broadband catching on
firms fight city-owned networks
superintendent William Ray estimates that since Glasgow, Kentucky,
began offering cable in 1989, $32 million of residents' money has
stayed in town that otherwise might have gone to big telecom firms.
2003 If you ever wince after opening your cable bill, yourenot
going to like this: The good folks in Glasgow, Ky., pay $19 a month
for 70 cable channels, and for an additional $25 they can get blazing
fast Internet access. How do they get prices nearly half the national
average Because the city-owned electric utility provides cable TV
and Internet access over wires that also monitor power usage in
the town of 14,000. The utility isnt trying to profit from
the service just recover its costs.
UTILITY SUPERINTENDENT William Ray estimates that since Glasgow
began offering cable in 1989, $32 million of residents money
has stayed in town that otherwise might have been vacuumed by giant
telecommunications companies which often dont offer
advanced services in rural areas like Glasgow anyway.
"Its like an armored car wrecking in the streets once
a year and spreading money in the streets for people to grab for
themselves," Ray says.
Frustrated with the high cost and slow pace of broadband deployment
in much of the country, 511 publicly owned utilities now provide
telecom services for residents, schools, city agencies and their
internal operations, up nearly 14 percent from a year ago, according
to the American Public Power Association.
Some utilities built networks from scratch. Others extended infrastructure
they already had, such as fiber-optic lines and networking equipment
needed to monitor power flow or remote substations.
Not surprisingly, big phone and cable companies hate this, and have
fought with some success to block public gas, water and electric
utilities from providing telecom services. Eleven states bar or
restrict the practice, sometimes by imposing artificial costs on
municipal telecoms so the prices they charge end up closer to what
private companies offer.
But things may be looking up for municipal telecoms thanks
to recent favorable court rulings, weakness in the private telecom
industry and a technological breakthrough that lets data be transmitted
over power lines.
"A very large number of communities across the country are
beginning to realize this is like the history of electrification
all over again, and if they dont help themselves, theyre
not going to get advanced communications services any time in the
foreseeable future," said Jim Baller, an attorney who has represented
municipal telecoms in several cases.
"Recognition of that is forcing legislatures to take a second
look even ones that had enacted barriers."
COMPANIES CRY FOUL
City-owned utilities which generally buy their cable programming
from a cooperative in Kansas and connect to the Internet by leasing
facilities from big data carriers dont have to be rivals
of telecom companies
For example, in Washington state, which prohibits utilities from
selling retail telecom services, several public power providers
are becoming "carriers' carriers" building fiber
networks that private Internet and phone providers can lease.
But generally, private companies say municipal telecoms create unfair
competition because they have no need to make profits or pay off
debts quickly, have preferential access to digging streets and other
'rights of way' and are owned by cities that have regulatory power
over the industry.
The mere existence of the competition is not really an issue for
us," said Rob Stoddard, spokesman for the National Cable &
"The issue is more that the competitive playing field seems
tilted in favor of municipalities."
The industrys arguments also stray into other realms.
In Palo Alto, Calif., where the public utility is considering spending
$50 million building fiber-optic connections to every home, a SBC
Pacific Bell executive gave officials "MuniToons," a memo
describing municipal telecoms as "folly."
Among its contentions: Municipal telecoms hurt a towns tax
base and may violate the First Amendment by placing the distribution
of media content under government ownership. Baller, the utilities
lawyer, believes nearly every sentence in MuniToons is "incorrect
or misleading or a half-truth."
Even SBC spokesman Kevin Belgrade said the document doesnt
exactly reflect the companys position.
Richard Carlson, chairman of Palo Altos utility advisory committee,
wasnt swayed by Munitoons. Nevertheless, he worries that a
civic fiber network might lose out to private competition or become
obsolete in a few years.
Ultimately, the municipal telecom fight boils down to two words:
"any" and "entity."
The 1996 Telecommunications Act meant to usher the nation
into the digital age said no state or city could prohibit
"any entity" from providing 'any" telecom service.
With that in mind, officials in Abilene, Texas, asked the Federal
Communications Commission to let them wire their own broadband network
despite a 1995 Texas law banning municipal telecoms.
But the FCC agreed with phone and cable companies that Congress
wasnt absolutely clear whether it meant for utilities to be
"entities" protected by the
law. The agency declined to overrule Texas.
A federal appeals court in Washington, D.C., let the decision stand.
Since then, a federal district court in Virginia and the Nebraska
Supreme Court have seen things differently, ruling in favor of municipal
telecoms. Most importantly, so has a federal appeals court in Missouri.
In hopes of getting clarity on the issue, Missouris attorney
general plans to appeal to the U.S. Supreme Court.
In the meantime, municipal telecoms are finding new ways to offer
broadband such as wireless antennas recently installed on
water towers in Carthage, Mo. and soon could have another
Private electric companies are experimenting with a new technology
that delivers data over existing power lines. So is the city-owned
electric utility in Manassas, Va., which provides broadband to city
departments but not residents.
"The interest in that is very high," said Ron Lunt, the
American Public Power Associations telecom director.
"It is a natural fit."
© 2003 Associated Press. All rights reserved.
that bar or restrict public telecom service:
Florida Heavy taxes on publicly provided telecom
services face court challenges.
Minnesota Municipalities must obtain approval from
at least 65 percent of their voters.
Nebraska Restricts utilities from being telecom carriers,
but allows them to lease lines to carriers, with certain restrictions.
Nevada Prohibits towns with more than 25,000 people
from providing service. (Read
of the battle to repeal.)
Public disclosure, vote requirements.
Utah Stringent procedural and accounting requirements
WashingtonUtilities can only sell telecom services
at wholesale prices
American Public Power Association
Watch this website and Barbwire
by Barbano in the Sunday Sparks Tribune
for updates. Click
here to request placement on our mailing list.