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D-Day for Municipals
A new unified front against state muni-bans
by Karl Bode 04:01PM Saturday Oct 25 2003
The battle between municipal operations and state bans barring them from offering service hits the supreme court, as an unprecedented number of supporters create a new unified front in the fight to enter the market. -

Section 253(a) of the Telecom Act of 1996 indicates that no state law "may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service." It's the "any entity" part of that statement that's currently under debate, as many states attempt to pass legislation that would ban or hinder local government operations from getting into the broadband or telecom business.

Roughly a dozen different states currently have laws on the books that either prohibit or hinder municipal operations. Wisconsin is only the latest, pushing their 11th attempt at such legislation in four years (as we mentioned earlier this week in our Municipal Report).

The simple term "any entity" has resulted in a laundry list of legal skirmishes country-wide, where local governments have battled with the FCC over the right to offer service. The City of Abilene, Texas was the first to fight the state's ban on municipal entry, arguing that the federal law should pre-empt the state ban on municipals. The FCC ultimately ruled against them, arguing that the Senate "had not expressed itself with sufficient clarity" in regards to the term "any entity".

While the city was appealing the ruling, the Supreme court ruled in an unrelated case (Salinas V. United States) that the term "any", when used in federal law, should be applied with the "broadest possible scope". Following that logic, attorneys argued, the Telecom Act should supercede any state level bans. The US Court of Appeals for the DC Circuit didn't see it that way, and ruled against Abilene in their battle to provide service.

It's semantics, but it could determine whether or not municipals will be allowed to operate in your community. If you're currently in an under-served region considered unimportant to the incumbents, these legal battles could have important implications as to whether or not you ever see service. Right now it's local communities who are fed up with waiting and providing services to rural areas. At the moment it's muni-funded utilities who are actually delivering fiber, while the bells offer endless promises followed by delays as they wait for the perfect and most profitable regulatory environment.

When municipals in Missouri brought their own complaints to the FCC, the FCC pointed to the Abilene case as a precedent, ruling against them. When Missouri appealed to the Eighth Circuit court in St. Louis, they won. The city of Bristol, Virginia also filed suit against their own municipal ban in federal district court, winning that case as well.

With the Eighth Circuit and the DC Circuit in obvious disagreement, the Supreme Court now must make the final decision on whether or not state lawmakers can bar municipals from the market-place.

The precipice upon which municipals now find themselves has fostered a new unified front for the movement. The following organizations issued filings supporting the push:

The High Tech Broadband Coalition and the Fiber to the Home Council (who represent 15,000 corporations from all American industries)

Consumers Federation of America (representing some 55 million consumers)

EDUCAUSE (an organization which represents some 1900 universities and other educational institutions)

IMLA-NATOA-NLC-NACO-USCM (represents local U.S. governments)

United Telecom Council (representing utilities)

Texas and Virginia municipal groups

Lincoln Electric System

Knology, Inc.

Congressman Rick Boucher (you'll recognize him as a strong proponent of "fair use" rights)


That's a fairly broad cross-section of Americans, and likely doesn't include the numerous consumers who might be concerned if they actually paid attention to the political process. While many utilities naturally have financial motivation in being allowed to compete with muni-support, a great number of the movement's supporters simply want to see a more wired America.

According to Educause, the educational community has "a vested and mutual interest in the economic acquisition of high bandwidth network services." The organization argues that muni operations "hold great potential for not only meeting the needs of the higher education community, but for speeding the deployment of advanced networking services to the broader American population."

Other organizations, like the FTTH Council, argue that if deploying broadband to under-served regions is really in the FCC's best interest, municipals have been "enormously valuable in countless instances of deployment in areas that are not an investment priority for private sector providers."

According to the Consumer Federation of America's filing, "Vigorous competition among telecommunications service providers, including municipally-owned entities, benefits consumers by yielding lower prices, better service, and increased innovation." The group also argues that consumers "should not be asked to wait for private providers to saturate densely populated and more profitable markets before turning to less profitable areas."

