“Where a community, or a city, or a county, or a district is not satisfied with the service rendered or the rates charged by the private utility, it has the undeniable right as one of its functions of government … to set up … its own governmentally owned and operated service,” – Franklin D. Roosevelt, 1932.
(MintPress) – It’s a battle that pits two core American values against one another: the uninhibited quest for wealth and the fight to do what’s best on behalf of a collective body.
For communities across the nation seeking ways to prosper in tough economic times, implementing a high-speed broadband system seemed like the solution — a move that would spur business growth and provide citizens with a valuable and reliable product.
But for the majority of communities that have stepped up to make it happen, the process hasn’t been easy. The stories playing out throughout America follow a common plot: A community wants high-speed internet, the existing telecom company in the area denies their requests, the city decides to implement the service itself — and the telecom company sues to stop it.
Large telecom corporations, which had previously turned down communities’ requests for broadband, suddenly see their monopolies being compromised — so they use their large budgets to push legislation and crack down on local broadband efforts, stifling many — but not all.
The little city that could
Lafayette, Louis., with a population of around 150,000, is known as a booming business community with one of the nation’s fastest high-speed broadband internet systems. But that wasn’t always the case.
Before 2004, the small city was plagued with slow internet, the source of frustration among residents and a serious impotent to the business world. The obvious solution at the time was to seek service through the existing telecom companies, and so they did, citing the fact that the demand was high enough among residents and business owners.
“We basically said, ‘Please do it so we don’t have to,’” Lafayette Mayor Joey Durel said. “Their attitude was, ‘You don’t need all that.’”
Despite the requests, Cox Communications and Bell South, the leading internet service providers at the time, didn’t go for it. In response to the inaction, the city began to proceed with plans to do it on their own.
As the process took shape, the telecom companies began to perk up. A meeting with city leaders was quickly scheduled, in what played out as an attempt to stifle the project and maintain their stronghold in the area.
“I think they thought that they would come in here, have a cup of coffee and we would go away,” Durel said.
That wasn’t the case. For the city, the most important goal wasn’t to battle the telecom companies, it was to create and provide the services needed to ensure it had a future as a business stronghold. Despite a charming culture and a reputation for excellent food, Lafayette isn’t exactly a hub of environmental beauty. Creating the draw of quality and reliable high speed internet was the city’s way of putting itself on the map, economically speaking.
Before the city could even begin to tackle the project, they were slapped with a lawsuit. The legal battle first began when Bell South sued, saying the action could not move forward without public approval through a referendum. And so a public vote was held, and the project was approved with overwhelming support.
The next legal hurdle came when Cox and Bell South together challenged the city, supporting a civil lawsuit against the city, citing a violation of the Louisiana Local Government Fair Competition Act. The case made its way to the Louisiana Supreme Court, which ruled in favor of the city by a vote of 7-0.
And so began the time for Lafayette to prosper. After fighting what Durel considers a David and Goliath battle, the city came out on top, but not before surcumming to costs related to legal battles — a small drop in the bucket for the telecom companies and a worthwhile, although expensive $1.2 million, cost for the city.
The new service rolled out in 2008, providing the most reliable, around-the-clock high speed internet service in the nation — all for a price tag cheaper than the large telecom companies, which, speed wise, couldn’t compete.
As predicted, the new high speed service began to attract businesses to the area. While working on a movie, The Secretariat, in Lafayette, Pixar Animation Studios began to recognize the quality, prompting the company to open a second office in the small city. Their other studio is located in Los Angeles. That move opened up 40 special effects jobs in the area — a boost to the local economy and a bonus for university students.
The high-speed internet has put the Louisiana city on the map, allowing it offer a service uncommon throughout the nation.
“We have a great university, culture, food … and high speed internet,” Durel said.
Patricia Thompson, manager of public relations with Cox Communication in Louisiana, said the company has maintained its argument that it is unfair for a business to compete against its regulator, which in this case was the city. Thompson said the company has not lost business since the new community-run broadband services have been in effect, but did say the corporation itself has taken steps to improve broadband service.
“The competition has made us a better company,” she said.
However, Thompson indicated a model of constant improvement is one that Cox Communications considers to be of great importance, regardless of outside factors. She said such improvements are based on market research, which indicates where and what type of need must be met.
