Telecoms Suing Municipalities That Plan Broadband Access

Law.com has up a review of ongoing and historical cases of telecoms suing municipalities that plan broadband networks. In many cases those same telecoms have spent years ignoring as potential customers the cities and towns now undertaking Net infrastructure projects, only to turn around and sue them. One lawyer who has defended many municipalities in this position says, "This is similar to electrification a century ago when small towns and rural areas were left behind, so they formed their own authorities." Bob Frankston has been writing for years about the financial model of artificial scarcity that underlies the telecoms businss plans. This post gives some of the background to the telecoms' fear of abundance.

Comments

open access

[QuantumG]

Municipalities want to pay for fiber to connect them to the metropolis? Fine. But that fiber has to be open for everyone. They don't get to play favorites with the telcos.

Re:open access

[TubeSteak]

Municipalities want to pay for fiber to connect them to the metropolis? Fine. But that fiber has to be open for everyone. They don't get to play favorites with the telcos.

Maybe you're confused.

Municipalities want to build out broadband networks and make them the 5th utility, alongside natural gas, heating oil, water, and electricity. The Telcos are suing to prevent Municipalities from doing this.

Re:open access

[QuantumG]

Yes, and the bits will get from their fiber to the Internet via MAGIC.

You obviously have gotten everything you know about this issue from the article, which is poor on details.

The Municipalities are cutting deals with Telcos. They are playing favorites.

Re:open access

[bberens]

You obviously have never worked for a large IT firm.

Re:open access

[spazdor]

So, the failure of the market to solve a problem helped science to figure out what that problem was.

I would say that's exactly what's happening to the Internet.

Re:open access

[CastrTroy]

I think that the road users should pay for the roads. I realize that everybody uses the roads, as a form of infrastructure, even if not everyone uses them directly. However, those who use more of the roads should pay a higher percentage of the upkeep of the roads. A gas tax seems to work pretty well in this respect. If the taxes are collected at a state/federal level, then the cities should get kickbacks to support the roads in their city. Charging internet users, or users of any other service for something not related to what they actually are paying for is not the right answer. I say if it only costs $15 a month for the city to provide broadband, then that is what it should cost.

Re:open access

[jc42]

They don't get to play favorites with the telcos.

And from TFA: ... you can't use your powers as a city to create an uneven playing field,"

This is a nonsensical argument. Nearly everywhere, the municipalities, states, and all other levels of government always "play favorites" and create an "uneven playing field". They do this by creating and enforcing local telecom monopolies.

Where I live, the phone line leading to my house is owned by Verizon, and it's illegal for any competitor to install a competing line. This is about as much an uneven playing field as you can imagine. The town has exactly one favorite phone company, and the others aren't allowed to install their wires in this neighborhood.

Cable is similar, though our neighborhood is a bit unusual in that there are two companies that are legally permitted to install their cables. But a "duopoly" isn't all that much better than a monopoly. (And the "competition" between phone and cable companies does little to alleviate these mon/duopolies.)

Also, here in the US, and in most other companies, the phone companies have received all sorts of subsidies from the national government. If I'd tried to start my own phone company, I'd have had no access to those subsidies. And even with regulations allowing my startup to use the phone company's (copper) wires, they can charge me so much that I can't price my services competitively with theirs.

How do people get off arguing that municipalities shouldn't play favorites to create an uneven playing field, when for over a century, all levels of government have been doing exactly that to create and enforce the telecom monopolies that we see everywhere?

Get what they deserve

[GrMunky]

Good, let the communities fill the void the telecomms left behind. let the telecomms fear the power of the little guy. then watch as the telecomms simply refuse service and squash it all. damn, capitolism at its best and worst

Telecoms find new way to fuck users

[Anonymous Coward]

News at 11

The government?

[symbolset]

The government? Providing necessary infrastructure companies can't or won't? How dare they!

Re:The government?

[QuantumG]

Yeah, cause its not like these municipalities are trying to say who can use the fiber that they want to build to connect their citizens to the Internet. Oh wait, yes they are. This would be like building a nice new highway, and getting Ford to pay part of the cost, and only allowing people with Fords to drive on it. [Slashdot car analogy at its finest].

