Cities hook up in broadband battles

Across the U.S., cities are planning tax-funded broadband networks. But they face fierce resistance from Bells and cable operators.

A hundred years ago, when Louisiana was still literally in the dark, residents of Lafayette banded together to build a city-owned electric utility where once there was little more than swampland. Today, at the dawn of the 21st century, it is hatching plans to lay out its own state-of-the-art fiber-optic broadband network.

This time, the city's futuristic ambitions are challenged not by the rigors of geography but by obstacles of business: specifically, telecommunications giant BellSouth and cable provider Cox Communications, which claimed the region as their own years ago. But the historic coastal community, known for its eclectic culture and rhythmic zydeco music, is not about to abandon the pioneering spirit that begat its visionary reputation.

After a legal skirmish earlier this year, the two sides are preparing for a citywide election slated for mid-July that will decide the issue.

"The people of Lafayette feel like there is a history of seizing the initiative," said John St. Julien, a member of Lafayette Coming Together, a citizens group supporting the fiber network. "Our Creole and Cajun communities have always been told by outsiders that everything we did was wrong--from our language to the food we eat. Culturally, we've learned not to care what others think or say about us. I think it gives us a place to stand when companies like BellSouth and Cox come in and tell us we can't do something."

Across the country, acrimonious conflicts have erupted as local governments attempt to create publicly funded broadband services with faster connections and cheaper rates for all citizens, narrowing the so-called digital divide. The Bells and cable companies, for their part, argue that government intervention in their business is not justified and say they are far better equipped to operate complex and far-flung data networks.

As part of this special report, CNET News.com has created an interactive municipal broadband legislative map that details the major battlegrounds on the issue. At stake is the fate of high-speed Internet access for millions of Americans, hinging on a fundamental question of civics and economics--whether the government or private industries should take the leading role in building out what's considered this generation's critical infrastructure challenge.

"Is broadband fast food, or is it power?" said Doug Lichtman, a professor at the University of Chicago Law School. "The answer might be: 'We don't know. Let's experiment with it.' It might give us great information about what risks the government assumes, once it gets into it."

In some cases, local governments have simply stepped into a vacuum left by commercial providers that have proved slow or unwilling to bring broadband to their residents. But the situation has grown more complicated with public broadband proposals in major cities already served by private industry. These projects highlight a growing conviction that broadband is not merely a luxury of modern urban life, but rather an essential public service that could increase tourism and commerce while squeezing new efficiencies from services such as health care, education and even sanitation.

Despite the technology's youth, the dynamics over its control are as old as the nation itself. Governments and private businesses have long quarreled over who should control the build-out of highways, canals, railroads, the postal system and telephone networks. Oftentimes, what begins as a project of one side eventually falls into the hands of the other: The railroad system was first constructed by private companies but is now controlled largely by the federal government, while the postal system is run by Washington but faces stiff competition from private couriers such as FedEx and United Parcel Service of America.

Philadelphia is an early high-profile litmus test for whether cities and broadband are a good mix. As is the goal with many municipal projects, the city hopes that its planned wireless broadband network will put it on the map as one of the most technologically advanced cities in the world.

In April, city officials unveiled an ambitious plan to blanket Philadelphia's 135-square-mile area with wireless broadband, or Wi-Fi, access. Officials hope the network will attract tourists and businesses, while providing affordable broadband access to underprivileged residents. The service could cost as little as $20 a month, which is cheaper than local phone company Verizon Communications' rate of $30.

Not surprisingly, Verizon has fought fiercely against the plan. The Baby Bell successfully helped shepherd a state bill that bans any city in Pennsylvania from pursuing similar projects without Verizon's input.

State activity
Verizon isn't the only one taking the legislative route. Other Bells and cable companies have behind similar state bills that bar municipalities from building networks. Twenty states have already passed, or are trying to push through, legislation that would impose heavy restrictions on communities creating their own networks in areas already served by Bells and cable companies.

Thirteen of those states--Arkansas, Florida, Minnesota, Missouri, Nebraska, Nevada, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia and Washington--have passed bills restricting future public broadband projects, though existing initiatives are allowed to operate. The remaining eight have measures pending or have seen their bills fail to reach a vote.

The debate has become contentious, sparking heated opinions over how the nation can become a global leader in broadband. Critics of the state of U.S. broadband penetration cite the nation's ranking below Japan, Korea and Norway, to name a few. But telecommunications giants say broadband adoption continues to skyrocket and that competition remains healthy.

The origins of the conflict date back to the late 1990s, when the Bells and cable giants were just beginning to dip their toes in the broadband stream. Cities eager for high-speed networks faced frustrating delays, particularly in rural centers where the phone and cable companies faced the prospects of heavy costs and slim returns.

