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Transcript: Community Broadband Bits Episode 67
Thanks to Jeff Hoel for providing the transcript for Episode 67 of the Community Broadband [no-glossary]Bit[/no-glossary]s podcast with Jim Baller on the third part of the history of municipal networks. Listen to this episode here.
Jim Baller: The legislature, with severe pressure from Verizon, did enact that legislation. And so there we were -- a new piece of legislation that was really an ugly bill.
Lisa Gonzalez: Hi there. This is Lisa Gonzalez from the Institute for Local Self-Reliance. Welcome to the Community Broadband Bits Podcast.
We often share info about state telecom legislation, either via our blog or through interviews with guests on the Broadband Bits Podcast. This week, Chris visits with Jim Baller, once again, to learn about modern historical events in telecommunications. Jim is President and Senior Principal of the Baller Herbst Law Group. He's been involved in many of the state fights at the legislative level, and shares some of those stories with us. Jim's intimate legislative experience can help us contend with future legislative battles at the state level. Here are Chris and Jim.
Chris Mitchell: Welcome to another episode of the Community Broadband Bits Podcast. And we're continuing our multipart series on the history of municipal networks -- cable networks, fiber networks, and eventually wireless networks. Jim Baller has joined us once again. Thank you, Jim.
Jim Baller: Nice to be back, Chris.
Chris: We've had a lot of positive response, starting right with the first episode, where a lot of people are really interested. So I'm glad that we're taking the time to do this in several shows, rather than trying to [no-glossary]rus[/no-glossary]h through it.
So, the last time, where we left off, we were speaking about how a number of communities -- Chelan, Grant County, both in Washington; Kutztown in Pennsylvania; BVU, Bristol, Virginia; and Dalton, Georgia -- those were some of the earliest fiber-to-the-home networks in the United States, where local governments really picked up a new technology, ran with it, and helped to commercialize it. And we were going to pick up right after that with the private sector, in 2004, pushing back and saying, no, this is our turf, local government need not apply.
Pennsylvania passes a law, at the urging of Verizon, that basically makes it all but impossible for a community to build its own network. And you rightly compared it to the sinking of the Lusitania. It wasn't the end of the story. It was actually just the beginning of it. So what happened right after this law [no-glossary]passed[/no-glossary]?
Jim: Well, let me go back a step if I can and just put the year 2004 into context. In April of 2004, the Supreme Court decided the Missouri case, and it ruled that while keeping municipalities out of telecommunications might well be a bad idea from a policy standpoint, from the standpoint of statutory interpretation, Congress did not go far enough in stating, on the face of the statute, that it intended for the FCC to be able to preempt state laws that prohibited municipalities from providing communications services.
Chris: We covered that in our first show, that you and I ...
Chris: ... did in this series. So, the Supreme Court basically said, hey, it might be a really dumb idea for states to do this, but, as far as we can tell by the way Congress wrote the law, states do still have the right to limit local authority.
Jim: So the next significant thing that happened in 2004 was that in the middle of the year or so, the city of Lafayette, Louisiana, started to explore the possibility of developing a fiber network. And BellSouth responded with a bill that was called the "ALEC" bill -- that's what it said on its face --
Chris: The American Legislative Exchange Council, though, right? A-L-E-C?
Jim: That's correct. And that bill was essentially almost identical to the law that had been passed in Utah in 2001. When that bill was introduced into the legislature in Louisiana, the Governor of Louisiana, Kathleen Blanco, said, to Lafayette and to BellSouth and to Cox and a few of the trade associations representing the industry and cities, here's my conference room; go in and negotiate a bill that I can sign and that the Legislature can pass. None of us thought that we could achieve that, but we took a month of hard negotiating, and we went through the ALEC model, line by line, word by word, and we came up with a statute that we thought Lafayette could live with. In fact, during the last day of those negotiations, we walked the other participants, step by step, through the legislation on everything that Lafayette was expecting to do. They checked with their offices in Atlanta and approved it. The bill went to the Legislature, which almost unanimously adopted it, the Governor signed it. And then BellSouth had a case of amnesia and forgot what it had agreed to and promptly sued Lafayette. And -- make that long story short -- that took three years of litigation, finally a unanimous decision by the Louisiana Supreme Court, approving the city's ability to move forward with its project.
But in any event -- so what we had, heading toward the end of 2004, was now legislation that had taken the ALEC bill and modified it in numerous ways in order to make it possible for a municipality to go forward and provide communications services and also provide for a level of protection for the private sector that they thought was appropriate.
