How ISPs “Compete” With Municipal Networks: Lobbying and Campaign Donations That Block Them

Say you’re mayor of a small city. Your city is small enough and far enough away from other cities that the big cable companies don’t want to spend what it would cost to run wires through your town, because the amount they will make in return isn’t worth it. That’s reasonable, from a business perspective. So you and the residents of your city get together and come up with a plan to make a public broadband utility instead. Makes sense, right? You’d happily pay someone else to do it for you, but since they don’t want to take your money you’ll do it yourself. Only — surprise! In come those self-same cable companies to block you from doing that, too, and they get your state’s legislature and governor to pass a law against you for good measure, so you can never try again.

That’s the story of municipal broadband in many parts of the country. Twenty states have some kind of law in place that either prohibits or restricts public broadband utilities from operating or expanding.

In a lengthy feature, the Center for Public Integrity reports on just how heavily involved companies like Comcast and AT&T are in stifling the expansion of municipal broadband. The telecom and cable companies wield outsized power in state-level governments, the report finds, and can make things very difficult for anyone who stands against them.

Incumbent ISPs don’t like publicly-owned broadband. They argue that it’s subsidized competition they just shouldn’t have to face. Earlier this year, an AT&T executive testified in a Senate hearing that, “we don’t believe that private companies should actually compete against public-subsidized, taxpayer cost to capital in that market.” At the same hearing, Comcast exec David L. Cohen agreed that Comcast advocates against municipal broadband whenever they can.

As the CPI report demonstrates, though, that “advocacy” is far from sign-waving and comment-filing. The article tells the story of Janice Bowling, a state senator in Tennessee who tried to expand an existing public network in the city of Tullahoma beyond the city limits. In February, she introduced a bill to do just that.

Over the coming months, Bowling and her caucus received repeated pressure from AT&T, Charter, and Comcast to drop the bill into a slow season where it would never be voted on. She continued to advocate for her bill, but ultimately found herself sitting at the table with an AT&T representative who “leaned toward her across the table in a conference room next to the House caucus leader’s office and said tersely, ‘Well, I’d hate for this to end up in litigation,'” according to CPI.

The apparent threat worked; Bowling’s bill lost support and vanished into obscurity without a vote.

Even ten years ago, CPI reports, getting that network built in Tullahoma was an uphill battle:

When Tullahoma began planning its fiber optic network in 2004, “it got unpleasant real fast,” said Steve Cope, who was mayor at the time. “When you get into broadband you begin stepping on the toes of some of the big boys, the AT&Ts and Charters of the world. They don’t want the competition, and they’ll do anything to keep it out.”

“Do anything” is basically synonymous with “spend a big mountain of money,” as it turns out. The CPI report goes on to detail the campaign giving, lobbying, and extensive advertising campaigns that entrenched companies have used to get state legislatures to move in their favor.

The CPI report also looks at the city of Fayetteville, North Carolina. Fayetteville has a fiber-optic network running beneath its streets for use by hospitals, police, and other specific public works agencies. Neither residents nor businesses, though, are allowed to access it — even though Time Warner Cable, the local supplier, refused to upgrade their network or even connect parts of the city.

One doctor told CPI that he pays Time Warner Cable $359 per month for internet service to his private practice, but that even so it’s slow and unreliable. He said that from a business perspective, he understands why TWC is hesitant to spend more in the area. “But,” he told CPI, “we still need a fast, affordable network. They have a monopoly, and they act that way. I just think a little competition from the city would go a long way in getting better service for everyone.”

Even though companies are unwilling to invest in their networks in certain areas, they are certainly willing to invest in politicians. In both Tennessee and North Carolina, AT&T has spent millions — $1.3m and $1.6m respectively — on campaign donations. Comcast, Time Warner Cable, and CenturyLink have also spent big on political donations in those states. State senators who have received tens of thousands of dollars from telecom companies aren’t likely to advance bills that hurt those companies’ interests.

The next best hope for cities that want to install their own fiber — or even to plug into dark fiber that’s already lying around unused — may come from the federal level. The FCC, at the request of two cities (Chattanooga, TN and Wilson, NC) that would like to expand their municipal fiber offerings, is considering a rule change that would allow them to pre-empt those state laws, giving municipalities the ability to carry on as they please.

That fight has rapidly become extremely politically polarized and also ugly very quickly. D.C. has slowed down in the August heat, but that battle is likely to start boiling again when September rolls around.

How big telecom smothers city-run broadband [Center for Public Integrity]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.