Communities Under Assault from Big Business... Again!


As political battles over budgets and deficits continue to rage in D.C. and statehouses across the nation, the dominant rhetoric continues to be that the vast majority of the nation must bear the burden of “shared sacrifices” – fewer teachers, hospitals, and other social services – while the wealthy continue to enjoy substantial tax cuts. In other words, working families have to cope with a financial crisis created by Wall Street while those that got us here in the first place pay no price.

Now, the very corporations that we support through these tax cuts and subsidies such as access to roads, utility poles, and other local infrastructure, are marshaling their increasingly powerful resources in an attempt to cut one of the most critical efforts underway to strengthen communities and rebuild prosperity in state economies: the build-out of broadband networks.

There is something very wrong with this picture.

In general, austerity measures do not work. As the Center on Budget and Policy Priorities, a non-partisan think-tank, has explained, spending cuts are a bad idea during an economic downturn because they reduce demand, threatening to make the downturn deeper. Slow economic growth, high unemployment, and decreasing revenues have also been cited as primary causes of states’ budget deficits. Over the years that corporations have enjoyed these vast benefits, our nation has lagged behind in the global market, including in the field of technology and broadband, where the United States is now in 16th place.

Instead of austerity measures, we need investments in infrastructure to revamp our local economies. Communities across the nation need critical resources like broadband to succeed in a 21st century economy. It is undeniable that infrastructure plays a critical role in the public’s access to needed services like hospitals and schools. Workers, small businesses, and students all increasingly depend on infrastructure like broadband in order to function in a modern economy.

Thankfully, local entities – including municipalities and private non-profits – have taken leadership in addressing these needs. Local governments and non-profits have stepped up to the plate to provide needed infrastructure to their communities. And they have done it on their own, meeting their populations’ needs, and even getting ahead of large corporate broadband providers.

Despite the leadership shown at the local level, some state governments are taking steps to eliminate this promising effort, as intense lobbying efforts by huge corporations seem, sadly, to be paying off.

The bottom line is this: Broadband is no longer a luxury, it is an investment we absolutely need to make in order to ensure prosperity in our communities and the competitiveness of our states as well as our nation in a global economy. Our economy cannot afford to let corporations reap more profits for themselves at the expense of the public good.

Our Economic Survival Depends On Broadband

Communities should invest in broadband: At a moment when applying for jobs, doing homework, registering to vote, and accessing other essential information can only be done online, broadband – or high-speed internet – is the new utility of our times. It is no longer a luxury, but a vital tool for our economic survival. The many millions who have lost jobs through no fault of their own in the Great Recession and its aftermath must be equipped with the tools required to return to the workforce.

One hundred million Americans – comprising a third of the nation – do not have broadband at home, and the United States continues to lag behind a large number of our international economic competitors in broadband access and speed. As such, technology is a critical investment for prosperity and opportunity that should be a central part of the broader progressive blueprint.

Broadband = jobs: Last year, a report by the Public Policy Institute of California found that areas of the country with broadband saw employment growth 6.4 percent higher than areas without it in the period from 1999 to 2006, with the highest employment growth in areas where technology services represent a larger share of local industry’s inputs. Careful analysis in the report indicates that this relationship was not incidental but a causal relationship between deployment and subsequent economic growth. This report confirms findings by earlier studies from such organizations as the Brookings Institution, which estimated that for every one percentage point increase in broadband penetration in a state, employment increases by 0.2 to 0.3 percent per year.

Other studies estimate that in the early stages of the internet, information technologies were responsible for two-thirds of total growth in productivity and that for every dollar invested in broadband, the economy sees a ten-fold return on that investment. In a report to the Federal Communications Commission, the U.S. Broadband Coalition – representing more than 160 organizations that include communication providers, labor unions, consumer groups, educational institutions, and units of state and local government – estimated that investment in broadband can create or retain 1 million to 2.5 million jobs. All of these reports demonstrate that there is a strong correlation between economic development and broadband, even further than can be seen by simple job growth.

And in addition to creating jobs, we are already seeing studies that clearly demonstrate that digital literacy and broadband utilization are required skills – even for low-income workers. In a symposium hosted by the Center for Social Inclusion, Plinio Ayala from Per Scholars cited a recent finding that those who are familiar with basic office programs, Web browsing, and email made roughly $125 a week more than their peers. As Ayala further explained, “for a low-income parent trying to support their family, $6,000 is huge.”