Chris: You can tell me I'm wrong. We covered this a little bit in that case study we did of Bristol, Lafayette, and Chattanooga. But I think you did a good job, because, as I read it, Lafayette is certainly subject to more onerous regulation than is any private company in Lafayette -- or, in Louisiana, rather. Nonetheless, as time has told, their network's doing well. And they haven't been overly burdened to the point at which they were not able to make it work for themselves.
Jim: Also, the legislation that we negotiated was amended to make it more restrictive in subsequent years. But the legislation, as it stood at the time our negotiations ended, was workable, as you point out. History has confirmed that. And so, there you have that.
And then you get to the end of November. And what was unusual about Pennsylvania is that most legislatures end -- state legislatures end their terms by mid-year. And so, in the case of Pennsylvania, they have a full year of legislation. That was the only story around, in the communications world. And it was followed worldwide. And ultimately, the bill, which, as I mentioned in the last program, had started out as a bill to prevent other Kutztowns from emerging in Pennsylvania, by the end of 2004, was now also going to prohibit wireless projects. And, in particular, the one in Philadelphia that was then under discussion. And, as it happens, the Legislature, with severe pressure from Verizon, did enact that legislation. And so there we were, at the end of 2004, with a huge loss before the Supreme Court, and a new piece of legislation in Pennsylvania that was really an ugly bill. What it did was, it essentially gave Verizon a right to decide whether or not to allow communities to provide communications services. And the only criterion in the law was speed -- of, you know, broadband speed. And so, if a community wanted to provide a broadband network because it made sense to couple that with its electric utilities, because the quality of service provided by the private sector was terrible, or the rates were too high, none of that was relevant. The only thing that was relevant was speed. And if a community said that it wanted to provide service at a certain speed, if Verizon said, well, we can match that speed, or we're already providing that speed, holding aside the rates, the quality, the customer service, we can preclude local governments from doing that, and there were more complications.
Well, that bill set off such a wave of fear and revulsion across the country. And it led us to believe that we would see, in 2005, bills like it all across the country, that we were able to piece together a huge coalition of organizations that represented local governments, such as the National League of Cities, and the Conference of Mayors, and NATOA, and the American Public Power Association. We also had the support of citizens groups, public interest organizations, utility organizations. But, most important, high-tech companies, such as Intel and Dell and Hewlett Packard and others, who helped us put together a coalition that fought what turned out to be almost -- 14 bills in various states across the country, and we were able to either defeat altogether or to water down almost all of them. You know, not entirely all of them, but almost all of them, because of this huge group of entities that opposed further barriers. And for a period of five years, we were very successful in defeating other state barriers proposed in many places. And they eventually petered out. There are only one or two a year introduced, mostly in -- North Carolina. There we fought a battle every year, for five years, until finally losing. And virtually everywhere else, we ended up stopping barriers proposed at the state level.
Chris: 2010 was when the statehouse shifted, but it wasn't until 2011 that the legislation was passed. And for people who'd like to know more, we did an interview with Katharine Rice that folks can check out in a previous show.
Jim: You're absolutely right. It was the election in the fall of 2010 that turned around the legislature in North Carolina. And, you're right, it was 2011 that resulted in defeat at last. Since 2011, we've also run into opposition in South Carolina, and held them off for a couple of years, and finally lost last year. And a few other states. These are all documented on both your website, our website (www.baller.com) with records of the bills and the submissions of various interested parties. You can find all of that there.
Chris: There's one other thing that I just wanted to note though. It's interesting that at the same time the industry is saying, these cities shouldn't be doing this, the industry was finally starting to catch up, and thinking about investing in the same technology -- the fiber optics -- that these cities had pioneered: taking all the way to the home.
Jim: That's true. That's right. Certainly, Verizon and AT&T -- which was then Southwestern Bell and SBC --
Chris: This was before AT&T, even. It was, you know, the different Bell companies were independently coming to their own conclusions, it seems.
Jim: Right. Right. And SBC, BellSouth, and Verizon got together on a big RFP to attract equipment and systems providers, and to negotiate common rates so that they could provide their particular selections of technology, and make the cost of the components and equipment and the services substantially lower than they had been before. So, you're absolutely right. They were moving into fiber. But not everywhere, of course. They had their own strategies -- different strategies -- for how to do this, how far to extend fiber into communities. Ranging from Southwestern Bell or SBC's essentially using a technology that we refer to as ADSL2+, which is a fiber to a neighborhood node and then copper from there on. Verizon's fiber plans were to take fiber all the way to the home in the areas where they chose to deploy fiber; and that was not everywhere. And BellSouth was somewhere between the two others.
