"State laws that prevent municipalities from providing their citizens faster, cheaper broadband service — or prevent the extension of that service to citizens in unserved or underserved areas — harm the entire Internet along with those citizens," Netflix wrote in a filing to the Federal Communications Commission.
Twenty states have passed such laws. Their restrictions range from requiring broadband proposals to pass a referendum before moving forward to keeping community-owned fiber optic services within a specific metropolitan area. To challenge the policies, the cities of Chattanooga, Tenn., and Wilson, N.C., have asked the FCC to intervene and preempt those laws.
The agency's chairman, Tom Wheeler, has signaled his interest in doing so. He's invoked the FCC's congressional mandate to promote broadband deployment as a way to highlight how some states are standing in mayors' way. But communications companies are pushing back.
Some, like AT&T, warned in their own filings that granting the cities' wishes would limit commercial providers' incentive to keep upgrading and investing in privately owned networks. "Any policy that risks diminishing private sector investment would be short-sighted and unwise," AT&T wrote.
Others argue that the solution is to give commercial ISPs even more freedom. U.S. Telecom, an industry group representing AT&T, Verizon, Windstream and CenturyLink, among others, says the FCC should focus on striking down the "true impediments" to better Internet access, such as the need for ISPs to get permission before digging up streets or using utility poles to string cables.
But Netflix pointed to Chattanooga as an example where a successful city-operated network forced the large companies to start competing after years of neglect.
"Prior to the launch of [the Electric Power Board of Chattanooga's] gigabit broadband service, Comcast raised its cable TV rates every year, leading to a 154 percent increase in rates between 1993 and 2008," wrote Netflix. "After EPB entered the field, the annual rate increases halted and Comcast eventually offered two tiers of service."
After 2008, Comcast also increased its speeds in Chattanooga, Netflix observed. EPB's fiber optic service provides speeds at 100 times the national average for $70 a month. "State laws motivated by a concern that municipal broadband networks might fail should not ensure that they do," Netflix added.
With the battle over municipal broadband heating up, expect states to get a lot more scrutiny in the weeks to come.