State and Municipal Investments Seek To Overcome U.S. Broadband Setbacks

February 20, 2014

Recent court decisions regarding high-speed Internet competition and net neutrality have put U.S. broadband competitiveness on uncertain terrain. Despite two decades of publically supported high-speed data infrastructure efforts, many rural areas still lack access and even densely populated areas remain underserved.  New statewide efforts in Kentucky, Minnesota and Iowa have been announced to improve broadband services and boost economic competitiveness. In addition, Google has announced that it will expand its ultra-fast fiber services to nine more cities across the country.

Last month, a court challenge to Federal Communications Commission’s (FCC) net neutrality rules ended with the rules sent back to the FCC for revision, according to a report by Ars Technica. Net neutrality rules had been put in place to prevent anti-competitive actions by communications companies, such as blocking or slowing down particular sites. Yesterday, the FCC announced that it will not challenge the decision, but will regulate anti-competitive behavior on a case-by-case basis.

At the same time, Comcast’s proposed acquisition of Time Warner Cable, if approved, could reduce competition in U.S. broadband markets, even though the two companies do not directly compete in any of their current markets. The FCC and Department of Justice are now investigating whether the proposed merger would impede high-speed Internet access and services, particularly since the merged firm would have the ability to control access speeds to particular sites for users anywhere in the country.

The FCC’s response to the net neutrality decision, however, suggests that public broadband projects may play a role in ensuring competition and universal access. Over the past decade, 20 states have passed laws banning municipal governments from providing Internet services that could compete with private firms. In the FCC’s response, Chairman Tom Wheeler stated that he will instruct the commission to re-examine these laws to find if removing the restrictions could improve access and services.

Municipal broadband projects include services like Google Fiber, which works with local governments to provide ultra-fast to-the-home fiber services and has announced plans to expand services to 34 cities in nine U.S. metro areas. Google currently provides services in Kansas City, Austin and Provo, UT. Proposed new metros include: San Jose, Portland, Salt Lake City, Phoenix, San Antonio, Nashville, Charlotte, Atlanta and Raleigh-Durham.

States, however, remain the main public source of investment broadband infrastructure. Kentucky Gov. Steve Beshear unveiled a $100 million plan to address the gaps in rural broadband access. Under the plan, up to 3,000 miles of fiber infrastructure would be rolled out over the next two-to-three years, with a priority on improving access in the rural eastern part of the state. The state plans to provide $60 million in bonds with another $40 million coming from federal and private sources. In his announcement, Gov. Beshear stressed that the rollout was needed because high-speed Internet has ceased to be a luxury in the current economy. Instead, broadband is a medium through which modern government services are provided and a necessary component of economic development.

In Minnesota, the Governor’s Task Force on Broadband released its 2014 annual report, which includes an ambitious slate of legislative recommendations. The task force calls for the creation of a $100 million broadband infrastructure grant fund to help build out broadband access in underserved parts of the state. Even at that price point, the state would not be able to guarantee universal service at speeds that match the state’s goals, but it would provide sufficiently high-quality services to an estimated 100,000 additional households.

Iowa Gov. Terry Branstad announced his support for the Connect Every Iowan Act, which is now being considered by the state legislature. In his State-of-the-State address, Gov. Branstad urged the passage of the targeted, time-limited and geographically-specific tax incentive program to promote high-speed broadband buildout. Under the proposed bill, broadband equipment and infrastructure installed or constructed in underserved areas would be exempt from property tax through 2018.

 

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