Broadband at Government Speeds: ACI in Real Clear Policy

Have you ever waited in line at a municipal government office and wondered how much faster private firms are in transacting business with the public?  Well, the line for Internet services may be getting much longer, if the FCC gets its way.    

At the National Cable Show early this month, The FCC’s Chairman, Tom Wheeler, promised to “preempt” state laws which limit or ban municipalities from creating government-owned broadband networks to compete with existing privately-owned providers. Wheeler’s comments have set off a firestorm of discussion on the merits of government-owned broadband networks and have many questioning whether the FCC is further overstepping its bounds.

It looks like the FCC is digging in their heels to square up with state legislatures that have started putting limits on government-backed municipal efforts. These services are something of a trend amongst local legislators, popping up all over the nation from Orlando, FL to Lafayette, LA, to Los Angeles, CA. In just the past 10 years, the number of municipal broadband programs has skyrocketed from around 20 to over 200 in 33 states.

The services provide Internet access in and around a municipality and are offered as a competitor to typical ISPs like Comcast and AT&T. Oftentimes, the service is given free or at a significantly reduced cost. Local governments use taxpayer dollars and stimulus grants to put together an IT infrastructure for the broadband access, and they tend to lose money and a lot of it. These efforts come despite reports that over 95-percent of Americans have access to quality broadband Internet.  These municipal programs often still receive tax dollars by claiming their efforts on behalf of President Obama’s goal to give 90-percent of American’s access to broadband service by 2015.

Chairman Wheeler, in his address, cited the government-owned broadband netowrks as a potential boon to competition in the broadband sector, and offered this warning to legislators:

“One place where it may be possible is municipally owned or authorized broadband systems. I understand that the experience with community broadband is mixed, that there have been both successes and failures. But if municipal governments—the same ones that granted cable franchises—want to pursue it, they shouldn’t be inhibited by state laws. I have said before, that I believe the FCC has the power – and I intend to exercise that power – to preempt state laws that ban competition from community broadband.”

So, why are these state legislators trying to thwart efforts to create municipal broadband programs? Many groups take issue with the Chairman’s portrayal of these programs as competition-enhancing; arguing that by creating a taxpayer funded entity, prices can be driven unnaturally low with local residents realizing the long-run consequences years down the road. John Stephenson, one-time telecommunications director for the legislator-group ALEC, warns that “millions [of dollars] are being wasted to duplicate private sector efforts and directly compete against the private sector.”

Groups like the American Consumer Institute and National Taxpayers Union (NTU) warn that, while these programs come with the promise of future revenue, that promise has yet to pan out. Horror stories like those in Mooresville, North Carolina, Chattanooga, Tennessee, and (more recently) Orlando, Florida (where just 27 people were found to be using the system after 16 months) offer a cautionary tale about the outcomes of government-run Internet.

Polling data suggests that state legislators looking to restrict municipalities’ ability to create taxpayer-funded broadband networks are acting in the interest of their constituents. According to a CNE Poll, when constituents were given information about the history of municipally-owned broadband networks, more than 80-percent of them oppose the idea. Nearly 90-percent believe that local government ought to be focusing on things like police and schools.

Chairman Wheeler’s recent insinuation that the FCC will be “preempting” state laws has some fearful of an executive overreach. Scott Cleland, Chairman of NetCompetition, predicts a future court battle stemming from the move. “This would be less a legal challenge to the FCC’s statutory authority,” says Cleland, “but more of a Constitutional challenge of the FCC’s perceived supremacy over fundamental state sovereign functions.”

This certainly wouldn’t mark the first time the FCC has been the subject of a court battle for an alleged overreach of executive power. Court battles about the FCC’s enforcement of net neutrality, their lopsided rules for auctioning spectrum, or their new foray into campaign finance, all paint the FCC as something of a power-hungry organization.

Whatever the future might hold for the FCC, state legislators will likely continue to try their best to slow the growth of municipal government-owned broadband programs in their state and protect their constituents from the devastation of billions in unfunded liabilities and bankrupt municipalities.

Next time you wait in line at the state DMV or some municipal government office, just think about how responsive your new municipal broadband service will be.

Zack Christenson and Steve Pociask write for the American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization.  For more information, visit www.theamericanconsumer.org.  This piece can be downloaded from Real Clear Policy

FacebooktwitterredditlinkedinFacebooktwitterredditlinkedin