Rural community puts up fight
The story in Monticello, Minn. isn’t too far off from Lafayette’s. Residents in the community, which has a population of 12,000, approached the city council in 2005 with a request for broadband internet services, citing the fact that the major telecom provider in the region would not provide the service they desired. With no competing companies to choose from, the citizens knew they had to do something — and so did the city.
“We had businesses that were dying on the vine,” City Administrator Jeff O’Neill said.
The city took on the challenge, recognizing the benefit it would provide for residents and the business community, but as O’Neill puts it, “It’s been a huge challenge.”
A feasibility study was conducted and a community referendum was held, in which 74 percent of the public voted in favor of the project, despite a heavy counter campaign elicited by the telecom provider. The next step for the city was to secure the funds to make it happen. Attempting to take on a business model, the city sold revenue bonds and sought investors. It wasn’t too tough to convince investors the deal was solid, and the city overnight had secured a $26 million investment.
Just as the future was looking rosy in Monticello, the telecom company hit back hard, suing the city for using revenue bonds to partially finance the project, a move they claim was out of city’s legal realm. Investors then put financing for the project in escrow, allowing the city one year to win the legal battle. If they didn’t resolve the issue, the money would be taken off the table.
After a series of court rulings and appeals, the city won the case — just two days before their one year financing deadline. But the year of legal battles did cost the city, which altered the budget and caused a few new obstacles for the city.
“Our business plan was jumbled by the lawsuit,” O’Neill said.
By December, 2010, the high-speed, city-owned broadband service was up and running, offering residents and business owners service comparable to the nation’s best. Businesses began to flourish and community members received the services they fought to have. But it wasn’t long before the telecom companies piggybacked on the city’s efforts, in turn offering competitive prices.
O’Neill said the decision for the city to move ahead and implement the system itself was the right one to make. Those within the community have remained loyal and the service is reliable at all times, he said. And in the midst of the fight to pursue service on their own, the community grew stronger. Throughout the years of legal battles, O’Neill saw the ugly side of business — the quest for companies looking out for their bottom line, and not the people they serve.
“We (the city) were motivated by citizens’ needs, not by money for shareholders,” O’Neill said.
Legislating a monopoly
The success stories in Lafayette and other communities throughout the nation are not likely to be shared among North Carolina cities and towns. In 2011, legislation was signed into law limiting the ability of communities to implement their own broadband systems. The legislation, known as the ‘Level Playing Field’ bill, creates tremendous obstacles for communities providing service to their citizens, and large telecom companies are behind it.
The language of the bill highlights the need telecom companies have to maintain their presence in America, through the outlawing of competition by government agencies. The bill itself is described as “an act to protect jobs and investment by regulating local government competition with private business.”
Measures within the bill outlaw local government broadband services from offering prices lower than those offered by large telecom companies, regardless of quality of service. It also prohibits local government services from advertising on public or government access channels and from subsidizing the business through other city-run utility services.
“It ties the people’s hands to take care of themselves,” said O’Neill, who claims Monticello would not have had the freedom to pursue broadband if Minnesotans had been subject to such laws.
For many communities, including Lafayette, providing a faster broadband service and offering it at a lower rate was what made the community — businesses included — thrive.
Similar legislation has made its appearance throughout the nation. Although American Legislative Exchange Council (ALEC) has not publicly claimed to have authored such model bills, a practice it is known for, it is supported by major telecom companies — AT&T (Previously Bell Communications) and Comcast — that have been at the forefront of lawsuits and attempted legislation.
The measure failed in Georgia, where it was introduced and later shelved as a “study bill,” meaning no further action will immediately be taken. Similar legislation is pending in South Carolina. If passed, it would add to the list of 19 states that have roadblocks in place for communities seeking broadband freedom.
Introduced in 2011, a South Carolina advocacy group is taking a stand against the legislation, prompting citizens throughout the state to voice their opposition to the bill. In a statement on the organization’s website, it gives its case as to why such legislation would be damaging to the future success of South Carolinian communities:
“While we do not disagree with the spirit of the law to prevent governmental agencies from competing in the free market system, there are times and conditions in which the free market system fails and the citizens do and should look to the government to help them.”