Re:The government?

[Anonymous Coward]

OH SHUT UP.

Sanitation is not "necessary infrastructure". Electricity is not "necessary infrastructure". Telephone lines are not "necessary infrastructure". The Amish show all this quite well.

But any modern city requires these things and also requires data transfer. Now, if no company will spend the money, clearly the citizens have the option of doing so themselves. I'd rather see them form a co-op, but whatever, it's their city.

Now, the private sector may not be able to compete with tax subsidized services, but the fact that the private sector does not want to get involved is a pretty clear indication that they can't compete, period. If they're not going to compete, then they need to stay the hell out of the way.

Re:The government?

[whoever57]

Internet access is not "necessary infrastructure".

Isn't it? I think that, with services such as local phone running over the Internet (eg. Vonage), there is a very strong argument that it is a necessary infrastructure. We think of electricity as a necessary infrastructure, yet in the early days many people were without it.

Re:The government?

[Xzzy]

That may have been true 10 years ago, but now? It's the 21st century equivalent of the printing press or TV.

Obviously it's not a required service to survive, but the generation of kids in school right now are building their lives around the existence of the internet, and if those of us in power now don't think it's "necessary", I guarantee you their generation will.

May as well get a jump start on it and make my life easier as well. ;)

Re:The government?

[Buran]

That was true 20 years ago. Not anymore.

Now, the Internet is vital to many peoples' livelihoods, and therefore their ability to stay off of public assistance programs, or off the streets.

What is more necessary than being able to live a decent life and have somewhere to live and food to eat?

Re:The government?

[Anonymous Coward]

I'm not the other anonymous coward, but you never proved your point that "Internet access is not 'necessary infrastructure'."

Instead, you said "The private sector cannot compete with tax subsidized services." Your second sentence just shows that you don't want it because it's bad for business. However, this sentence does not offer any proof of why internet access isn't necessary infrastructure.

Re:The government?

[whoever57]

Internet access is not "necessary infrastructure". Isn't it? I think that, with services such as local phone running over the Internet (eg. Vonage), there is a very strong argument that it is a necessary infrastructure. We think of electricity as a necessary infrastructure, yet in the early days many people were without it.

Vonage? Are you serious? Yeah, let's consider Vonage, one of the most unreliable VoIP providers on the planet, to be a necessary service.

No thanks. I'd rather stick with my switched circuits for reliable service.

Your opinion on the reliability of Vonage has nothing to do with the discussion. Vonage (and other VOIP providers -- I cited Vonage only as an example) provide a local phone service. It is not possible for them to provide this essential service without Internet access.

I notice that elsewhere you responded to another poster with a clear ad-hominem.

And if you think that you get a switched circuit from your local phone provider for anything except perhaps a call to your neighbor, you are just showing your ignorance.

Re:The government?

[Vancorps]

The only thing you stated was circular logic. You did not state why you think it's not a necessity. You only made a generic statement about private industry competing with government.

I think it's pretty easy to make a case that the 21st century economy should include Internet access as a necessity.

In this day and age all my bills are paid online, the yellow pages on paper is a thing of the past and calling internationally is no longer prohibitively expensive. Looking for a new job is next to impossible without being online even.

Yes people can live without the Internet, people can live without phone service and electricity too. How exactly is it not a necessity?

Re:The government?

[stinerman]

The AC is speaking of infrastructure, not service. The government can build the network and then allow ISPs to provide service.

Do you also shun public roads and railways because private roads cannot compete?

Re:The government?

[Anonymous Coward]

Are you an idiot or just a shill?

The telcos HAVEN'T BEEN PROVIDING SERVICE TO THESE TOWNS DESPITE REQUESTS TO DO SO. So the towns have done it themselves. They aren't saying the telcos can't run their own lines and services to the town, they're just going to do it themselves because the telcos have never shown any interest in serving them. The companies have denied themselves this business. And like any municipal service (power, water, etc.) the citizens pay for it and anyone who pays bills gets it. The municipality is basically going to become a local service provider (like the big companies), and the big companies don't like cheap competition.

