Will Congress Ban Municipal WiFi?

by Richard Koman

Municipal wireless took another hit recently when Senator John Ensign (R-Nevada) introduced the Broadband Investment and Consumer Choice Act of 2005. The 74-page bill, which is generally regarded as a rewrite of the broad Telecommunications Act of 1996, includes a section that specifically limits local governments' abilities to deploy public broadband systems.

The bill says local governments that want to build a public network must issue a Request for Proposal--through a third-party agency--and that in the case of competing bids between private and public sector parties, the neutral agency shall give preference to private sector companies. In addition, if the government wins the bid, private companies will have the "ability" to use the publicly built conduits and trenches. Governments that are already delivering network services would be allowed to continue but could not add new features or expand the service area.

This bill is a culmination of a series of state and federal actions stemming from intense lobbying from Verizon and other internet providers:

  • When Philadelphia announced plans to deploy low-cost wireless broadband across the entire city, Verizon pressured the Pennsylvania State House to pass a law banning municipalities from directly offering fee-based service. The law, signed by Democratic Governor Edward Rendell, limited the city's options to offering service for free and offering it through a consortium of private companies at a higher rate than originally planned. Philadelphia's plans are going forward under the latter scheme. (NPR recently reported on Philadelphia's struggle to overcome opposition from telco and cable companies.)
  • In May, Rep. Pete Sessions (R-Texas), a former SBC executive with half a million dollars in SBC stock options, introduced a bill that bans governments from providing internet services "in a geographic area . . . in which a corporation or private entity that is not affiliated with any state or local government is offering a substantially similar service."
  • In early June, Florida Governor Jeb Bush signed a law prohibiting Florida cities from offering broadband services if private services already exist.

In response to the uproar, Senators John McCain (R-Arizona) and Frank Lautenberg (D-New Jersey), introduced a bill, the Community Broadband Act of 2005, that defends local governments' ability to compete with private sector service providers. It says that no state law can prohibit a "public provider from providing ... advanced telecommunications capability."

For advocates of municipal wireless, the stakes are high. Says Ben Scott, policy director of Free Press, a nonpartisan media policy group: "Soon, nearly all information--TV, radio, telephone, and the Web--will be delivered via high-speed broadband. Community internet connects rural communities, attracts new businesses, and serves schools, libraries, and public safety sectors. It will make access to the information superhighway affordable and accessible to everyone."

And in introducing the bill, McCain pointed out:

"...In many rural towns, the local government's high-speed internet offering may be its citizens' only option to access the World Wide Web. Despite this situation, a few incumbent providers of traditional telecommunications services have attempted to stop local government deployment of community high speed internet services. The bill would do nothing to limit their ability to compete. In fact, the bill would provide them an incentive to enter more rural areas and deploy services in partnership with local governments."

The Efficiency of the Private Sector

The argument from Sessions, Ensign, and the telcos is that the private sector will always deliver services more efficiently than government and that government competition would discourage companies from investing in infrastructure.

To hear Sessions tell it, governments are directly competing with telcos. "My goal in introducing this legislation is to discourage municipal governments from wasting taxpayer funds on building duplicative infrastructure, while at the same time encouraging private companies to offer continually innovating service in underserved areas by removing the specter of government competition," Sessions said in a statement.

On the Ensign bill, Verizon says simply, "This bill recognizes that the world has changed and consumer-driven markets work better than those managed by the government."

Jim Baller, an attorney who represents local governments interested in starting public access networks, issued a statement that the Ensign bill is predicated on five false assumptions, including that local governments have an unfair advantage that should be transferred to private companies, and that the reason incumbent providers have failed to deliver universal service is because of these government advantages, not "their own short-term profit objectives."

[The bill's procedures would] create a host of disincentives and unintended consequences. For many communities, it would retard economic development, educational opportunity, homeland security, public safety, cultural enrichment, and the many other benefits that access to affordable advanced telecommunications capability and services would foster. It would disserve America's private sector, particularly our high-technology industry, which has been a willing partner in municipal networks nationwide and would be a major beneficiary of a rapid increase in broadband deployment across the United States.

Dana Spiegel of nycwireless, a volunteer group that advocates and provides technical support for community wireless, points out: "It's not government involvement that's preventing broadband deployment. In New York, there's no competition from government and there are huge swaths of residential and commercial with no DSL or cable service. These companies act from a business interest and they decided not to service these areas because they're not profitable."

In a recent report FreePress documented numerous cities where the existence of public networks has resulted in falling prices and service improvements. In Tacoma, Washington, where the local utility operates the Click! network, the report found, "In the cities where Click! Network services are available, prices for cable TV and high-speed internet are 20 to 25 percent lower than areas where competition does not exist. Tacoma has a thriving marketplace for broadband, including several ISPs that use the Click! Network as a vendor-neutral delivery system. . . Not only has the system offered a low-cost alternative in underserved communities, it has prompted both the incumbent telco and cable providers to build out their networks to compete."

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