Cities combat state laws in the quest for faster, cheaper Internet

Telecom giants influence state laws to prevent public high-speed Web service

October 14, 2015 12:36PM ET

by Kristyn Martin @kristynmartin

This is part two of a two-part series on the city-run high speed internet

Across the U.S., cities are deciding to compete with cable and telecom giants and invest in the latest technology for superfast Internet: fiber optics. It’s called gigabit Internet. Almost 90 cities have it — provided through the local electric utility or in partnership with a private company. It’s changing the landscape. Competition is thriving. Incumbent providers are lowering their prices and increasing speeds in cities with the service.

‘We have no Internet here.’

Penny Coltrin

teacher, Bradley County, Tennessee

There are 19 states with laws that restrict or prohibit city-led broadband service.

But the giants are striking back — through litigation or by working with lawmakers — on the grounds that it is unfair to have to compete with a city-owned business, funded by taxpayer dollars. There are 19 states that have laws on the books that restrict or prohibit city-led broadband. One of those states with restrictive laws is Tennessee, where utilities that provide high-speed Internet service may not expand past their service areas.

This poses a problem for rural areas like Tennessee’s Bradley County, just 30 miles east of Chattanooga. Country roads lead to a picturesque landscape of grazing cattle and cornfields. But its Internet landscape — that’s a different story.

“Currently, our Internet landscape looks like nothing. We have no Internet here,” said Penny Coltrin, a middle school teacher and mother of two with no access to high-speed Internet. Her family has two choices: dial-up or satellite service, which she says isn’t reliable.

“And so the Internet that we use, my husband and I, is just using our data on our cellphones,” she said. But she and her family run into problems with that system, especially if her sons have homework. Some websites needed for school assignments won’t open on her phone.

Coltrin said she has been waiting for years for broadband to arrive in her area. She’s not alone. In rural areas of the U.S., 53 percent of residents don’t have access to basic broadband.

‘The reason Comcast isn’t there or other providers is … it costs a lot of money and the revenue isn’t high.’

Rob Atkinson

president, ITIF

“The reason Comcast isn’t there or other providers is … it costs a lot of money and the revenue isn’t high,” said Rob Atkinson, the president of the Information Technology and Innovation Foundation, a libertarian think tank.

But one company does want to offer high-speed Internet service to Bradley County: the Electric Power Board (EPB), Chattanooga’s utility, which offers ultra-high-speed Internet access, with data transmission speeds of 1 gigabit per second. It has fiber-optic infrastructure that ends just a half a mile from where the Coltrins live.

“We’ve looked at a couple of those and can serve those and make a financial business model work out of serving some of those areas and could do it fairly quickly,” said David Wade, EPB’s chief operating officer. The utility is willing to invest $60 million to extend service to Bradley County. But the company can’t take action because of the state law that prohibits local utility companies from expanding past their service areas.

He said the reason is that the telecom and cable giants don’t want to compete with utilities. “It’s certainly about retaining service rights and service territories … and reducing competition, to be honest,” he said.

Penny Coltrin, a resident of Bradley County in Tennessee, doesn’t have access to high-speed Internet where she lives.

“I understand that any company is in it for a profit,” said Coltrin. “The problem is, if they aren’t willing to provide it for us, why not let somebody that is come in?”

So EPB and the city of Chattanooga filed a petition last year, asking the Federal Communications Commission (FCC) to pre-empt Tennessee’s law, charging that it limits city-owned broadband from competing with major players like Comcast and AT&T. Wilson, North Carolina, was also a part of the petition.

“There’s certainly no question that if Chattanooga and Wilson were private entities seeking to do what they wanted to do and the state prohibited it from doing it, that the FCC could and would overturn it,” said Jim Baller, the lead counsel representing the EPB, Chattanooga and Wilson.

In February the FCC pre-empted Tennessee’s law.

“We have a situation where the federal government is pre-empting a state from pre-empting cities,” said Christopher Mitchell, the director of the community broadband initiative at the Institute for Local Self-Reliance.