In the opinion of Muni lawyer Jim Baller, counsel of record for the Missouri respondents, the broad support could make the difference as the Municipals approach this final legal stretch. "It is very gratifying that organizations representing the interests of more than 50 million consumers and thousands of corporations, institutions of higher education, local governments, and utilities of all kinds have stepped forward to support our position before the Supreme Court," says Baller.

"We hope that state legislators across the United States will take note of this broad and strong consensus on the need for unfettered public involvement in the rapid deployment of advanced telecommunications services and capabilities to all Americans, especially in unserved or underserved rural areas."

While this somewhat complicated process will likely fly under the radar of most media outlets and consumers, it could make the difference between many communities seeing broadband competition, or for that matter, any broadband at all.

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UnKown
The Underground Network

join:2002-09-08
Orlando, FL

Im all for it

this sure is a large amount of people and businesses competing in this. im really glad to see all the support for this and kepp on thinking about the term, Majority Rules. the FCC has put restrictions on us for way to long and its about time some 1 actually beat the fcc.

pit_viper
1 Shot, 1 Kill, No Remorse, I Decide

join:2002-07-24

Re: Im all for it

Why should those who regulate the MSO's and Telco's be allowed to compete with them?

Unfair playing field isn't it? We already have city run utilities where I am (Water/sewer/electricity) so they own the poles. Would the city than be able to bypass the pole hanging fee's?

I'm not totally against the idea of municipalities operating a cable/broadband network, however I'm not sure if the playing field is level. If their is not cable operator in a town, by all means...go to it.
--
Bush/Cheney 2004

Unit649
I B U, Who U B?
Premium
join:2000-01-22
Stockton, CA

Re: Im all for it

I would think if the city owned the poles the city would be able to bypass the fees-they pay already for pole maintance, right?

I'm sure the city would have to pay if they had to use other poles they don't pay for and some other entity does-just like that other entity would pay the city for usage of city owned poles.

I'm sure if a municipal system used city poles they would probably use part of the municipal systems budget to charge a small fee-to go into another account for pole maintance.
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wtansill
Ncc1701

join:2000-10-10
Falls Church, VA
said by pit_viper:
Why should those who regulate the MSO's and Telco's be allowed to compete with them?

Unfair playing field isn't it? We already have city run utilities where I am (Water/sewer/electricity) so they own the poles. Would the city than be able to bypass the pole hanging fee's?

I'm not totally against the idea of municipalities operating a cable/broadband network, however I'm not sure if the playing field is level. If their is not cable operator in a town, by all means...go to it.

As I understand it, very few munis are doing their own installs, and they are, in general, doing so because they are not served by any incumbent service provider. It does not seem to me in this case that there is any concern over a "level playing field", since there is no existing service against which the muni would compete, fairly or otherwise. Have I missed something?
--
That which does not kill me merely prolongs the agony.

g0nepostal
I Am The One Her Mom Warned Her About

join:2001-03-23
Burlingame, CA

It's all about interpretation, isn't it?

It always amazes me how legal disputes can turn on the slightest of phrases. To you and I, "any entity" means just that: ANYBODY.

Of course our local bell and cable providers don't see it that way. I sincerely hope the Municipalities win.

Do you all see a particular trend coming into view here? All sorts of people are tired of being lorded over (for lack of a better term) by entrenched political and corporate oligarchs. The Bells vs. Municipalities battle is yet another symptom of us regular folks (in this case, Municipalities and those who want to help them) saying that we aren't taking it anymore.

Good for them!

gp

ravital
Just Another Pesky Independent Nh Voter
Premium
join:2001-07-19
Merrimack, NH

The grasp of the obvious

What's amazing, is that it takes the cumulative centuries of legal expertise between 9 Supreme Court justices, to settle what any child could clearly identify as nothing more than big business buying themselves mercenary legislators, both at the local and national levels. We're sorely in need of a new Teddy Roosevelt.

