TELECOM Digest OnLine - Sorted: The Municipal Broadband Brouhaha: Tech Firms Caught in Middle

The Municipal Broadband Brouhaha: Tech Firms Caught in Middle

Lisa Minter (
Thu, 30 Jun 2005 17:07:01 -0500

By Drew Clark

Cities and counties that want to offer high-speed, Internet-based
communications have been fighting regional Bell telecommunications and
cable companies on the state level, and now the battle is erupting on
the national stage.

For local governments, public interest groups and the technology
community, permitting such municipal broadband is a no-brainer. "It
makes no sense for us to be wasting our time and energy fighting
battles when the country has such a challenge to get broadband to
everyone," said Jim Baller, an attorney for the municipalities --
citing a call by President Bush for universal and affordable broadband
by 2007. Baller has helped to spearhead a new group called the
Community Broadband Coalition.

Until recently, the debate has occurred primarily in the states -- 14
of which have imposed some legal barriers to state-run municipal
service. Two rival pieces of federal legislation have been introduced:
In the House, H.R. 2726, which would bar states from allowing
municipal broadband in areas served by the private sector; and in the
Senate, S. 1294, which would bar states from opposing government-run
broadband if municipalities do not discriminate against private

Some see the conflicting bills as pressuring tech companies to choose
between some big customers -- the Bells and cable companies -- and a
market opportunity that may be growing, but that is not fully ripe.

Wireless Life for Municipal Movement

Early conflicts over municipal broadband centered on the availability
of fiber-optic lines to homes. But wireless technologies such as Wi-Fi
have breathed new life into the movement. Although fiber-optic cables
have far greater capacity -- including the ability to offer
multi-channel video -- stringing them to homes costs more than $1,000
on average. Philadelphia is planning a metropolitan-area Wi-Fi network
that it believes it can create for $25 per home. Once in place, the
city believes it can wholesale its service to commercial providers for
$9 a month.

That does not sound attractive to Verizon Communications and Comcast,
which sell high-speed Internet service for prices ranging from $20 to
$45 a month. Both companies supported telecom legislation last
December in Pennsylvania barring municipal broadband projects. After
complaints from public interest groups, an exception was granted for
Philadelphia. This year, Colorado, Florida and Nebraska put
restrictions on municipal networks in their states, although similar
measures were defeated in Illinois, Iowa and Texas.

"Cable operators are not uniformly opposed to all municipal broadband
projects, but they do have serious reservations about local
governments investing increasingly scarce taxpayer dollars for
telecommunications services already being provided by the private
sector with state-of-the-art technology," said Brian Dietz, a
spokesman for the National Cable and Telecommunications Association.

"We believe there are many other ways to speed the deployment of
broadband, like creating a regulatory climate that encourages
investment and innovation," added Allison Remsen, a spokeswoman for
the U.S. Telecom Association. "With telecom networks, government
intervention could chill private investment and further delay new
services for consumers. When government-owned networks are used,
presumably as a last resort, the networks should be regulated and
taxed like private carriers."

Tech Firms Stuck in the Middle

Technology companies eager to see more widespread adoption of Internet
computing have generally favored doing something to promote
broadband. They have sought tax credits for broadband deployment, as
well as deregulation of traditional telecom rules when it comes to
broadband -- stances favored by the Bells. But the tech firms also
have promoted municipal networks. Dell, Intel, the political
fundraising group Technet and the High-Tech Broadband Coalition --
which articulated a position against state laws as recently as March
-- are among the companies and groups supporting municipal broadband

In the Texas battle that peaked over the Memorial Day weekend, Intel
and Dell vigorously fought legislation supported by two Bell
companies, SBC Communications and Verizon Communications. The
unsuccessful final bill attempted to grant telecom providers the
ability to offer statewide cable television franchises and also would
have extended an existing ban on municipal telephone and cable systems
to broadband.

"Michael Dell lobbied this personally down in Texas, and was pretty
critical in stemming the tide," said Mark Uncapher, vice president of
the Information Technology Association of America. The Texas-based
Dell Corp. is an ITAA member.