Old and trusted strategy, just new technology: Community infrastructure has played a critical role in the history of our nation’s economic growth, including the installation of electricity wires and landline phones in nearly all areas of the country. The success of lighting every household in America occurred thanks to local ownership of infrastructure that, over a span of 70 years, produced jobs, stimulated innovation, and ensured accountability for our local governments. Just like electricity, broadband is now a basic element of necessary infrastructure that must be guaranteed by policy and investment in order to ensure our nation’s economic survival. As unemployment is still our country’s biggest concern, it is critical that more people have access to fast and reliable internetservices to conduct job searches or submit job applications.

Broadband as an economic development strategy: While we have noted immediate results, even more of the benefits from broadband are long-term, and as such, the facilitation of internet services must be seen as part of any comprehensive local economic development strategy. Communications services have changed dramatically over the last couple of decades, and the internet is quickly replacing other media for our communications needs, economic development, health care, public safety, and other essential services. The deployment of community broadband networks is a crucial tool for job creation and community empowerment through infrastructure development.

Community Broadband To The Rescue

In an increasingly globalized economy, why are we doing so poorly as a nation when it comes to broadband? The United States lags in 16th place globally when it comes to broadband access, and according to the Organization for Economic Cooperation and Development, we also rank among the countries with the highest cost for broadband subscriptions.

Failed models based on consumption only favor a few broadband providers. Policies influenced by industry lobbying have created a system where one incumbent internet service provider is given virtually monopolistic control over broadband services in our communities.Given their sole control over services, there is very little incentive to meet the community needs by making broadband affordable or efficient. We see this trend mostly in rural areas, where providers refuse to make any investment at the fear of low profit margins. By the same token, this trend can also be seen in heavily populated and urban areas, where broadband providers refuse to deploy in poor neighborhoods. This trend, which the Center for Social Inclusion calls “digital redlining,” is another step in the long history of discriminatory decisions that has left low-income, rural, and communities of color with inadequate infrastructure and services.

Even in the best of scenarios, most U.S. homes only have access to two wireline broadband service providers. With only profit margins in mind, large private service providers do not consider the long term economic impact in communities – and far less so for minority populations.

A Better Solution: Control By Local Entities
With one third of the country remaining digitally disconnected, we clearly need to examine alternative models of ownership, technology, economic development, and social inclusion.

Local entities including municipalities, counties, and non-profits have often taken power in their own hands to serve their communities’ need for broadband services, particularly in places where the private sector will not operate. Local efforts nationwide – representing the will of the community – have established networks that increase broadband access by making it affordable.

By allowing local entities to build their own networks, a truly competitive market for broadband services is reached, and when all networks are placed on an equal footing, a reduction in prices ensues. In North Carolina, for example, the largest cable provider raised rates up to 52 percent in communities – except in those where municipalities were providing competitive cable service. It is therefore clear that different models of ownership must be allowed to arise when it comes to infrastructure investment. As the Center for Social Inclusion notes, it is only with diverse ownership that we can fully reach broadband ubiquity and service penetration.

In addition to providing affordable services for their constituents, governments themselves can leverage their networks for their own use. For example, local broadband networks facilitate the operation of public safety networks, making our communities more secure. Community-based networks give local governments a means to implement costs-saving mechanisms by using city infrastructure, such as telephone poles and water towers, to lower the cost of leasing locations for Wi-Fi transmitters. Locals are thinking strategically about how to spur economic growth, building broadband not merely to connect their populations, but encouraging long-term investments to include local universities and other community investments.

Community projects can also engage volunteers to construct and maintain the network. Hence, community based networks inspire civic participation, involving every member to install, maintain, and make use of broadband networks. It is extremely important to recognize that community-based networks are here to offer a public service, not to make a profit.

The Success Of Community Based Broadband Networks

Source: Map of Community Broadband Networks in the United States, from the Institute for Local Self-Reliance

More than 130 communities own broadband networks in the country. Not only are community networks a viable alternative to private providers, but the evidence shows that some of them offer a service that is superior to incumbents. Most notably, the single fastest citywide broadband tier available in the U.S. is from the town of Chattanooga, Tennessee with a speed of 150 Mbps. Similarly, in Wilson, North Carolina, the city provides broadband at a speed that is 10 times faster than what the incumbents offer. One of the most economical services is also provided by a city, Lafayette, Louisiana, where broadband is $30 per month. The New America Foundation’s recent study on municipal and community wireless networks also points to the example in Lompoc, California, where a municipal network managed by the city’s utility department provides affordable wireless access that is added to its residents’ utility bills.