Chris, I also wanted to mention that during the years when we pieced together this large coalition to do battle at the state level, this coalition was operating well and functioning very well when a representative of the U.S. House of Representatives from Texas introduced a bill in Congress to essentially bar municipal broadband networks. Congressman Pete Sessions introduced a bill. And that then shifted attention of the country to actions in Congress, on barriers to entry. We eventually countered with what became called the Community Broadband Act, in 2006. We actually got our version of the Community Broadband Act all the way through the House of Representatives and through the Senate Commerce Committee, and it was heading to the floor in the Senate, when we had the elections of 2006 that changed the character of Congress. And there's been no significant telecommunications legislation that's passed since that change.
Chris: Now, who were some of the people that were responsible for that. I just want to credit them. I know that, if I remember correctly, Senators McCain and Lautenberg were a bipartisan team in the Senate. And then you had Representative Boucher ...
Jim: Boucher [corrects pronunciation] Yeah. Rick Boucher.
Chris: And then you had Representative Rich Boucher from the Bristol, Virginia, area, ...
Chris: ... who was just a tireless champion for them. Who else?
Jim: Well, on the House, Fred Upton of Michigan was the cosponsor, with Rick Boucher, of the House bill. And we had -- ultimately, I believe, eight cosponsors on the Senate side, and one -- you can go to our website for the legislation and legislative history on all of that. Lindsey Graham and some others were cosponsors of our bill on the Senate side.
Chris: OK. And, Jim, how do you want to wrap this up with the few minutes we have left?
Jim: We've talked about the fights over barriers, in the states and in Congress. In the meanwhile, while all this was going on, you have the major carriers -- BellSouth, Verizon, and Southwestern Bell -- moving toward fiber. At the same time, you have a wave of communities across the county developing public networks. Your list now tracks approximately 89 municipal fiber networks. During this period, by about 2009, we had gotten up to 55 -- 54 or 55 or so, according to Mike Render of Render Vanderslice Associates, that tracks fiber networks. And he did a report in October 2009 finding that virtually all of these networks were doing well. They were -- they had take rates of, at the time, about 54-55 percent, as compared to the take rates for the private-sector entities of about 22-23-24 percent. And municipalities, one could fairly say, were very much ahead, and leading the development of fiber-to-the-home. Particularly in large projects that covered whole communities, as distinguished from doing services in limited areas, such as, for example, Verizon's development of FiOS networks in doughnuts around major cities but not in the heart of many major cities at the same time.
So, a conclusion I would draw would be that during this period, while the battles were going on about preventing municipalities from providing such services, in fact, in the field, a number of systems were developing. They were highly popular with their communities. They were doing many good things for their communities, including supporting economic development and educational opportunity and all of that. And so we're now at about the latter part of the 2000s, and we're about to get into what's happening today.
Chris: Right. And I think there's so much more to talk about. I think we could spend more time going into greater detail in some of those state fights, and some of the interesting stories that came out of them. Whether it was a surprising twist or surprising allies, it's something we could possibly come back to. We'll almost certainly spend some time talking about the wireless, and the municipal wireless -- muni Wi-Fi -- in a future show. But people should certainly feel free to leave a comment on this story, or leave us a note to suggest some aspects of this history that you'd like us to cover. Because I think it's important. And it's hard to find this history without having access to someone like Jim, who's lived it. So, you know, feel free to ask us questions. We have plenty more history to talk about, as far as I can tell. We're also almost up to the National Broadband Act, as well, Jim, which I know is near and dear to your heart. So, we have a lot of topics to talk about in the future.
Jim: Well, Chris, I'm very grateful for your doing this series, and I look forward to following the discussion wherever you want to take it.
Chris: Great! Thank you, Jim.
Lisa: That was Jim Baller, from the Baller Herbst law firm. You heard Jim refer to their website at baller.com . Be sure to check out their extensive library of historical and legal resources. Jim will be back in the future to talk more about community networks, and if there's a specific topic you want him to address, let us know. E-mail us at email@example.com and we'll be sure to include it in the discussion. Likewise, if you have ideas for future podcast discussions, please send us a note. Thanks again for listening to the Broadband Bits Podcast. You can follow us on Twitter, where our handle is @communitynets . This show was released on October 8th, 2013. We want to thank the group Break the Bans once again for their song, "Escape," licensed using Creative Commons. Thanks for listening.
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