The story has changed dramatically in some ways since then. The Bells and cable giants are fighting a fierce war over broadband among Americans, prompting the local phone companies to lower prices, and cable providers to nearly double download speeds, over the past two years.

Within the next 12 months, Verizon and SBC Communications expect to launch their own pay TV services, to put more competitive pressure on cable companies. In late April, Verizon said it would sell to some customers DSL access without requiring people to buy a local phone line--a longtime demand from consumer groups.

Providers are also trying to add bells and whistles to the basic data pipe into the home. Some of the phone carriers, including Verizon and SBC, have partnered with Web portals Yahoo or MSN, or both. Cable giant Comcast runs its own broadband portal, which emphasizes high-bandwidth features such as video clips and video e-mail. Time Warner Cable's Road Runner service comes packaged with America Online.

"Broadband services are maturing enough where it's not just high-speed access to the Internet," said Mike Paxton, an analyst at In-Stat. "There's a lot more that can be done with a broadband connection now than in the past, and that is very attractive and beneficial to consumers."

Appealing to the states
The stakes for the winners are huge. So it's hardly a surprise that the Bells and cable companies are lobbying hard to keep government out of the race. They're working to support antimunicipal broadband bills at the state level and funding publicity campaigns to squash these projects. The message: Local governments should not compete against private industries, which have spent billions of dollars on infrastructure to serve residents and on city taxes.

The industry also argues that governments are in over their heads when they try to operate a complex citywide network. And if the city's plans go belly-up, opponents say residents will have to bail out the projects through higher tax bills.

"Our major focus--either through the legislative branch or through working with regulators--is to make sure...we have provisions in place that the resulting competition that we engage with is fair," BellSouth spokesman Joe Chandler said.

Fairness in the eyes of the Bells means implementing a series of "safeguards," according to Chandler. These include barring cities from using taxes to fund their ventures; requiring city networks to pay the same taxes as private companies; and requiring the public to vote on proposals before construction.

Many cities claim that they are not competing against the Bells and cable but rather are serving their communities. Legal experts wonder whether municipalities are addressing legitimate problems ignored by the telecoms, or whether they are trying stifle competition.

"I worry about the political economics of it," said Matthew Spitzer, Dean of the University of Southern California Law School. "Once the city gets into a business that's directly competitive with private companies, there are temptations to regulate the private companies in ways that disadvantage them."

What are cities doing?
Many communities remain undeterred. Larger cities such as Philadelphia and Chicago claim broadband is too expensive for lower-income residents.

In March, officials in Chicago threw down the gauntlet against the state of Illinois when they announced plans to consider blanketing the entire metropolis with Wi-Fi. Just as in Philadelphia and Lafayette, lawmakers promoting this plan think that cheap broadband is good for residents and offers an additional source of revenue for city coffers.

"It's our responsibility to protect the interests of citizens of Chicago, and if we feel a Wi-Fi system would open up opportunities to provide cheaper access, why wouldn't we examine it, and why should we be told by Springfield that we can't?" said Donal Quinlan, a spokesman for Chicago Alderman Edward Burke.

Smaller communities such as Scottsburg, Ind., and Lafayette hope that citywide broadband systems will attract more businesses and spark entrepreneurship.

Lafayette's economy over the last century has been tied to the oil industry. But as oil reserves in the Gulf of Mexico run down, city leaders recognize that they need to attract new industries to the community to sustain growth. A fiber-based broadband network could help attract manufacturing-design companies and software developers, said Kaliste Saloom, an attorney in Lafayette who organized the Lafayette Yes political action group to campaign for the new fiber network.

"We have a great computer science program right here in Lafayette at the University of Louisiana," he said. "So we already have the talent. If we have the high-speed broadband network, it would be easy for companies to tap that resource and open development facilities here."

Then there's the string of cities hugging Utah's Great Salt Lake that have begun constructing a fiber-optic network. Called the Utah Telecommunication Open Infrastructure Agency, the project aims to pipe video, phone service and broadband Internet access into peoples' homes. Organizers draw analogies to airports, for which governments fund facilities and private companies operate their businesses using the space.

Utopia's executive director, Paul Morris, told an audience at the Voice on the Net conference this month that the project has already attracted some private companies, including AT&T. One Utah-based ISP plans to begin offering 10 megabits per second of broadband speed for $39.95 a month. Cable broadband at less than half that speed costs about $45 a month, while many cheaper DSL services from the Bells provide 1.5mbps at the base service tier.

