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APPA Washington Report - The Broadband Fight
Taken from American Public Power Association External Site
Written By Robert Varela
April 30, 2004

The Supreme Court's recent decision on pre-emption of state laws barring or restricting municipal provision of telecommunications services was disheartening. (It's hard to believe that Supreme Court justices don't share the same meaning of "any" as virtually all English speakers, but they are lawyers after all.)

But, moving beyond the disappointment, the decision should serve as a wake-up call for all public power utilities (and municipalities).

First, to put the Supreme Court ruling in some context, the court's order did not prohibit or even restrict public power utilities or municipalities from offering telecommunications services. The court simply decided the narrow issue of whether states have the power to restrict municipal governments from providing telecommunications services. The court's ruling interpreted the meaning of the phrase "any entity" as used in Section 253 of the Telecommunications Act of 1996. Section 253 authorizes federal pre-emption of state and local laws and regulations expressly or effectively "prohibiting the ability of any entity" to provide telecommunications services.

"The question is whether the class of entities includes the state's own subdivisions, so as to affect the power of states and localities to restrict their own (or their political inferiors') delivery of such services," the court said. "We hold it does not."

It's also worth noting that the decision deals with telecommunications services, as opposed to information services. The federal government currently defines telecommunications as voice service, not cable TV or Internet. The Federal Communications Commission has determined that Voice over Internet Protocol (VoIP) service is an information service in one case, but the commission has asked for comments on how it should classify VoIP.

To date 13 states have created anticompetitive barriers to entry for public power utilities that want to offer broadband infrastructure and services to wholesale and retail customers. It's a very safe bet that private cable TV and telecom companies-who are generally viewed as considerably more cutthroat than investor-owned utilities-will be knocking on many more statehouse doors peddling legislation to prohibit, either expressly or effectively, public power utilities and municipalities from getting into the broadband business.

Get ready for a rough fight with the telecom companies. In Florida, public power is battling legislative proposals to impose new taxes on all municipal utilities that expand their service areas and to place a one-year moratorium on signing up new customers for telecommunications services offered by existing city and county utilities. One sponsor of the legislation is not only a former mayor of a public power city but also served on the board of the municipal utility.

One good resource for countering the companies' arguments is APPA's recent report, Community Broadband: Separating Fact from Fiction, which can be downloaded or ordered at That report refutes assertions commonly used to argue against municipal utilities offering broadband services. Many of these assertions will look familiar, as they are the same tired, unfounded charges used by opponents of public power.

That's one reason all public power utilities-even if they have no plans or interest in offering broadband in the foreseeable future-should get involved in the fight over the right of local governments to provide broadband services. Like electricity, broadband is a basic infrastructure service with implications for the economic well-being or even survival of communities. Just as opponents' arguments are the same, the principles involved are the same.

(A short digression. Having recently tried in vain to get an estimate, let alone a reasonable estimate, from a contractor on replacing some railroad ties around a patio, I am particularly unsympathetic to the whining of these monopolistic cable and phone companies about how unfair it is that communities don't pay income taxes and can issue tax-exempt financing. This is analogous to local contractors complaining that do-it-yourselfers are unfair competitors because they don't pay payroll and Social Security taxes on their labor. The local city council would laugh (or boot) them out of the room; Congress and state legislatures should do the same to the telecom companies seeking restrictions on municipalities offering broadband.)

All public power utilities should join the fight over broadband because the future is rarely foreseeable, so sitting by while your options are foreclosed is never a good idea.

Restrictions on municipalities sought by the telecom companies may-either intentionally or unintentionally-affect all sorts of municipal communications systems, such as SCADA systems or local government networks.

Congress is expected to begin work soon on another telecommunications bill, offering an opportunity for lawmakers to confirm that "any entity" means exactly that. It won't be easy. The big cable and telecom companies will blanket Capitol Hill with lobbyists and campaign contributions, but members of Congress are revisiting the Telecommunications Act of 1996 because it has not produced the level of competition (and benefits) that were promised.

That means it's a real opportunity. Perhaps the last one.