Does anyone know exactly when the SC is supposed to hear this? I couldn't find that in the article (sorry if I've missed it). Thanks.
mjcrocket
Mjc

join:2000-12-02
Abingdon, MD
Reviews:
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Re: The grasp of the obvious

said by ravital:

Does anyone know exactly when the SC is supposed to hear this? I couldn't find that in the article (sorry if I've missed it). Thanks.
The SC is not hearing it! Until one of the parties involved the two referenced court cases (Eighth Circuit and the DC Circuit), appeals to the SC; the SC will not get involved. Also, just because you appeal to the SC; it does not mean the SC will hear the appeal. The SC receives far more appeals than it can ever handle; so they have to pick & choose which cases they will actually hear & rule on. The effect can still be the same. If an appeal is filed with the SC, and it is not accepted for hearing; that effectively affirms the findings of the lower court. All of this is done on the public record and is reported in the public media.
ciad

join:2003-10-28
Washington, DC
The Supreme Court has already agreed to hear the case; the briefs referred to in the article were a result of that. Oral arguments by the actual parties (State of MO arguing against, Missouri Muni League arguing in favor of preempting state law to permit muni telecom) are scheduled for January. Decision likely will be released next summer. It's an odd picture, in that the State is arguing against its own citizens being provided service in order to protect its sovereignty vis-a-vis the federal government. Meanwhile, in order to protect its prior decision, the FCC has to argue against its own authority to preempt state law -- which is why it hasn't been too active in the case.

ravital
Just Another Pesky Independent Nh Voter
Premium
join:2001-07-19
Merrimack, NH

Re: The grasp of the obvious

ciad, that's good info, thanks, and welcome

DrTCP
Yours truly
Premium,ExMod 1999-04
join:1999-11-09
Round Rock, TX

Supreme Court to decide if "any" really means ANY

You would think "ANY" is clear for most people. Well, it seems not so simple for some.

David
I start new work on
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join:2002-05-30
Granite City, IL
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The other dumb question

Note: this is not a bell shill post or anything just a general question

Would they have to play by the same rules the business does already?? Ya know share lines and such.. I would imagine with any communications business(and yes police department radio towers have to still obey the FCC) still have to obey the FCC guidelines in regards to competition?? I would think just because a local goverment provides the service they have to...
--
Fast and furious!! 225lbs lost and a future that I never dreamed of... Whodathunkit??

woody7
Premium
join:2000-10-13
Torrance, CA

Re: The other dumb question

Then they could screw whom they gave access to............hmmm

David
I start new work on
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join:2002-05-30
Granite City, IL
kudos:101
Reviews:
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Re: The other dumb question

said by woody7:
Then they could screw whom they gave access to............hmmm
Keep in mind and I have spoke to a few covad techs, they are still allowed in C.O.'s and in thier cages. Just like ASI is. Trust me I talked briefly (about the time I was hired at SBC) to a covad tech and he was in the C.O. before ASI became seperate on the day in may..
--
Fast and furious!! 225lbs lost and a future that I never dreamed of... Whodathunkit??
SanJoseNerd
Premium
join:2002-07-24
San Jose, CA
said by David:
Would they have to play by the same rules the business does already?? Ya know share lines and such.. I would imagine with any communications business(and yes police department radio towers have to still obey the FCC) still have to obey the FCC guidelines in regards to competition?? I would think just because a local goverment provides the service they have to...
Right now, telcos mostly have to share lines, while cablecos mostly don't have to share lines.

I would expect muni operations would have to obey the rules for cablecos. In terms of network architecture and the types of services offered, a muni operation is likely to be more similar to a cableco than a telco. Legally, a muni operation is very much like a cableco. A cableco operates under a franchise agreement with the local government, and therefore a cableco is, in a sense, a creation of the local government. A muni operation is also a creation of the local government, just with a different ownership structure.

