Only in the USA: ISPs get tax dollars to build weak broadband

Tennessee votes to give millions of taxpayer dollars to AT&T and Comcast rather than let municipal broadband expand at no taxpayer expense

Only in the USA: ISPs get tax dollars to build weak broadband
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Americans overwhelmingly supported broadband privacy rules, so Congress repealed them. Net neutrality rules enjoy broad bipartisan support, so the FCC plans to revoke them.

Now there's a new survey showing that more than 70 percent of Americans think municipal broadband should be allowed to expand into underserved rural areas. You can guess what comes next, right?

Tennessee's state legislature this week voted to funnel millions of taxpayer dollars to AT&T and Comcast, when a city-owned communications company could have offered better, cheaper service to underserved residents at no taxpayer expense.

Life is grand when you're a telecom giant.

Faster, cheaper internet? No thanks

A survey by the Pew Research Center found that Americans overwhelmingly support letting a town or city build its own broadband networks if existing services in the area are too expensive or not good enough. Despite this support, more than 20 states have passed protectionist laws—often written by telecoms themselves to avoid competition at all costs—that ban local governments from starting or expanding their own broadband service.

The results of many communities going the municipal broadband route have been impressive. Chattanooga's government-owned EFB communications company provides the fastest, most affordable internet in the United States, which has been a significant factor in an economic renewal that's reaped roughly $1 billion in the form of new jobs and other benefits to the self-proclaimed "Gig City." EFB is profitable and not funded by taxpayer money.

Meanwhile, in many rural areas surrounding the city, private ISPs offer dialup or no internet service at all. EFB wanted to expand its network, but telecom giants have shoveled piles of cash to state lawmakers to stop that from happening.

When Tennessee state lawmakers last year voted down a proposal that would have allowed municipal broadband to expand, one state representative accused his fellow lawmakers of caving to pressure from lobbyists rather than listening to the electorate. Another blamed AT&T, which had argued that "taxpayer money should not be used to overbuild or compete with the private sector." 

Taxpayer money showered on private ISPs is another story, apparently. The Tennessee state legislature was considering a new bill this year that would have allowed EFB to expand, but instead passed by a 93-4 vote the Broadband Accessibility Act of 2017, which funnels $45 million of taxpayer money to incentivize telecom giants like AT&T and Comcast to upgrade service in rural areas.

"Tennessee taxpayers may subsidize AT&T to build DSL service to Chattanooga's [rural] neighbors rather than letting [EFB] expand its fiber at no cost to taxpayers," said Christopher Mitchell, director of the Community Broadband Networks initiative at the Institute for Local Self-Reliance. "Tennessee will literally be paying AT&T to provide a service 1,000 times slower than what Chattanooga could provide without subsidies."

Republican state Sen. Janice Bowling, who co-sponsored the bill that would have allowed EFB to expand, told Motherboard: "What we have right now is not the free market, it's regulations protecting giant corporations, which is the exact definition of crony capitalism."

Turn off that fast internet service, right now

A similar situation unfolded in Wilson, North Carolina. State law prevented the city from offering broadband to underserved surrounding areas until the FCC, under former chair Tom Wheeler, intervened to preempt it. Wilson's community-owned Greenlight ISP proceeded to expand its fiber network—which provided speeds of 40Mbps to 1Gbps at prices ranging from $40 to $100 a month—to nearby homes previously served only with sluggish DSL service from the incumbent providers protected by the state law.

Unfortunately, an appeals court struck down the FCC's actions, saying the agency had overstepped its authority. Wilson's city council voted to provide free internet service for six months to the nearby towns, but soon will be forced to shut off its fiber-to-the-home internet unless the state legislature passes a new, very narrowly written bill that would give those towns—but no others in the state—an exemption.

That piecemeal approach will leave many people in rural N.C. without broadband, and "ISPs would continue to face little competition and have little incentive to upgrade networks, reduce prices, or provide better customer service," Ars Technica notes.

Broken promises, dismal performance

In rankings of the world's fastest internet speeds, the United States lags badly, coming in 20th for average speed and 22nd for average peak connection speed. Bruce Kushnick, author of "The Book of Broken Promises," denounces the continuing transfer of taxpayer money to telecom giants that have repeatedly reneged on promises to build out and update infrastructure.

The United States has "paid over and over and over again for upgrades that were never done, including the wiring of schools. We collectively paid about $400 billion to have the phone networks upgraded to fiber optics, and the cablecos' collected over $50 billion extra since 2000 under something called the 'Social Contract,' which was supposed to wire the schools," Kushnick writes.

Companies like Verizon "nab billions in tax breaks and subsidies for jobs half-completed," TechDirt reports. States like West Virginia, regional incumbents received millions in subsidies, which were wasted on projects that helped virtually nobody.

ISP lobbyists continue to successfully stall the progress of municipal broadband that could challenge the status quo, as "states continue to sell state telecom law to the highest bidder." TechDirt writes, noting that AT&T convinced Missouri legislators to pass a law this year that expanded restrictions on municipal broadband. One bright spot: "Virginia tried to similarly expand its ban on municipal broadband, but lawmakers there were forced to retreat after they took a notable beating from the press and public."

The National Cable and Telecommunications Association is always swift to bemoan the unfairness of local governments competing with private companies. But as TechDirt says:

One surefire way to prevent towns and cities from getting into the broadband business is to provide cheaper, better service. But it has long been significantly easier to just buy a state lawmaker and protectionist law to protect the dysfunctional status quo. And like so many issues facing America, until we at least marginally address money's influence on politics—and/or drive a higher turnout during state elections, little if any of this is going to change.