The Most Important Decision the FCC Made Last Week Wasn't on Net Neutrality
By David Dayen @ddayen
Last week’s Federal Communications Commission (FCC) ruling codifying the principles of net neutrality is a victory for grassroots organizing. But in 20 years, we might be talking more about another FCC decision made last Thursday.
In a party-line 3-2 ruling, the FCC pre-empted state laws in Tennessee and North Carolina that sought to prevent two community broadband networks from delivering high-quality, high-speed Internet access as a public utility. Overall, 19 states have laws banning or restricting community broadband, but the FCC’s ruling, if it survives court challenges, all but disintegrates them, allowing any municipality to offer a “public option” for broadband access. The ruling has major implications for promoting competition, increasing broadband speeds, and perhaps even making Internet access look more like electricity.
Chattanooga, Tennessee, and Wilson, North Carolina, southern cities far from the dominant financial, media, and governance corridors on the coasts, both provide publicly owned community broadband. Wilson’s offering, Greenlight Community Broadband, and Chattanooga Gig both offer “triple play” service (phone, television and Internet) and speeds of up to 1 gigabit per second (Gbps), which is roughly 30 times the average Internet speed in the United States (some put the number at 200 times higher).
The 1 Gbps service costs Chattanooga residents just $70 a month, and slower plans which still outpace the national average are even cheaper (Wilson’s menu of options are somewhat more expensive). City-owned agencies in Wilson and Chattanooga manage the networks. And they’re not alone: The Institute for Local Self-Reliance reports that more than 40 communities in 13 states offer public, ultra-fast broadband. They happen to be mostly clustered in rural, Republican communities that telecom giants have abandoned, showing that getting fast-loading YouTube cat videos is a priority that transcends political party.
But in far more communities across the country, Internet users have virtually no choice of service provider, a situation that would grow worse if Comcast and Time Warner Cable merge. FCC Commissioner Tom Wheeler said in a speech last September that three-quarters of all American households have “no competitive choice” for high-speed broadband. Comcast, Verizon, AT&T and Time Warner have effectively divvied up the entire country, forcing consumers to use their products if they want access to the Web.
This lack of competition has kept Internet prices up and speeds down. The United States has fallen behind the world in broadband speeds, as Americans often pay more for less. Monopolies set their prices higher because they can, and neglect the relative decrepitude of their infrastructure to save on capital costs, because they know their customers have nowhere else to go. Countries in Europe and elsewhere force broadband companies who lay down infrastructure to lease part of the pipe to rivals. But this concept, known as “unbundling,” is basically dead in the United States (although there’s a chance that net neutrality rules will open this up again).
As an illustrative example, Verizon’s 500-megabit-per-second plans in New York, Los Angeles, and Washington, D.C.—half the speed of networks in Seoul, Hong Kong, and Tokyo, not to mention Chattanooga—cost around $300 a month, significantly more than abroad. In fact, the only exceptions to this rule in America come from either cities equipped with Google Fiber or community broadband cities.
Most community broadband networks are fiber optic, which the major Internet service providers have been slow to install, citing infrastructure costs. The potential for communities to switch to a community network could be just the spur the telecoms need to invest in upgraded networks, or else get left behind. Community broadband has also been shown to keep prices down through competition; in Wilson, Time Warner broadband prices are as much as 40 percent lower than in nearby cities like Raleigh.
Municipalities have financed fiber rollouts through revenue bonds and savings from canceling leased services. Those who have already made the switch are testaments to the potential economic rewards. Online travel company Expedia recently moved a major call center to Springfield, Missouri, a city with community broadband, creating 900 jobs. Chattanooga cites its gigabit service as crucial to attracting an Amazon distribution center and a Volkswagen auto assembly plant. Lafayette, Louisiana is being called the Silicon Bayou, bringing in multiple tech firms on the promise of its 21st-century digital infrastructure.
Telecoms have reacted to this wave of community broadband in ways you would expect from politically powerful, deep-pocketed corporations. First they sued the pants off any municipality trying to build their own network. Then they used their clout in state legislatures to restrict their reach. In Tennessee, only municipal electric companies can provide broadband, and only in the markets they serve. In North Carolina, community broadband networks cannot jump county lines. States like Missouri and Texas ban communities from building their own fiber-optic networks.
Chairman Wheeler and his Democratic colleagues overturned the restrictions in North Carolina and Tennessee because they found them inconsistent with the FCC’s mandate, explicitly authorized by Congress in the 1996 Telecommunications Act, to “remove barriers” to deploy high-speed Internet “to all Americans in a reasonable and timely fashion.” The Republican commissioners questioned whether the agency had the authority to shoot down the laws, and you can expect legal action. Pre-butting the inevitable claims that decision damages state’s rights, community broadband advocates are already calling the Chattanooga and Wilson orders victories for local choice.
If the order holds, it presents real promise for a city-by-city public option for broadband. Net neutrality ensures that the worst practices of telecom monopolies—charging for content to deliver across their pipes—won’t happen. But the public option, as Harvard law professor and former White House official Susan Crawford explained last April in an interview with Vox, could remove the monopoly itself, and the tendency among those corporate behemoths to deliver expensive, substandard service and leave many communities behind. “Just as we have a postal service that's a public option for communications in the form of mail, we also need public options in every city for very high-capacity, very high-speed fiber internet access,” Crawford said.
The Roosevelt Institute’s Mike Konczal has written compellingly about the necessary role of public options in the welfare state, where government does not just provide coupons to purchase private, for-profit services, but actively delivers the services themselves. They can often generate better outcomes for less money than private enterprise. Broadband is a perfect example. You can make the case that maximizing supply through direct public/private competition will ensure quality, affordable access to a service that has become almost as critical to the modern household as electricity.
In fact, wiring the country for power, particularly rural areas the utility companies neglected, was a hallmark of the New Deal. In 2009, $7.2 billion in federal stimulus money was earmarked for building out broadband, and while more funds won’t pour out of the GOP-controlled Congress anytime soon, facilitating community broadband is about as close as we can get to that New Deal spirit of ensuring equal access to opportunity and economic competitiveness. And in this case, not just rural outposts, but all of us, can benefit.http://www.newrepublic.com/article/121188/fcc-community-broadband-ruling-could-transform-internet-access