"We were concerned we were being left behind," Morris said. "We wanted to lure businesses and nurture them in Utah, and we didn't see that happening for us."

A hundred years ago, when Louisiana was still literally in the dark, residents of Lafayette banded together to build a city-owned electric utility where once there was little more than swampland. Today, at the dawn of the 21st century, it is hatching plans to lay out its own state-of-the-art fiber-optic broadband network.

This time, the city's futuristic ambitions are challenged not by the rigors of geography but by obstacles of business: specifically, telecommunications giant BellSouth and cable provider Cox Communications, which claimed the region as their own years ago. But the historic coastal community, known for its eclectic culture and rhythmic zydeco music, is not about to abandon the pioneering spirit that begat its visionary reputation.

After a legal skirmish earlier this year, the two sides are preparing for a citywide election slated for mid-July that will decide the issue.

"The people of Lafayette feel like there is a history of seizing the initiative," said John St. Julien, a member of Lafayette Coming Together, a citizens group supporting the fiber network. "Our Creole and Cajun communities have always been told by outsiders that everything we did was wrong--from our language to the food we eat. Culturally, we've learned not to care what others think or say about us. I think it gives us a place to stand when companies like BellSouth and Cox come in and tell us we can't do something."

Across the country, acrimonious conflicts have erupted as local governments attempt to create publicly funded broadband services with faster connections and cheaper rates for all citizens, narrowing the so-called digital divide. The Bells and cable companies, for their part, argue that government intervention in their business is not justified and say they are far better equipped to operate complex and far-flung data networks.

As part of this special report, CNET News.com has created an interactive municipal broadband legislative map that details the major battlegrounds on the issue. At stake is the fate of high-speed Internet access for millions of Americans, hinging on a fundamental question of civics and economics--whether the government or private industries should take the leading role in building out what's considered this generation's critical infrastructure challenge.

"Is broadband fast food, or is it power?" said Doug Lichtman, a professor at the University of Chicago Law School. "The answer might be: 'We don't know. Let's experiment with it.' It might give us great information about what risks the government assumes, once it gets into it."

In some cases, local governments have simply stepped into a vacuum left by commercial providers that have proved slow or unwilling to bring broadband to their residents. But the situation has grown more complicated with public broadband proposals in major cities already served by private industry. These projects highlight a growing conviction that broadband is not merely a luxury of modern urban life, but rather an essential public service that could increase tourism and commerce while squeezing new efficiencies from services such as health care, education and even sanitation.

Despite the technology's youth, the dynamics over its control are as old as the nation itself. Governments and private businesses have long quarreled over who should control the build-out of highways, canals, railroads, the postal system and telephone networks. Oftentimes, what begins as a project of one side eventually falls into the hands of the other: The railroad system was first constructed by private companies but is now controlled largely by the federal government, while the postal system is run by Washington but faces stiff competition from private couriers such as FedEx and United Parcel Service of America.

Philadelphia is an early high-profile litmus test for whether cities and broadband are a good mix. As is the goal with many municipal projects, the city hopes that its planned wireless broadband network will put it on the map as one of the most technologically advanced cities in the world.

In April, city officials unveiled an ambitious plan to blanket Philadelphia's 135-square-mile area with wireless broadband, or Wi-Fi, access. Officials hope the network will attract tourists and businesses, while providing affordable broadband access to underprivileged residents. The service could cost as little as $20 a month, which is cheaper than local phone company Verizon Communications' rate of $30.

Not surprisingly, Verizon has fought fiercely against the plan. The Baby Bell successfully helped shepherd a state bill that bans any city in Pennsylvania from pursuing similar projects without Verizon's input.

State activity
Verizon isn't the only one taking the legislative route. Other Bells and cable companies have behind similar state bills that bar municipalities from building networks. Twenty states have already passed, or are trying to push through, legislation that would impose heavy restrictions on communities creating their own networks in areas already served by Bells and cable companies.

Thirteen of those states--Arkansas, Florida, Minnesota, Missouri, Nebraska, Nevada, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia and Washington--have passed bills restricting future public broadband projects, though existing initiatives are allowed to operate. The remaining eight have measures pending or have seen their bills fail to reach a vote.

The debate has become contentious, sparking heated opinions over how the nation can become a global leader in broadband. Critics of the state of U.S. broadband penetration cite the nation's ranking below Japan, Korea and Norway, to name a few. But telecommunications giants say broadband adoption continues to skyrocket and that competition remains healthy.

The origins of the conflict date back to the late 1990s, when the Bells and cable giants were just beginning to dip their toes in the broadband stream. Cities eager for high-speed networks faced frustrating delays, particularly in rural centers where the phone and cable companies faced the prospects of heavy costs and slim returns.

