Incumbents resist proposed government broadband networks
A battle is simmering in some of the country’s municipalities that are looking to build their own high-speed data networks because they are fed up with what they view as a lack of — or inadequate — services from incumbent cable the telecom companies. Incumbent providers or state laws are creating barriers to community broadband or outright banning it.
Christopher Mitchell, director of the non-profit Telecommunications as Commons Initiative Institute for Local Self Reliance, likens the battle to the fight for electrification in the 1920s and 1930s, when many private electric companies built power companies in large cities but largely ignored more rural areas. But, when smaller municipalities decided to build their own power companies, their plans were met with resistance from the very electric companies that wouldn’t build out in their areas.
Mitchell says 18 states have imposed some barriers to community broadband networks, such as administrative and procedural hurdles, while Texas, Arkansas, Missouri and Nebraska have instituted outright bans. In many states, telecom incumbents have been the ones influencing policy. In other regions, where state law isn’t stopping municipalities from building networks, incumbents are filing suit, likely hoping to dissuade municipalities from moving forward.
The main reason municipalities build their own networks is for economic development, Mitchell said. Enterprises and businesses are attracted to highly connected regions. Cities often make the request of incumbents to offer higher data speeds and better coverage. When incumbents decline because doing so is not cost-effective for them, cities move ahead with their own plans — ironically, to the opposition of incumbents.
Mitchell said incumbents are typically strong forces in legislatures and are “very good at finding sympathetic local groups, or creating them to spread lies and half truths about the issue.” In particular, incumbents spread that notion that broadband networks are funded by tax dollars and typically aren’t successful in other areas.
The reality is that these networks are funded by outside investors and, in fact, are doing well in many areas of the country, Mitchell says. But not all is doom and gloom. Mitchell cites examples of projects that are moving forward despite incumbent opposition. In Lafayette, La., where city officials asked its incumbents to enhance the local broadband network but were denied, the city decided to build its own network. The incumbents subsequently filed suit. After years of litigation, the city began offering a fiber network to businesses and consumers.
Andrew Cohill, president of Design Nine Networks — a firm that helps municipalities plan broadband networks — says one of the more successful models for municipalities is what he refers to as the open services model. Under this arrangement, municipalities or a group of local governments, build out a network and then sell capacity to any operator that wants to connect. This model drives competition and typically avoids incumbent opposition. None of the projects his company is involved in have faced incumbent opposition, he says.
“This way, local governments don’t get in the way,” Cohill says. “Why delay a project for often a couple of years and spend a lot on legal bills if you can construct a business model that is incumbent friendly?”
Wired Road in southwest Virginia was formed after local governments in the Twin Counties region created a regional broadband authority to build an integrated fiber and wireless network to offer to service providers. Cohill reports that, after 18 months in operation, some five service providers have signed on, and the cost of Internet access has fallen by 50% in less than a year.
These outside service providers, in turn, have a major impact on government functions such as public safety, Cohill argues. He sees some hundred-plus outside providers coming onto these types of networks offering specialized services that might include alarm services, medical and telehealth applications, medical diagnostics, and specialized video conferencing .
“We don’t talk triple play at all,” Cohill says.
