April 18 (Bloomberg) -- Last month, a majority of the Georgia House of Representatives voted against a proposal that would have barred cities from investing in their own Internet-access networks. The bill failed because Georgia municipalities, businesses and minority advocates want Internet access that’s faster and less expensive than what commercial providers now offer them.
This is a turning point in what has been a multiyear, state-by-state effort by major commercial Internet-access providers -- AT&T Inc., Time Warner Cable Inc. and CenturyLink Inc., banded together within the American Legislative Exchange Council -- to erect state barriers to competition from local public-private partnerships. Nineteen states have such laws in place.
Meanwhile, cities such as Seattle and Chicago, fed up with second-rate Internet access, are aiming to work with private parties to provide world-class local communications networks. To make sure that all U.S. cities have this choice, Congress should step in to preempt state laws that bar local authority over communications networks.
The federal Telecommunications Act of 1996 already stipulates that no state may prohibit the ability of any entity to provide communications services. But in a 2004 decision, the U.S. Supreme Court held that a municipality is not an “entity” separate from the state itself. Emboldened by this ruling, the American Legislative Exchange Council and other lobbyists for network operators flocked to state capitols. In North Carolina in 2011, after large telecom providers contributed almost $1.2 million over five years to state legislators, a law backed by the council was passed making it virtually impossible for cities in that state to involve themselves in communications networks. South Carolina enacted a similar measure in 2012.
In Georgia, half the legislators sponsoring the anti-municipal networks bill were council members who had received “scholarships” to attend council meetings, workshops and parties.
Ending these state laws would take just three words from Congress: “including public entities.” Adding that phrase to the Telecommunications Act would clarify that the “entities” that cannot be interfered with by states include cities. Bills along these lines were proposed in 2005 and 2007 but failed to pass.
Events since 2007 make federal preemption more urgent and its chances of success more certain today. Although Americans often believe the U.S. leads the world in technological prowess, in fact, when it comes to affordable world-class high-speed Internet access, we are being left far behind. China plans to have all new homes wired for fiber access; Japan long ago made sure that each of its citizens had reasonably priced fiber Internet access at home. South Korea, Sweden, Norway and even Latvia are far ahead us.
Adoption and pricing of high-speed Internet access in the U.S. haven’t changed much since 2009: Only about 7 percent of Internet connections are fiber-to-the-home, and roughly a third of Americans don’t subscribe at all. Only Chile, Mexico and Israel have high-speed connections more expensive than those in the U.S.
For the U.S. to move ahead, American cities need to get involved. Julius Genachowski, the chairman of the Federal Communications Commission, recently called for high-speed Internet-access providers as well as state and municipal leaders to come together to develop at least one gigabit community (with Internet access capable of download and upload speeds of a gigabit per second, or a thousand megabits -- 100 times faster than the Internet-access connection that most Americans have today) in each of the 50 states by 2015.
“The U.S. needs a critical mass of gigabit communities nationwide so that innovators can develop next-generation applications and services that will drive economic growth and global competitiveness,” Genachowski said.
Right now, the corporate members of American Legislative Exchange Council in the communications business are enjoying a quiet life. Their companies are, for the most part, subject to neither competition nor substantial oversight, and they are under no pressure to build fiber-to-the-home networks. Mayors, for their part, are eager to act but uncertain that their states will allow it.
The bipartisan defeat of the Georgia anti-muni bill last month demonstrates that this is not a right-left issue. Nor is it a pro-business/anti-business issue: Opposed to the Georgia bill were hardware provider Alcatel-Lucent SA and advertising giant Google Inc., which said public/private high-speed Internet access was necessary to “stimulate and support economic development and job creation, especially in economically distressed areas.”
Now Congress needs to play its part.
(Susan P. Crawford, a contributor to Bloomberg View and a professor at the Cardozo School of Law, is the author of “Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age.” The opinions expressed are her own.)
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