A Natural Experiment In Anti-Municipal Broadband Laws

Why incumbent ISPs buy protection from the state.

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I believe in a free and open internet. I agreed with the Obama Administration’s FCC when they classified last mile internet service providers like Comcast and Verizon as common carriers. I also agreed with the FCC when they passed an order to preempt certain state laws that prohibit municipal broadband.

What exactly is municipal broadband? In a nutshell, it’s what you get when residents of a city or small town can’t get reliable service, better speeds, or just good customer service from their legacy incumbent service provider. Names like Comcast, Centurylink, AT&T, and Time-Warner come to mind.

I have found many stories about how the largest ISPs simply didn’t care enough to properly serve their customers, potential customers, and captive markets in small towns. Small towns and rural communities spend years begging their ISP to deliver better service. Then those people give up, have a lot of meetings, and sell bonds to build their own ISP and make it available to everyone in town. Market failure is what gives rise to municipal broadband.

Back in the late 1990s, the ISPs saw municipal broadband coming and started working the statehouses to ensure that their scarcity-only business model is not interrupted or disrupted. They simply didn’t want to lose their de facto monopoly power to use as a personal ATM. They used the American Legislative Exchange Council (ALEC) and other proxies to fight their war against their customers, and in more than 20 states, they’ve won. For now.

More than 800 cities and towns across America have rolled their own ISP and have benefited handsomely from it. They got relief from intransigent commercial ISPs. They got much higher speeds, with greater reliability and far better customer service. All from a local service provider that keeps the money local.

Here in Utah, The Utah Taxpayers Association will tell you that building your own network is a risk that should never be imposed upon taxpayers. Let the private ISPs do that work and take that risk, they say. But what they won’t tell you is why that risk is greater now than it used to be.

Community Networks has found a natural experiment in municipal broadband. In 2001, Utah passed an onerous law that prohibited municipal broadband providers from selling directly to customers. Instead, they must sell wholesale through retailers. But one municipal ISP that was already selling direct to residents was grandfathered into that law, and they were allowed to continue as before.

Christopher Mitchell, Director of Community Networks, gives us a study in contrasts. Where Spanish Fork was able to build their own network and sell direct, Provo had to rely upon independent resellers to promote the network. What happened?

The results from Spanish Fork, where the taxpayers were not “protected” by the laws drafted by cable and telephone lobbyists? The city has paid off all of its debt, regularly reinvested net income into local budgets, and is on its way to gigabit fiber. More details on Spanish Fork here.

Provo, saddled with the state restrictions that forced a riskier business model on it, was not financially sustainable. The network generated some benefits but the costs were too great and it eventually became Google Fiber. Many envy the network they now have but the intervening years certainly were part of the plan to improving Internet access.

Provo sold their network to Google for a dollar (really, just one dollar) and is still paying off the debts from their buildout to this day. This is what the incumbent ISPs want to do to all of us to ensure that we never, ever bother them again. This is how big money works in politics. Take the money out of politics and suddenly, people start talking about ideas with merit rather than veiled ulterior motives.

If your state has similar restrictions on municipal broadband, check to see if any municipal ISPs have been grandfathered in before the restrictions became law and see how they’re doing now. You might find that the protection that the ISPs seek has nothing to do with taxpayers. You might even want to write to your representatives in the state legislature to set things right.

After ten years of phone calls, meetings, and lobbying, I now have Utopia Fiber. I’m a true cord-cutter, with internet access that will never be matched in price and performance by “private” ISPs, and I’m never going back. No more Comcast, no more CenturyLink.

No longer do I have to send money to an organization that is constantly working against my interests. No longer do I have to send money to an organization that will use that money to lobby for laws that work against me — just to have internet access. Utopia Fiber and I have a mutual interest, and that’s something that I’ve never found with private ISPs.

Write on.

Originally published at thedigitalfirehose.blogspot.com on November 17th, 2015.

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