Policy

Viewpoint: Telecom Carriers Continue Their Crusade Against Municipal Broadband

"The carriers and cable providers have had years to make broadband access a reality for everyone and have failed miserably in many cases. It's time for communities to take the matter seriously and intervene, if necessary, to get affordable access to everyone who wants it and/or needs it."

by / June 28, 2005 0
[Ed. Note: Following Philadelphia's rollout of a municipal wireless network, the issue of whether government should create such networks has evolved, with various states and jurisdictions ruling for or against. Currently competing bills in Congress would either allow municipal networks or prevent them. Here is a point of view from Carl Peede co-founder of Camvera Networks who has installed broadband networks for small cities. At the end of this editorial are links to other points of view and related articles.]

As a provider of municipal wireless broadband services for small cities, I continue to be amazed at the self-serving protectionism demonstrated by the large telecom carriers in their continuing efforts to keep municipalities from providing needed broadband services to their citizens. As the Wall Street Journal pointed out in a front page article June 23, 2005, "Phone Giants Are Lobbying Hard To Block Towns' Wireless Plans." Lobbying efforts by Verizon, SBC and others have succeeded in Pennsylvania, Nebraska and Colorado, but have failed in Illinois, Texas, and Florida. However, the crusades continue.

Why are the carriers demonstrating such relentless opposition to municipalities providing broadcast services? Is it really a concern against "unfair competition" as the carriers claim? Or is it actually a self-centered concern that they will possibly lose future revenues and market share? A quick review of the facts leads me to believe the latter.

First, carriers have been reluctant to aggressively deploy DSL and other broadband services to rural and less densely populated markets due to the associated expense and the perceived low rate of return on the investment. This is understandable, but it was also a choice -- a choice of priorities by the carrier.

Second, carriers have been reluctant to embrace new technologies, such as fixed wireless and Wi-Fi, for delivering high-speed Internet access. This is due in large part to their habitual, plodding momentum and the supposedly prohibitive cost of re-training thousands of personnel for provisioning, installing, and supporting the new technologies. Also, it is due to a concern for creating competition within its own subscriber base. Many customers might demand "wireless," for example, even if DSL were available.

Third, and most significantly in my opinion, is that the carriers realized prospective subscribers within the carriers' service areas had few alternatives -- mainly obtaining services from the carrier or the local cable service provider. This allowed the carriers to simply wait. And wait. And wait. And that's exactly what they have done.

Daniel Aghion, executive director of The Wireless Internet Institute -- an organization founded several years ago to promote broadband access for developing countries -- has stated, "In 2003, findings by the United Nations showed that the United States was 13th in the world in the percentage of households having high-speed access to the Internet. Now, we are 23rd and losing ground."

The carriers have had almost a decade to provide high-speed access, but due to this market failure by the carriers to provide ubiquitous broadband services, many municipalities now feel it is incumbent upon them to meet constituent demands by providing high-speed broadband themselves. Since broadband is an essential element for both large and small businesses, it is critical for small cities to have readily-available access to broadband in order to competitively attract new businesses and new jobs to their cities, and most importantly, to improve the overall quality of life for their citizenry.

The carriers realize that should a wave of municipalities begin offering broadband services, it could lead to significant revenue erosion over time -- not just for Internet access, but for Voice over IP (VoIP) and other enhanced services as well. The carriers depend on these services as significant future sources of revenue.

Furthermore, the costs for a municipality to provide effective services -- especially wireless -- are insignificant when compared to that of embedded DSL and cable systems. Technology has advanced to a state where hundreds of square miles can now be served in only a matter of a few months and a few hundred thousand dollars.

Finally, the new wireless services being offered by many municipalities are not subsidized. In fact, they are profitable and provide a new revenue source to the municipality that could lead to lower taxes. This fact, among others, persuaded Kentucky Governor Ernie Fletcher to launch "ConnectKentucky" a creative initiative involving public/private partnerships that would ensure high-speed Internet access to every household in Kentucky by the end of 2007!

Disappointingly, the response from the carriers has been different than that of Governor Fletcher's. The carriers have chosen not to meet market demand, but instead to pay exorbitant amounts of money for local, state, and federal lobbyists to rail against state and municipal governments having the option of meeting the basic needs of their constituents. Some have convinced an ex-SBC employee and now Texas Congressman, Pete Sessions, to introduce legislation that would prohibit cities and towns across the country from entering what he calls the "telecom business." (It should be noted that Representative Sessions' wife is currently an SBC employee.)
This potential conflict of interest by Representative Sessions, the aggressive opposition by the carriers toward municipal broadband, and the fact that many residents of the U.S. continue to do without high-speed Internet access, has not gone unnoticed by others in our nation's capital. Senators McCain (AZ) and Lautenburg (NJ) are preparing legislation of their own. In part, a draft of their proposed Senate bill reads:
    "No State statute, regulation, or other State legal requirement may prohibit or have the effect of prohibiting any public provider from providing, to any person or any public or private entity, advanced telecommunications capability or any service that utilizes the advanced telecommunications capability provided by such provider."
I applaud the actions of Senator McCain and Senator Lautenburg, but personally, I question the need or legitimacy for either bill. After all, whether or not a particular municipality provides broadband or other enhanced services should be a local issue. If a local municipality can justify the need and resources for providing municipal telecom, and their citizens do not object, then it should do so with expediency.

The carriers and cable providers have had years to make broadband access a reality for everyone and have failed miserably in many cases. It's time for communities to take the matter seriously and intervene, if necessary, to get affordable access to everyone who wants it and/or needs it.

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