The story has changed dramatically in some ways since then. The Bells and cable giants are fighting a fierce war over broadband among Americans, prompting the local phone companies to lower prices, and cable providers to nearly double download speeds, over the past two years.

Within the next 12 months, Verizon and SBC Communications expect to launch their own pay TV services, to put more competitive pressure on cable companies. In late April, Verizon said it would sell to some customers DSL access without requiring people to buy a local phone line--a longtime demand from consumer groups.

Providers are also trying to add bells and whistles to the basic data pipe into the home. Some of the phone carriers, including Verizon and SBC, have partnered with Web portals Yahoo or MSN, or both. Cable giant Comcast runs its own broadband portal, which emphasizes high-bandwidth features such as video clips and video e-mail. Time Warner Cable's Road Runner service comes packaged with America Online.

"Broadband services are maturing enough where it's not just high-speed access to the Internet," said Mike Paxton, an analyst at In-Stat. "There's a lot more that can be done with a broadband connection now than in the past, and that is very attractive and beneficial to consumers."

Appealing to the states
The stakes for the winners are huge. So it's hardly a surprise that the Bells and cable companies are lobbying hard to keep government out of the race. They're working to support antimunicipal broadband bills at the state level and funding publicity campaigns to squash these projects. The message: Local governments should not compete against private industries, which have spent billions of dollars on infrastructure to serve residents and on city taxes.

The industry also argues that governments are in over their heads when they try to operate a complex citywide network. And if the city's plans go belly-up, opponents say residents will have to bail out the projects through higher tax bills.

"Our major focus--either through the legislative branch or through working with regulators--is to make sure...we have provisions in place that the resulting competition that we engage with is fair," BellSouth spokesman Joe Chandler said.

Fairness in the eyes of the Bells means implementing a series of "safeguards," according to Chandler. These include barring cities from using taxes to fund their ventures; requiring city networks to pay the same taxes as private companies; and requiring the public to vote on proposals before construction.

Many cities claim that they are not competing against the Bells and cable but rather are serving their communities. Legal experts wonder whether municipalities are addressing legitimate problems ignored by the telecoms, or whether they are trying stifle competition.

"I worry about the political economics of it," said Matthew Spitzer, Dean of the University of Southern California Law School. "Once the city gets into a business that's directly competitive with private companies, there are temptations to regulate the private companies in ways that disadvantage them."

What are cities doing?
Many communities remain undeterred. Larger cities such as Philadelphia and Chicago claim broadband is too expensive for lower-income residents.

In March, officials in Chicago threw down the gauntlet against the state of Illinois when they announced plans to consider blanketing the entire metropolis with Wi-Fi. Just as in Philadelphia and Lafayette, lawmakers promoting this plan think that cheap broadband is good for residents and offers an additional source of revenue for city coffers.

"It's our responsibility to protect the interests of citizens of Chicago, and if we feel a Wi-Fi system would open up opportunities to provide cheaper access, why wouldn't we examine it, and why should we be told by Springfield that we can't?" said Donal Quinlan, a spokesman for Chicago Alderman Edward Burke.

Smaller communities such as Scottsburg, Ind., and Lafayette hope that citywide broadband systems will attract more businesses and spark entrepreneurship.

Lafayette's economy over the last century has been tied to the oil industry. But as oil reserves in the Gulf of Mexico run down, city leaders recognize that they need to attract new industries to the community to sustain growth. A fiber-based broadband network could help attract manufacturing-design companies and software developers, said Kaliste Saloom, an attorney in Lafayette who organized the Lafayette Yes political action group to campaign for the new fiber network.

"We have a great computer science program right here in Lafayette at the University of Louisiana," he said. "So we already have the talent. If we have the high-speed broadband network, it would be easy for companies to tap that resource and open development facilities here."

Then there's the string of cities hugging Utah's Great Salt Lake that have begun constructing a fiber-optic network. Called the Utah Telecommunication Open Infrastructure Agency, the project aims to pipe video, phone service and broadband Internet access into peoples' homes. Organizers draw analogies to airports, for which governments fund facilities and private companies operate their businesses using the space.

Utopia's executive director, Paul Morris, told an audience at the Voice on the Net conference this month that the project has already attracted some private companies, including AT&T. One Utah-based ISP plans to begin offering 10 megabits per second of broadband speed for $39.95 a month. Cable broadband at less than half that speed costs about $45 a month, while many cheaper DSL services from the Bells provide 1.5mbps at the base service tier.

"We were concerned we were being left behind," Morris said. "We wanted to lure businesses and nurture them in Utah, and we didn't see that happening for us."