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To Close Rural Broadband Gap, Minnesota Communities Consider Public Option

| Written by admin | No Comments | Updated on May 2, 2014 The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/close-rural-broadband-gap-minnesota-communities-public-option/
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Minnpost, May 2, 2014

WASHINGTON — Like all plans should, this one started on the back of a napkin. In the early 2000s, Scott County wanted to broaden the availability of high-speed broadband Internet for its government buildings. County officials decided to build their own fiber optic broadband network and connect to the Internet for cheap.

The opportune word here, of course, is cheap. So by the middle of the decade, officials had hatched a scheme — on the back of a napkin, County Administrator Gary Shelton said — in which the county, state and broadband providers share both the costs and benefits of the new network. Scott County paid the upfront capital cost of building the physical network. In exchange for tapping into the network to deliver broadband to their users, the state pays the network’s operation costs and providers pay for maintenance.

Today, Shelton said, most of the county’s government buildings, from fire stations and schools to water towers, use the network, as do some state agencies from Minneapolis to Mankato. The county has used it has an incentive to attract new business, he said, and the state saves about $1 million a year, while the county saves $35,000 by owning its network instead of leasing from providers, according to estimates.

Lawmakers in St. Paul and Washington have long grappled with expanding rural broadband access, with state lawmakers considering pumping $25 million toward that goal this year. But once you find a way to build the physical components of a network, who’s best put in charge of actually offering quality Internet services over it?

The telecom industry says long-time providers are best suited to the task. But public interests groups and some local governments, looking for faster Internet speeds and lower costs than are offered by private providers — which are often insulated against stiff competition — have occasionally looked to municipally owned networks instead.

They got a big boost from Federal Communications Commission Chairman Tom Wheeler, who said Wednesday he’d look to strike down state laws preventing local public networks in the name of fostering Internet competition.

Handful of networks in Minnesota

In Scott County’s case, Shelton said the county wasn’t looking to compete with private providers.

“We have shared it with some of our providers, because we have tried to make broadband more affordable and available throughout, but not by trying to get into the business of being a broadband provider,” Shelton said.

But other municipalities are getting into the broadband game, including more than a dozen in Minnesota, looking to compete with the few private providers that dominate their markets, Christopher Mitchell, Director of the Telecommunications as Commons Initiative at the Institute for Local Self-Reliance said.

This isn’t a new idea, Mitchell said, and it’s more prevalent than many people realize. Municipalities began building their own cable networks as early as the 1980s, he said, and they moved into fiber networks about 15 years ago. There are up to 250 public cable or fiber netwoks around the United States.

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The Minneapolis-based ILSR has been researching municipal ownership and co-op models and pushing state governments to remove barriers to them for nearly a decade.

Mitchell argues municipal networks can help improve prices and quality by going head-to-head with private providers who aren’t used to competition. Companies have no incentive to offer a better service when they dominate their market, which hurts consumers. And other private companies are less likely to challenge a dominant provider because starting a new network is too expensive to be lucrative for a for-profit company. Publicly financed networks can stand to go a lot longer before turning a profit, which allows them to move in challenge private providers.

“Because there is no real competition, the existing providers do a really poor job, especially in rural areas,” he said. “There’s basically two [solutions]: one is public ownership in the form of municipal networks or co-ops, the other is regulation. … I would argue right now that regulation is not really an option given the power of Comcast in D.C.”

FCC chairman Tom Wheeler said he would use his agency’s regulatory power to fight state laws that ban municipal broadband networks.

Wheeler, the FCC chairman, said Wednesday that he’d use his federal authority to block 20 state laws — often backed by telecom companies — restricting municipal networks, arguing the broadband industry is already lacking competition as it is. Mitchell called it “the strongest statement to date by the FCC in restoring local authority.”

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Read the full story here.