The Federal Communications Commission is considering a controversial proposal that would allow major Internet service providers, such as Comcast, Time Warner, AT&T and Verizon, to charge content providers higher rates for faster transmission speeds — effectively ending the government’s commitment to “net neutrality” which offers everybody the same access to the Internet.
The commission should classify broadband as a telecommunications common carrier, which would allow it to continue to prohibit companies from engaging in unjust or unreasonable discrimination. Phone and cable companies as well as their many supporters in Congress oppose that option, and they appear to have moved FCC Chairman Tom Wheeler, a former cable TV executive, in that direction.
If the FCC allows ISPs to show preference to favored corporate content providers, effectively creating a fast lane for them and a slow lane for the rest of us, the commission also should clear the way for community broadband networks that would compete with the private carriers who already too often provide substandard service.
At the prompting of the big cable and phone companies, legislators in 20 states have enacted laws limiting cities and towns from building their own broadband networks that would compete with for-profit Internet service providers, and new restrictions have been proposed in Kansas and Utah. Wheeler has said he intends for the commission to exercise its authority to preempt state laws that ban competition from community broadband networks.
Speaking at the Cable Show industry conference April 30, Wheeler said, “[F]or many parts of the communications sector, there hasn’t been as much competition as consumers and innovation deserve. Given the high fixed costs and consequent scale economies, this isn’t especially surprising. But that makes it all the more important that we knock down public and private barriers to competition and avoid erecting new ones. It is equally important that we encourage competition wherever it is possible.
“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,” Wheeler said, as reported by Jon Brodkin at ArsTechnica.com.
A panel of the US Court of Appeals for D.C. in January ruled that the FCC could enforce net neutrality rules under the Telecommunications Act of 1995, but only if the ISPs were classified as common carriers, not information services, as they were designated in 2005 by George W. Bush’s FCC. Judge Laurence Silberman, who dissented from his fellow judges in the 2-1 decision, wrote that the FCC does have authority under the law to take “measures that promote competition in the local telecommunications market or other regulating methods that remove barriers to infrastructure investment.” In a footnote, Silberman wrote that “[a]n example of a paradigmatic barrier to infrastructure investment would be state laws that prohibit municipalities from creating their own broadband infrastructure to compete against private companies.”
Many smaller and mid-sized cities have had difficulty getting their local phone or cable companies to provide broadband service — at least until the communities started building their own community networks. The National Telecommunications and Information Administration reported in May 2013 that almost 100% of urban residents have access to download speeds of at least 6 megabits per second (Mbps), which is suitable for email and other basic Internet service, but only 82% of rural communities can access those speeds. And while almost 88% of urban residents have access to speeds of 25 Mbps, which is more suitable for video streaming and other advanced uses, only 41% of rural residents have the same access. Many Americans lack even basic 3 Mbps broadband.
Edward Wyatt reported in the New York Times Dec. 29, 2013, that the United States is falling dangerously behind other nations in offering high-speed, affordable broadband service to businesses and consumers. The average Internet speed in Riga, Latvia, is at least two and a half times that of San Antonio, Texas, according to Ookla, a research firm that measures broadband speeds around the globe. That means downloading a two-hour movie takes, on average, 35 minutes in San Antonio, and 13 in Riga. And the cost of Riga’s service is about one-fourth that of San Antonio.
Ironically, San Antonio’s city-owned electric utility has installed fiber-optic cable that is used by city officials and could provide low-cost broadband services for the city’s residents, but Texas law prohibits the city from providing the service.
However, Wyatt noted that at least three American cities have such superfast broadband that if they were ranked against foreign countries, Bristol, Va., Chattanooga, Tenn., and Lafayette, La., would rank in the top 10. And those three cities built municipal fiber-optic networks that can operate just as fast as the swiftest connections in Hong Kong, Seoul and Tokyo.
David Morris, co-founder of the Institute for Local Self Reliance, said publicly owned telecommunications networks offer lower prices and higher speeds than such giants as Comcast, AT&T and Time Warner. “It is instructive that the first gigabit network was built not by a private company but by Chattanooga, a muni network. Today 40 cities in 13 states have locally owned gigabit networks.”
According to the Institute, more than 400 towns and cities across America have installed or are planning broadband networks.
Among the states that have imposed significant obstacles to communities owning their broadband networks, Morris noted that Nebraska, Nevada, Texas and Missouri have enacted outright bans. Virginia prohibits a city from offering TV unless it can cash flow the first year. Utah prohibits public broadband networks from selling any retail services.
To persuade legislators to inhibit or prohibit muni networks, Morris noted, telecom lobbyists offer two arguments. First they contend that government cannot effectively run a telecom network. When it becomes impossible to ignore the growing empirical evidence to the contrary, they shift gears and pitch without shame an entirely contradictory argument: Cities have an unfair advantage.
“That was the argument Time Warner used in North Carolina after the cities of Wilson and Salisbury successfully demonstrated their telecom competences. It was a bizarre thesis. Time Warner had 15 million subscribers and revenues of $18 billion at the time. Salisbury had 1,000 subscribers and a total municipal budget of $34 million. Nevertheless, North Carolina legislators dutifully voted to effectively prohibit other cities from replicating Salisbury and Wilson’s successful ventures.”
Susan Crawford, a visiting professor at Harvard Law School and author of Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age, in an op-ed for the New York Times (April 28) noted that her hometown, Santa Monica, Calif., has shifted from paying expensive leases on private communications lines to using its own fiber network, called City Net. Businesses in Santa Monica pay City Net a third of what a private operator would charge and the city government has made millions leasing out its fiber resources at reasonable rates to other providers.
“American cities need fast, cheap, ubiquitous, open fiber networks, and every city has the tools at its disposal to get these networks built. But there are powerful and well-funded incumbents who will fight any mayor brave enough to consider the idea. If you’re furious about your cable bill and worried about net neutrality, go tell city hall,” she wrote.
Legislators should get out of the way of communities that want to provide affordable broadband service and the FCC should encourage competition and keep the Internet open to all. — JMC
From The Progressive Populist, June 1, 2014
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