As a practical matter, I think muni operations are much more likely to permit sharing than any of the cablecos. A muni operator doesn't own any television channels, production companies, music labels, and such; and therefore it has no economic incentive to steer customers to its own offerings and block out others.

godsmack

join:2003-06-08

I don't have any trouble with this......

Until they start to use tax money for funding either the start up or to keep operations afloat......I really don't want my tax money used for it...who knows it may cause a tax increase locally??????????

tazman69
Safety Guy

join:2000-12-22
Duluth, MN

Re: I don't have any trouble with this......

What are you talking about? This is all about municipal provided broadband. They normally sell bonds to fund the projects start-up and operating costs for the first few years. I'm not sure when your tax dollars would come into play.
mjcrocket
Mjc

join:2000-12-02
Abingdon, MD
Reviews:
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Re: I don't have any trouble with this......

said by tazman69:
I'm not sure when your tax dollars would come into play.
Tax Dollars come into play, because that is where the guarantee on the bonds comes from. The Municipal government guarantees that the principal & interest on the bonds will be paid; and the credit rating of the local government is used to get the good interest rate on the bonds. The value of these bonds is also counted against the total credit limit of the municipal government concerned.

ravital
Just Another Pesky Independent Nh Voter
Premium
join:2001-07-19
Merrimack, NH

Re: I don't have any trouble with this......

said by mjcrocket:
said by tazman69:
I'm not sure when your tax dollars would come into play.
Tax Dollars come into play, because that is where the guarantee on the bonds comes from. The Municipal government guarantees that the principal & interest on the bonds will be paid; and the credit rating of the local government is used to get the good interest rate on the bonds. The value of these bonds is also counted against the total credit limit of the municipal government concerned.
That is only true with General Obligation bonds. Many municipal governments fund it with Revenue bonds, which cost absolutely not one penny in tax money. Not one red cent.

However, when the project is a success, it means the municipal government can direct money earned from the project to other purposes, like a property tax abatement or a reduction in other fees, which benefits everyone, whether they subscribe to the service or not.

So taxpayers lose nothing, and in many cases, benefit from something without having invested in it.
--
"And if you call me brother now, forgive me if I inquire, just according to whose plan?"

highjinx

join:2000-10-12
Alturas, CA

Re: I don't have any trouble with this......

said by ravital:
said by mjcrocket:
said by tazman69:
I'm not sure when your tax dollars would come into play.
Tax Dollars come into play, because that is where the guarantee on the bonds comes from. The Municipal government guarantees that the principal & interest on the bonds will be paid; and the credit rating of the local government is used to get the good interest rate on the bonds. The value of these bonds is also counted against the total credit limit of the municipal government concerned.
blah, blah, blah...However, when the project is a success, it means the municipal government can direct money earned from the project to other purposes, like a property tax abatement or a reduction in other fees, which benefits everyone, whether they subscribe to the service or not.
Nice spin. Not only will they not "re-direct" profits, you can be damn sure that eventually it will be a source adding to the coffers.

Way back when, when I lived up in Northern California, they told us that the 15 cent toll to cross the Bay Bridge would go away after 5 years....Today they charge $2.00 and there's 6 Billion in new bonds for the new bridge. What do you think the new toll will be?

On the surface, Muni-Networks have a grass-roots sort of appeal. I just don't think that muni's understand the continual costs and technological risks associated with building/running/maintaining a fiber network.

Until someone convinces me otherwise, I say let private investment build it.

HJ

ravital
Just Another Pesky Independent Nh Voter
Premium
join:2001-07-19
Merrimack, NH

Re: I don't have any trouble with this......

said by highjinx:
Until someone convinces me otherwise, I say let private investment build it.

HJ
Nice spin, but that is exactly what Revenue Bonds are, private investment. Private investors take all the risk. Really.
--
"And if you call me brother now, forgive me if I inquire, just according to whose plan?"

lml2000
Whazzup

join:2000-08-17
Los Angeles, CA
said by ravital:
That is only true with General Obligation bonds. Many municipal governments fund it with Revenue bonds, which cost absolutely not one penny in tax money. Not one red cent.
Simply not true. There's no way to fund a municipally-owned broadband system from revenues that don't yet exist, & for which there is no history upon which to project a ramp-up in revenues to support debt issued.

