Georgia Bill Stirs Fight Over Municipally Owned Networks
Georgia’s House Bill 282 is reigniting controversies and conversation on whether states should limit municipal broadband networks. Other states have debated and sometimes passed such laws in the past. The bill has attracted heavy media attention since it was introduced in early February, and last Friday FCC Chairman Julius Genachowski discouraged state legislators from passing such laws (CD Feb 19 p11). The bill proposes forbidding municipal networks if a region’s residents connect at speeds of 1.5 Mbps, a provision which has attracted intense opposition as well as support.
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"We just think that building government-owned networks over private networks is bad policy,” Windstream Senior Vice President Eric Einhorn told us. Windstream has been an active proponent of such bills, he said, noting a failed effort to pass a similar law last year. The company fully supports the spread of broadband and is devoted to it, but the nature of such municipal networks creates a disincentive for private investment, he said. “How do we create the right economic incentives to enhance the networks?” The government has in effect “endless resources” and its entry creates “not fair competition,” Einhorn said. “It changes the business plans, it changes the economics.”
Many disagree. “We've written countless letters to legislators” and called them, said Max Beverly, mayor of Thomasville, Ga., on a Tuesday Gigabit Nation live show. He opposes the proposed law even though it wouldn’t have a huge effect on the municipal network in Thomasville. The legislation wouldn’t affect currently operating networks. “I think it’s a pro-business move,” Beverly said of municipal networks. He described the healthcare needs that prompted Thomasville to start its own network more than a decade ago -- “that kept us in the game economically,” he said, describing the network’s “fantastic” service. “Also it’s been for a very profitable business for us, too,” he added, describing $2 million a year the town receives from the network. The money has allowed it to slash taxes, he said. “Giving municipalities the ability to do it is taxpayer protection.”
The Georgia House delayed its initial hearing on the bill “I hope indefinitely,” Beverly said. Other organizations, locally and nationally, have objected to the bill, including the Georgia Municipal Association and the Institute for Local Self-Reliance. The law would “reduce Georgia’s competitiveness and ability to attract new jobs” and sets a definition of unserved “so narrow that virtually no community would ever fall under the exception,” contend the talking points the Georgia Municipal Association has circulated (http://bit.ly/Y86dco).
The American Legislative Exchange Council has long been a vocal critic of municipal networks and supports the spirit of this legislation. “It’s much different from our model” legislation but the concept is similar, said ALEC Communications and Technology Task Force Director John Stephenson. It’s important to highlight the costs of these municipal networks, he said, criticizing the hundreds of miles of cable laid in Marietta, Ga., for only a couple hundred customers. Free Press disputed the idea that Marietta represented municipal telecom network failures in a 2005 report (http://bit.ly/Xlini3). The bill is an example of “presenting real costs to taxpayers,” Stephenson said. He warned against “draining resources” despite the attraction to the “noble goal” of promoting broadband infrastructure and adoption. Einhorn said he was not aware of any ALEC role in this bill.
There’s been some confusion and “misperceptions about ALEC in the news over the last year or so,” Stephenson said, acknowledging some critics that freely associate any municipal network limitations with his colleagues, despite differences from the ALEC model. “At the end of the day, that’s all chatter.” He also praised House Bill 176 (http://1.usa.gov/Yn9tgd), which would streamline Georgia’s rules for wireless companies who may face long delays in approval and regulation regarding their facilities. “Georgia is showing that it’s starting to ask the right questions,” he said.
"Government will not compete fairly,” Institute for Policy Innovation President Tom Giovanetti warned Georgia legislators in a Feb. 7 letter (http://bit.ly/134FD7S) supporting the bill. “Governments will give their own network efforts advantages in zoning hearings, taxes, permit approvals, and other government functions. They will cross-subsidize their struggling networks with taxpayer money levied to perform other, more important functions.” Windstream’s Einhorn said he’s seen a movement “to do more of those” when speaking about municipal networks in Georgia. Often the municipal networks emerge in towns and the residential places where Windstream sees competition, not the high-cost, “really hard to serve” areas, he added.
Einhorn hesitated to make predictions on the bill’s passage but said it’s “always difficult” moving legislation forward. The policy discussion has been ongoing in Georgia, he said. Companies, meanwhile, face what they see as complications in the operating municipal networks: “The economics are challenging, and this makes it even more challenging.”