Quod erat demonstratum.

Re:The government?

[nine-times]

We think of electricity as a necessary infrastructure, yet in the early days many people were without it.

Right. For every kind of infrastructure we have, there has been a time when we lived without it. Telephones, electricity, indoor plumbing, roads. In the hunter/gatherer sense of the word "necessary", none of these things are necessary.

However, they're all vital to our economy, and an important factor in the development of our civilization. Having a couple big companies exercise complete control over all allowed infrastructure, and that infrastructure's use, is unacceptable.

Would we hand over construction of our roads to a single private company, allow them to build roads where they want and not build roads elsewhere, and then allow them to arbitrarily decide what kind of traffic is allowed, based solely on what they believe would be most profitable?

Re:The government?

[dark whole]

Would we hand over construction of our roads to a single private company, allow them to build roads where they want and not build roads elsewhere, and then allow them to arbitrarily decide what kind of traffic is allowed, based solely on what they believe would be most profitable?

depends how big the "donation" to congress members is.

Re:The government?

[mabhatter654]

you mean the PUBLIC utilities that ALREADY accepted millions of dollars in tax credits (that's a subsidy!!!!) but didn't deliver the product? Telcos already had their chance, got it paid for with tax money and took the cash.. but didn't deliver when and where they promised Congress.

Re:The government?

[S.O.B.]

I notice that elsewhere you responded to another poster with a clear ad-hominem.

I agreed with everything you said but there's no reason to resort to name calling.

And how would you even know if he's gay? Not that there's anything wrong with that.

Re:The government?

[Anonymous Coward]

OH SHUT UP.

Sanitation is not "necessary infrastructure". Electricity is not "necessary infrastructure". Telephone lines are not "necessary infrastructure". The Amish show all this quite well.

But any modern city requires these things and also requires data transfer. Now, if no company will spend the money, clearly the citizens have the option of doing so themselves. I'd rather see them form a co-op, but whatever, it's their city.

Now, the private sector may not be able to compete with tax subsidized services, but the fact that the private sector does not want to get involved is a pretty clear indication that they can't compete, period. If they're not going to compete, then they need to stay the hell out of the way.

Your use of the Amish is false, look at your average Amish settlement, how many people live per square mile there? Now how many people live per square mile inside the city limits of a major metropolitan area.

Even ancient romans knew they needed sewers to support the population.

Eight million people live in New York City. Care to imagine what NYC would look like after two days of no sewage service? You don't think about it because you just flush it away, but what happens to 8 million fast food meals after lunch hour if you cant just flush it away?

You think electricity isn't essential? NYC traffic is bad enough already, take the traffic lights away and tell me electricity wasn't an essential service.

Emergency services phone operators can deal with upwards of 150 calls in an 8 hour shift, and thats just one operator. Thats an easy potential for thousands of 911 calls a day. Seems like phone is a pretty fucking essential service to me.

And thats just the tip of the iceberg, imagine what would happen to the NYSE and the economy with no electricity or internet service, Imagine all the business that would shut down overnight with no new shipments of supplies because theres no traffic lights, imagine trying to control all that shipping on the water with no radios.

These are all essential services because our society relies on them, Could you imagine running a major corporation with no ability to communicate with anyone not actually in the room with you?

Yes the Amish live without them, but we're not the fucking Amish are we?

Just because something is possible doesn't make it a good fucking idea, you could steer your car with your ass if you really wanted to, that doesn't mean its a good idea.

The internet has become the cornerstone of the modern economy even to the point where companies like Google can thrive on nothing BUT the internet. And the biggest corporate monsters, right behind the oil companies are the telco's. The sheer scale of that should tell you how important it is.

This isn't about your personal convince either, were talking business interests now, any business bigger than a corner store that wants to amount to anything at all needs an online presence, and more importantly from a municipalities point of view, large companies (and therefore large corporate taxes) will not move into their cities if they have no internet access, and while your grandmother might be happy fetching her email on a dialup AOL account you can bet big business won't settle for anything less than a big fat broadband pipe.