Community-based broadband network can be installed in every type of community: For instance, Bristol, Virginia, a city with a cost of living 20 percent below the national average has managed to install optic fiber internet. The project started as a way to save the city money on its phone exchange, only wiring the city’s offices and substations only for internal use. Given the network’s success, local businesses wanted it soon, and home service followed three years later. The fiber connection now serves up to eight counties of Virginia’s coalfield region. With economic development taking place, businesses moved to the Bristol area, creating jobs for 700 technicians, consultants, and call-operators.

Support from the federal government: In its 2010 National Broadband Plan, the Federal Communications Commission clearly recognized that tribal, state, regional, and local governments have the right to build broadband networks (Recommendation 8.19). Not only is it enough that they have the right, the FCC maintained, federal and state policies should facilitate demand aggregation and use of state, regional, and local networks when that is the most cost-efficient solution for anchor institutions to meet their connectivity needs (Recommendation 8.20). And finally, in an unusual course of action, FCC Commissioner Mignon Clyburn released astatementlast month protesting against state efforts to curtail community-based broadband networks.

Industry attacks on local broadband networks: Despite their proven track record and support from the FCC, about 18 states have either defacto or outright bans on the development of local broadband networks.Arkansas, Missouri, Nebraska, and Texas established a full ban. In Florida, projects must prove positive cash-flow within four years; in Minnesota they require 65% approval in a referendum; and in Nevada municipalities with populations larger than 25,000 or counties with populations of 50,000 or more are prohibited from providing retail “telecommunications services.”

Incumbents have come in full force in 2011 to make sure this ban occurs nationwide. Their most recent wins have been in the Carolinas, where the bills – HB3508/SB483 in South Carolina and HB129/SB87 in North Carolina – place onerous requirements for community-based broadband networks, threatening their existence and economic growth. Ironically named “Level the Playing Field Bill,” the South Carolina bill piles burdens on municipally owned networks that are not subject to private providers. South Carolina law already imposed significant restrictions and burdensome procedural and imputed-cost requirements on municipalities, demonstrating that lobbying from the industry is an outright attack on the already debilitated communities.

Ray of light: Some state legislators are finally taking notice of the potential that community-based broadband networks can have in their districts and are not only voting against legislation like those existing in the Carolinas, but are actually taking steps to allow public utilities to own networks and use their consumer base to offer broadband.This is the case in Washington state, where the law limits public utility districts from providing wholesale telecommunications services. The federal government’s Agriculture Departments Rural Utilities Services is allowing community networks to apply for its $700 million broadband loan programs.

Full Resources from this Article

DISPATCH: Communities Under Assault from Big Business... Again!

Center on Budget and Policy Priorities – States Continue to Feel Recession’s Impact

Our Economic Survival Depends On Broadband

U.S. Broadband Coalition – Report of the U.S. Broadband Coalition on a National Broadband Strategy
The Brookings Institution – The Effects of Bcroadband Deployment on Output and Employment: A Cross-sectional Analysis of U.S. Data
Public Policy Institute of California – Does Broadband Boost Local Economic Development?
The Center for Social Inclusion – The Promise & Challenge of Community Broadband Models: Lessons from the National Symposium on Community-Scale Broadband

Community Broadband To The Rescue

Center for Social Inclusion – The Promise & Challenge of Community Broadband Models: Lessons from the National Symposium of Community-Scale Broadband

The Success Of Community Based Broadband Networks – Hoyle to municipal broadband: Drop dead
The Washington Post- How the FCC’s New National Broadband Plan is Expected to Affect Consumers
American Public Power Association – State Barriers to Community Broadband Services
Daily Yonder – Co-Op Tactics for Community Broadband
Community Broadband Networks – Natural Monopoly in North Carolina: The Need for Community Networks and Competition
New America Foundation – From the Digital Divide to Digital Excellence
Federal Communications Commission – National Broadband Plan
Federal Communications Commission – Statement by FCC Commission Mignon L. Clyburn on Proposed Antin-Municipal Broadband Legislation

This article is part of PSN's email newsletter, The Stateside Dispatch.
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