President Obama’s recent comments advocating municipal broadband networks have drawn a variety of rebuttals from groups such as the Phoenix Center, TechFreedom and Media Freedom.
The Phoenix Center sums up the core argument in a white paper critiquing FCC Chairman Tom Wheeler’s praise for the EPB gigabit network in Chattanooga: “The widespread use of government money to build networks to compete with networks [built] with private sector money over many decades deserves an exceedingly careful analysis and not just grandstanding by the President and the Chairman,” the report argues.
Perhaps the most vehement critique came from Media Freedom, which argued in a press release that “the bullies at the White House and the FCC will not stop until they have taken all of our lunch money.”
A more tempered critique came from the National Cable & Telecommunications Association, which said government-run networks “may be appropriate in rare cases” but added that government policies should be directed at “overcoming barriers to adoption and extending the reach of broadband to places yet unserved.”
Anti-Muni Network Arguments
The most thorough critique was the one from the Phoenix Center. In a report titled “Why Chattanooga is not the ‘Poster Child’ for Municipal Broadband” the organization stated that:
- The Chattanooga network was an extension of the city’s municipally-run electric utility monopoly, and therefore benefited from “spillovers in expertise and facilities from the electric to the broadband divisions that are unavailable in most areas” as only 14% of U.S. households are served by a government-run electric utility
- The network also received a $111 million grant from the U.S. Department of Energy as part of the American Recovery and Reinvestment Act. This equated to about $650 per electric customer – and according to the researchers if Comcast were to receive an equivalent subsidy that subsidy would be about $35 billion
- While acknowledging that the ultra-high-speed Chattanooga network attracted business to the area, those businesses simply relocated from other areas
- The rates for EPB’s service are not lower than those of their private sector counterparts
Rebutting the Rebuttal
Christopher Mitchell, director of community broadband networks at the Institute for Self-Reliance, accused the Phoenix Center of being a “mouthpiece of the cable and telephone industry.” In an email to Telecompetitor, Mitchell said it was inaccurate to say the EPB network was built with “government money” but instead was built largely with bond funding sold to private investors. He also argued that Chattanooga ratepayers would be paying more for electricity had the utility not built the fiber network and also offered telecommunications services.
He added that Chattanooga’s approach is only one of a range of alternatives for building municipal networks. “There are many models with various levels of risk and several involve partnerships with private companies,” he said.
One thing I found missing from the critiques from the Phoenix Center and other organizations is any discussion of whether the services provided by the private sector are truly equivalent to those offered by municipal network operators. What I’ve observed is that municipalities rarely take on a broadband network construction project unless residents have found existing broadband services to be lacking. And generally municipal network projects are undertaken only when local residents are unable to persuade incumbent network operators to make the network upgrades that the residents are seeking.
Clearly this is not a simple issue. And while the topic previously was debated primarily within the communications industry and by advocacy groups, it could gain more mainstream attention in the wake of President Obama’s recent remarks.