The telcos have been shafting us for years by refusing to upgrade capacity in order to create an artificial shortage to drive up prices, and relying on a huge barrier to entry to keep any competitors from stepping up. Well now somebody with the cash to lay their own network has stepped up and the telcos are shitting them selves. Good.

Municipalities are doing exactly what they should be doing, build services to support their own area, and no its not gonna put the telcos out of business, because they are still going to need to connect to the backbones. What the municipal services will do though is demonstrate how shitty we've been treated by the big telcos. If the level of service from a

Re:The government?

[stinerman]

The fact that many posters here automatically assume that those who own the infrastructure must also provide the services on that infrastructure is a bad sign.

We wouldn't tolerate GM owning and operating large amounts of roads and only allowing GM cars on the roads. We shouldn't tolerate the same in telecommunications networks.

The oddest thing about the public ownership, private competition plan is that it creates the conditions for the most competition. ISPs could compete on service rather than just being the first guy on the block to offer service. Many times where there isn't a free market, government intervention is required to create one.

Re:The government?

[Dog-Cow]

That makes no sense what-so-ever. Why does security define a service's utility? In many non-emergency situations electricity is not available. Is it now not a utility?

hmmm

[ILuvRamen]

yeah or maybe it just costs too much to run cabling and equipment out to rural areas...like more than they'd make selling internet connections so they don't do it. Consipiracy theorists tend to really leave logic behind. The whole suing thing is just because telecom companies know the cost per person will be so low, it's crazy. I mean a 100 megabit connections could cover a decent sized small town and that's relatively cheap when you divide it out per person. So then everyone's gonna want it and drop the traditional ISPs in favor of probably free municipal internet and their business will collapse.

We're screwed

[clang_jangle]

The people didn't worry when the same thing happened with electricity, they didn't worry when it happened with telephone service. They didn't even worry when a "radio set" came to mean just a receiver. The wild and wooly "early days of the internet" will be over in just a few years, and few will really care. Relish these times we live in, pity those who come later...

Bad Idea

[Bios_Hakr]

Letting a local government run your Internet is a stupid-bad idea.

You will see caps, filters, and all kinds of other crap. States like Arizona and Alabama have laws against sodomy. Alabama makes it illegal to own a sex toy. Let Alabama run the Internet and you'll find yourself in jail for watching MrHands.avi or WeLiveTogether.

I understand that in some places, commercial access would remain available. Just like we have toll roads and bridges today. But a good portion of the people would be forced to use a tightly regulated, government ISP.

Re:Bad Idea

[stinerman]

Letting a local government run your Internet is a stupid-bad idea.

I agree.

What isn't a stupid idea is letting a local government build networking infrastructure and then allowing access to anyone who wishes to provide services over the infrastructure.

Wi-Fi

[Darkness404]

Hmmm... Lets see... I can go to any city and immediately find around 10 wireless networks, about 3 of them will be unencrypted. Does this too pose a threat to the telecoms? When I can get 100% free Wi-Fi wherever I go that isn't a problem but this is?

Big Business

[Anonymous Coward]

Always seems like when someone is treading on big business, or at least what big business thinks is theirs they get sued.

That's the point

[symbolset]

These areas have no current broadband business serving them and they aren't going to because the margins are higher providing 5mbps to city folk than dragging fiber out to farmer John. That's why rural areas to get broadband at all have to do it themselves.

The thing is in places like sleepy Ephrata, WA they can sell 100mbps broadband for $50/mo through the power district and still make a profit - just not as big of a margin as the telcos are getting.

There is no business there to destroy and there never will be. Comcast and Ma Bell have no intention of serving these folks ever. They just sue to keep other people from doing it to prop up the myth that bandwidth is evpensive. Yeah sure it's expensive if the guy dragging the fiber has to take every corner, valley and river by force from a defending battalion of lawyers.