Earlier comment was correct. Only way bond issue can be floated is by municipality or other agency such as a municipally-owned power utility to secure bond issue with revenues from other sources that presently exist & can be relied upon w/reasonable certainty over time to pay debt service until revenues from broadband project materialize.

ravital
Just Another Pesky Independent Nh Voter
Premium
join:2001-07-19
Merrimack, NH

Re: I don't have any trouble with this......

said by lml2000:
Simply not true. There's no way to fund a municipally-owned broadband system from revenues that don't yet exist, & for which there is no history upon which to project a ramp-up in revenues to support debt issued.
Simply yes true, and I'm not going to waste my time here explaining what Revenue Bonds are and how they work. The fact is that they are issued by municipalities to private investors without the guarantee of tax revenues, as "General Obligation" or "GO" bonds would be. I'm not going to waste my time explaining that, when a simple google search will give you plenty of sources for better information. And I'm not going to waste my time attempting to convince anyone who refuses to be convinced, that these municipal networks always turn up the reveue they need to come up with, when more than 500 municipaliities have done it with great success. I'm not wasting my time pointing to facts that are well documented elsewhere. If you don't want to be presueaded, that's your business.
--
"And if you call me brother now, forgive me if I inquire, just according to whose plan?"

godsmack

join:2003-06-08
At some point when they start to fail as a business.....they just might hit up the general funds (hence tax's). where I am for an example the county runs an amusement park called Playland in Rye NY......This park is not self sufficient they are in fact subsidized by county tax's.
hescominsoon

join:2003-02-18
Brunswick, MD

Re: I don't have any trouble with this......

fortunatly most muni's are profitable and totally self-sufficient.
--
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godsmack

join:2003-06-08

Re: I don't have any trouble with this......

That is good news then !!!!!!!!!!!!!!!!!!!!!!!!

dvd536
as Mr. Pink as they come
Premium
join:2001-04-27
Phoenix, AZ
kudos:4

Exactly

Exactly why the big boys dont want munis. they know their service sucks and is too expensive for what you get. given a choice, anyone with half a brain would go with the muni's.
--
You can never be too rich, too thin or have too much Bandwidth
apsinkus

join:2002-06-25
Chicago, IL

1 recommendation

Somehow people forget...

Before I go any further: do you go to vote? If not, you should can it and take your comments somewhere else! Why? We elect our government (don't start with your retarded illuminati crap and how everything is already predetermined), there for government represents us (at least the ones who voted). What am I leading to? All municipalities should be allowed to start any ventures as long as :
1. Majority of citizens support the venture
2. Profits go back into community to provide additional money to schools and other badly underfunded areas (not mayor's new car or new offices for the government in lucrative properties)
Look at Native Americans, they got their casinos and so on and they pump back all that money into their communities ontop of the fact that things they provide make their own quality of life better. Think about it this way (and I know I will piss off HAMs who majority of I have no love for), communities who are underserved by communications giants should have every right to use every technology to get the services, it should not matter if it is BPL or anything else. It is a fact that kids and young adults have a higher chance to be successful if they are given best communications, education, and other good things that come with strong public/private services.
So, grab your ID an go register to vote. Once you get your voice heard, start bitching or supporting.
PthirusPubis6

join:2003-05-24
00000

Giant sucking sound!

Worried that a muni operation might cause a tax increase?
Consider this. A small community with just 5000 phone lines sends $2,400,000/yr out of the local economy to the national telco.

$40/mo * 12 mo * 5000 customers = 2,400,000

This money leaves the local community, never to be seen again. Obviously, a muni operation will keep a portion of that to be used locally.

So the question is do you want to contribute to angry Ed's obscene bonus or keep the money local?