ITAA, the electronics group AeA and the Fiber-to-the-Home Council were
among the 40 groups that signed onto the Community Broadband
Coalition, which released its list of signers as a means of showcasing
its support for the Senate bill (sponsored by Sens. John McCain,
R-Ariz., and Frank Lautenberg, D-N.J.). The High-Tech Broadband
Coalition thus far has taken no position on the legislation.

"Intel will be taking a position on federal legislation shortly," said
Peter Pitsch, director of communications policy for the semiconductor
firm, which is a major supporter of Wi-Fi and a member of several of
the associations that comprise the coalition. "We will continue to
oppose state prohibitions on municipal broadband but recognize that
municipalities should operate in a non-discriminatory and completely
neutral fashion."

Pressured By Bells And Cable?

An association of several leading tech associations that includes the
Business Software Alliance, the Information Technology Industry
Council, and the Telecommunications Industry Association -- the
broadband coalition organized itself in 2002 to lobby for deregulation
at the FCC.

In 2003, it joined with the Fiber-to-the-Home Council in a
friend-of-the-court brief for the Missouri Municipal League in a
Supreme Court case about the right of municipalities to deploy
broadband networks. The court held 8-1 in March 2004 that the 1996
Telecommunications Act does not pre-empt states from regulating the
conduct of its own municipalities. "I think it is embarrassing that
you are publicly filing a Supreme Court brief and then stepping back
from legislation that generally supports that position," said an
industry source close to the coalition.

Baller and others believe more tech companies soon will publicly
support federal legislation promoting municipal networks. A good
percentage of revenue for telecommunications manufacturers comes from
Bell carriers, making manufacturers wary of alienating key customers.

"Municipalities are saying, 'We want no limits on our ability to offer
broadband,' and industry is saying, 'We can't prohibit you from the
market, but you are going to participate on the same terms and
conditions we are in the market,'" said William Kovacs, vice
president, of technology and regulatory affairs for the U.S. Chamber
of Commerce. As with Baller, Kovacs sees a parallel in the country's
experience with rural electrification and municipal solid waste
treatment, which are provided by both the private sector and by
municipal governments.

Supporters of community broadband also are promoting the words of an
unlikely ally: Bush. In a speech on June 24, 2004, he cited a Wi-Fi
project in Spokane, Wash., "that allows users within a hundred-block
area of the city to obtain wireless broadband access. Imagine if
you're the head of a Chamber of Commerce of a city, and you say,
'Gosh, our city is a great place to do business or to find work. We're
setting up a Wi-Fi hot zone, which means our citizens are more likely
to be more productive than the citizens from a neighboring community.'
It's a great opportunity."

Copyright 2005 by National Journal Group Inc.
The Watergate 600 New Hampshire Ave., NW Washington, DC 20037
202-739-8400 fax 202-833-8069
National Journal's Insider Update is an Atlantic Media publication.

NOTE: For more telecom/internet/networking/computer news from the
daily media, check out our feature 'Telecom Digest Extra' each day at . Hundreds of new
articles daily.

*** FAIR USE NOTICE. This message contains copyrighted material the
use of which has not been specifically authorized by the copyright
owner. This Internet discussion group is making it available without
profit to group members who have expressed a prior interest in
receiving the included information in their efforts to advance the
understanding of literary, educational, political, and economic
issues, for non-profit research and educational purposes only. I
believe that this constitutes a 'fair use' of the copyrighted material
as provided for in section 107 of the U.S. Copyright Law. If you wish
to use this copyrighted material for purposes of your own that go
beyond 'fair use,' you must obtain permission from the copyright
owner, in this instance, National Journal Group, Atlantic Media.

For more information go to:

Post Followup Article Use your browser's quoting feature to quote article into reply
Go to Next message: Lisa Minter: "Congressman Ensign Also Helping SBC"
Go to Previous message: Lisa Minter: "SBC Voices Two Approaches to Video"
TELECOM Digest: Home Page