He'll write to the Federal Communications Commission urging the agency to help neutralize laws, erected by states, that effectively protect large established Internet providers against the threat represented by cities that want to build and offer their own, municipal Internet service. He'll direct federal agencies to expand grants and loans for these projects and for smaller, rural Internet providers. And he'll draw attention to a new coalition of mayors from 50 cities who've committed to spurring choice in the broadband industry.
"When more companies compete for your broadband business, it means lower prices," Jeff Zients, director of Obama's National Economic Council, told reporters Tuesday. "Broadband is no longer a luxury. It's a necessity."
The announcement highlights a growing chorus of small and mid-sized cities that say they've been left behind by some of the country's biggest Internet providers. In many of these places, incumbent companies have delayed network upgrades or offer what customers say is unsatisfactory service because it isn't cost-effective to build new infrastructure. Many cities, such as Cedar Falls, Iowa, have responded by building their own, publicly operated competitors. Obama will travel to Cedar Falls on Wednesday to roll out his initiative.
Betty Zeman, the marketing manager for Cedar Falls Utilities, said in an interview that about 88 percent of households subscribe to its high-speed Internet, as do about 650 business customers. Cedar Falls has a population of about 40,000.
The utility started offering service to businesses in 1996 and residential customers in 1997. It was created with the idea of being an Internet service provider, and cable followed, she said.
“It’s hard to remember a time when we didn’t all use the Internet every day. If we can take our heads back to the mid-to-late '90s, that was the time when people were starting to say, 'We want a high-speed Internet connection,'” she said. “None of the providers in town had invested and that’s why we built it. People wanted it and nobody was building it here. The intention from day one was to be an Internet service provider.”
The most popular residential plan is $45.50 a month for download speeds of 50 megabits per second. Gigabit service, or 1,000 Mbps, is $135 a month and enables downloads at 100 times faster than the national average. In other cities, prices are even more competitive. Chattanooga, Tenn., for example, offers gigabit speeds for $70 a month.
But those efforts have often been met by resistance at the state level, which is what Obama is expected to address Wednesday. As many as 20 states have laws on the books either banning municipal broadband or setting up roadblocks. Colorado requires cities to hold a referendum approving such projects before they can move forward. In states like Kansas, the cable industry has played a role in crafting legislation designed to stymie publicly funded Internet projects.
Two cities — Chattanooga and Wilson, N.C. — have already asked the FCC to intervene against these laws; the agency's chairman, Tom Wheeler, has expressed interest in doing so.
"If the people, acting through their elected local governments, want to pursue competitive community broadband, they shouldn’t be stopped by state laws promoted by cable and telephone companies that don’t want that competition," Wheeler wrote in a blog post last year. It would be in the public's interest, he added, if the FCC moved to "preempt state laws that ban or restrict competition from community broadband."
Now Obama appears to be asking Wheeler to press ahead. Although Zients declined to say whether Obama was specifically endorsing the preemption proposal, he said there is "no question some state laws tilt the playing field" and that Obama's letter to the FCC will ask the agency to "make sure all states have a level playing field."
It will also set the stage for a major legal battle over the FCC's authority over state laws. Republicans at the commission argue that Congress never gave the FCC permission to come between states and the cities they govern.
Any effort by the FCC to preempt anti-muni-broadband laws will likely focus on a controversial part of the FCC's congressional charter known as "Section 706." That part of the law recognizes the FCC's authority to stimulate broadband deployment, which supporters of preemption argue the tactic would promote. If Section 706 sounds familiar, that's because it's also the legal tool some say should be used to promote net neutrality, or the principle that broadband companies shouldn't speed up or slow down some Web sites over others.
Obama's letter to the FCC on muni broadband will mark the second time in as many months that the president has written the agency. In November, Obama asked Wheeler to apply aggressive rules on Internet providers in an effort to preserve net neutrality.
Two other points. First, Obama's proposals studiously avoids mentioning Congress or asking for legislation — highlighting by omission how muni broadband has become a polarizing issue in Congress. Second, it's unclear whether Obama's initiative addresses regulations at the city level that some say deter private companies from investing in new infrastructure.
Katie Zezima contributed to this report.