Ars Technica, February 12, 2014
It’s no secret that private Internet service providers hate when cities and towns decide to enter the telecommunications business themselves. But with private ISPs facing little competition and offering slow speeds for high prices, municipalities occasionally get fed up and decide to build their own broadband networks.
To prevent this assault on their lucrative revenue streams, ISPs have teamed up with friends in state legislatures to pass laws that make it more difficult or impossible for cities and towns to offer broadband service.
Attorney James Baller of the Baller Herbst Law Group has been fighting attempts to restrict municipal broadband projects for years. He’s catalogued restrictions placed upon public Internet service in 20 states, and that number could be much higher already if not for the efforts of consumer advocates.
Some state restrictions have been in place for decades. A new wave of state laws were passed in the years after the federal Telecommunications Act of 1996 was passed, Baller told Ars. Another wave of proposals came after a US Supreme Court decision in 2004 that said the Telecommunications Act “allows states to prevent municipalities from providing telecommunications services.”
Pennsylvania enacted a new law limiting municipal broadband later in 2004, but then the tide began to turn.
“The next year we saw 14 states consider barriers, and we fought most of them off, and then it was two or three a year,” Baller told Ars. “We won all the battles for a while until North Carolina in 2011 and South Carolina in 2012, and there were no new ones in 2013.” (That North Carolina bill was titled, “An act to protect jobs and investment by regulating local government competition with private business.”)
Taxpayer dollars can be used to build networks, but Christopher Mitchell, director of the Telecommunications as Commons Initiative at the Institute for Local Self-Reliance, argued that cable company arguments pointing to taxpayer funds are misleading.
“Most networks sell bonds to private investors who are repaid by revenues from the network. No taxpayer dollars,” he told Ars. “If anything, taxpayer dollars are better spent by no longer overpaying for service to schools, fire departments, and the like. And the municipal utilities that often operate the network generally pay far more in what is called PILoT—Payments in lieu of taxes—than the private providers do, meaning that even though the prices on muni networks are generally lower than what existed in the market prior to the muni entry, more of the revenue goes to pay for other government services. The result is that municipal networks more often subsidize the general fund rather than the general fund subsidizing a municipal network.”
Cox said its “22 other states” statistic is based on internal research and declined to say which states it includes in that figure. As we mentioned, Baller has identified 20 states with such restrictions. Let’s take a look at each one (quotes come from Baller’s analysis): A Sad states of affairs