The internet is the modern post road

[symbolset]

Many government services are provided by Internet. The internet is for many people the only access to modern markets. Internet is essential infrastructure.

These companies have no desire to compete for these markets. Their objective is the prevention of information services to these people. The people are right to be angry. They're also more used to fixing these things themselves.

New business model

[SilverBlade2k]

Just like the RIAA and MPAA, the Telcos would rather sue, then to actually WORK for their money.

Problem with the telcos

[DigitAl56K]

Here is the problem I see with ISPs in general.

You tend to get internet, phone, and TV services from a single provider. Unfortunately, phone services will go away as a revenue stream as people move to VOIP. I know plenty of people who have also canceled their tv service because they only watch a few shows and they prefer to get them online at their convenience. This means that providers loose the revenue attached to phone and tv services right off the bat. Then you have to consider how many big ISPs are also media industry giants and have a vested interest in ensuring you continue to consume media through premium channels and channels laden with advertising. They don't necessarily want you watching things over the net at your convenience. So we have ISPs fighting against P2P claiming "conjestion", while refusing to upgrade their backbone, killing their newsgroup services, and imposing bandwidth caps with costly per gigabyte charges for subscribers who exceed them.

Of course, the ISPs can't afford to lose even these "undesirable" users to a municipality, because as soon as they do they can no longer impose p2p throttling and bandwidth caps as a measure to slow people moving away from their established channels and services, and their content is harder to monetize. So IMHO they're going to fight to keep people locked into a service that they're also working feverishly to lock down to their benefit and the detriment of consumers.

But that's just my $0.02 ..

Re:Problem with the telcos

[pdemon]

just removing a wrong mod

Re:Problem with the telcos

[nine-times]

You tend to get internet, phone, and TV services from a single provider. Unfortunately, phone services will go away as a revenue stream as people move to VOIP. I know plenty of people who have also canceled their tv service because they only watch a few shows and they prefer to get them online at their convenience. This means that providers loose the revenue attached to phone and tv services right off the bat. Then you have to consider how many big ISPs are also media industry giants and have a vested interest in ensuring you continue to consume media through premium channels and channels laden with advertising.

Yup. It's a problem. People often focus on the problem of limited choices in ISPs-- that your only real choice in a given area is usually "the phone company" or "the cable company"-- but they usually fail to recognize the conflict of interest involved in owning multiple points in the chain. Verizon, for example, is the owner of the infrastructure, the ISP, and the phone service provider. So right off, they aren't going to want VOIP to be successful, but also they don't have much interest in seeing successful alternative ISPs over their own infrastructure.

Cable companies can be even worse. Like with TimeWarner Cable, you have the same problems as Verizon, but substitute "cable TV" for "phone service". But in addition to that, their parent company also owns a bunch of the content being delivered on their TV service. So they own the infrastructure, they're the ISP, they provide a video service, and they provide the video content that they're providing in that service.

Now maybe there's some independence between those functions, but there's still a conflict of interest. As the company building infrastructure, it would normally be in your best interest to build infrastructure everywhere so that you could get paid. As the owner of the infrastructure (if you weren't an ISP) it would be in your interest to foster ISPs and new services who would pay for a variety of uses of that infrastructure, instead of putting all your eggs in one basket. If you were the ISP, anything which made people want access to the internet would be to your advantage. As the video/voice service provider, you'd want the best/fastest network possible. As the content owner, you'd want your content on every possible channel (that makes money for you).

But since these companies basically run the whole supply chain, their interests are different. Building the infrastructure comes out of their own pocket, they don't want to build anything without knowing it'll provide the best ROI, so they don't bother building in lots of places. As the owner of the infrastructure, they want to restrict its use to pushing their own services. As the ISP, their interests are best served by restricting usage, as much as possible, to pushing their own content and services. As video/voice service provider, your interests are served by seeing Internet service being slow outside of a QoS for your own services. As the content owner, you want to restrict your content to channels that you control, and also use those channels to push/advertise your content.

