikely to go away, Brake said, adding that one way to find a compromise would be through an update to the Telecommunications Act of 1996 settling the matter of jurisdiction.

“It really is a matter of divorcing the idea of net neutrality, the idea of open internet from the underlying jurisdictional issues,” he said. “The problem is the statute is outdated, and so the FCC has been improvising with ways to implement open internet principles.”

With Republicans in control of FCC and Congress now, it’s likely Title II will be rolled back, Brake said -- FCC Chairman Ajit Pai has expressed his opposition to it -- but “the internet will stay by and large the same.”

In Virginia, Jackson said she’s “watching at this point.  My hope is we will all learn from the lessons of the past -- the good and the bad -- and that somehow we’ll be able to provide a comfort level to municipalities that decide to take this leap,” she said.