All of this is a bit of an oversimplification, but I still think we would be well-served by breaking some of these functions out into separate companies. Primarily I have in mind that whoever builds/maintains the infrastructure should be forbidden from providing any services on that infrastructure. I admit that I'm not an expert in telecommunications or economics, but it seems reasonable to me.

If it's not possible to build infrastructure by itself, without providing services, then it seems like an argument in favor of a completely public infrastructure.

Re:Problem with the telcos

[johnny cashed]

I wonder about the competition that VoIP presents. Right now, I'm paying to split a phone line. This person already has land line phone service, I'm paying for the DSL on top of the service, splitting the internet thru a router. I'm also paying for VoIP service on top of that, because I don't want to split a phone number with someone. I've complained that the telco advertises heavily for DSL service for "just $25.99" or some such number. This is if you are already paying ~$15 +taxes and additional charges for the land line you are required to pay for, even if infrastructure is already in place.

I believe that the telco should offer (maybe they do...now) a flat rate nation wide calling service for what they charge for local. They are already loosing business to the mobile market (I think, I only have anecdotal evidence at this point). This is why they lost me. Plus stupid things like "connection" fees. I talking about already wired neighborhoods.

I had cable internet (without the TV programming, just internet) and liked if for all my surfing needs, but it had too much latency for VoIP. If the cable could have provided phone service (they didn't in my area) with a decent calling plan, I would have paid comprable to what I pay for VoIP (I want nationwide flat rate, because I get a lot of out of state mobile phone numbers, I don't want to pay LD when I'm calling a guy a few blocks over.)

Just a technicality

[f2x]

I hate seeing articles like this...
Municipal corporations versus privately held corporations. It doesn't matter who wins, the taxpayer/consumer loses.

I'm curious when the internet as we know it will essentially vanish. Usenet is already on the endangered species list, P2P is still a logistics nightmare if it goes prime time. Special interest groups want to censor every website. Barratry is rampant over intellectual property claims. Spam, spyware, trojans, worms, viruses, and other malwares are constantly trying to take over or kill the net. Governments want to tap into everybody's business while they're on the net. Telecoms want to repackage it with their own brand name all over it. The list of this degenerating garbage is endless, and yet people are still so desperate to get it!

Why doesn't this stupid thing just implode already?! Once it does, Tim Berners-Lee (with nothing better to do) can come out and design a whole new concept of network computing that no single entity can possibly own or control.

Meanwhile, Priva-corp vs Muni-corp can serve as yet another distraction from creating more practical advances in technology.

I won't move to VOIP.

[plasmacutter]

When the power goes out, so does VIOP. Eventually a mobile also has to be charged, and murphy's law states the power will go out on the evening it's due to be charged.

The redundancy offered by self-powered land lines is something which cannot be so readily ignored, at least to me.

Re:I won't move to VOIP.

[QuantumLeaper]

If you have portable phones, like most people, you lose power, you lose your phone also. I bought a $10 non portable phone just because the power when out and I lost the use of all my phones.

Re:I won't move to VOIP.

[AvitarX]

Mobiles can be charged in all sorts of ways:
1)car
2)USB from laptop
3)Double A's
4)For the truly hard core hand crank

Re:open access - "unfair" competition

[davide marney]

See, here's the thing: telcos do not have a "right" to compete for these services. Rights belong to the people, not to private businesses.

The people, through their various branches of government, decide what are the rules and laws under which business can operate. The people, through taxes, fees, and bonds, provides the funding. The people, through our elected representatives, entirely owns the "public" sphere and everything that operates within it.

We are our own sovereign entity. No private enterprise can legitimately claim to "compete" with us; there is no government other than what we have established.

The whole foundation of the telco's argument is built on sand. Something to think about ...

Re:When the power goes out, so does VoIP.

[ultranova]

In that case, I think it would make more sense to wire your community with a redundant power grid (2 separate power sources for every domicile) rather than maintain an obsolete comm. protocol just because it was designed with a +45v wire.

Or just bury the existing wires underground where they aren't affected by storms. Sure, it wouldn't be cheap, but it would likely be cheaper than rewiring an entire community, and would ensure power for all appliances rather than just communications.