Thursday, October 09, 2008

Private, public sectors clash on broadband deployment

As fiber optic guru Tim Nulty accurately observed, wireline telecommunications infrastructure is a natural monopoly. That fact has spawned conflict between the private and public sectors over which will build out infrastructure to provide modern IP-based services. At issue in this confrontation that has played out throughout much of the United States over the past decade is who will get first rights to build since whoever deploys infrastructure first dominates the market given its monopolistic nature.

But there's more to it than that. Both sides have conflicting agendas. The private sector telcos and MSOs (cable companies) want to maintain an open ended option to build whereas public sector entities like muncipalities motivated by constituent pressure to rapidly deploy, pressure that naturally increases over time as demand for broadband-based services from consumers and businesses grows. In that regard, time is on the side of the public sector. That reality has spurred private sector players to employ litigation to buy time to preserve the option to serve a given area.

Case in point: this week, a Minnesota judge ruled this week that Minnesota cities have the authority to issue bonds to finance community fiber-optic networks. Monticello, a town of 12,000, has been locked in a legal battle with its incumbent phone company, TDS Telecom, which filed a complaint to prevent the city from building a network its citizens overwhelmingly approved in a referendum last year, according to Christopher Mitchell, Director of the Telecommunications as Commons Initiative for the Institute for Local Self Reliance (ILSR). “All along, we have said that this lawsuit is frivolous and was merely a delaying tactic,” Mitchell said in a news release. Mitchell adds that TDS "was merely trying to protect its monopolistic interests, much to the detriment of the citizens of Monticello who clearly want a local, accountable alternative to existing services.”

More delay could be in store. ILSR reports Monticello had to put the project on hold until the case was decided and escrowed funding until the case is fully resolved and all appeals are exhausted.

At present, the rules allow private sector providers to game the system to buy time. Even if they lose on the merits of muni fiber project legal challenges as in this case, they still win because they've achieved their goal of buying time to exercise their option to build. The problem is that option is currently open ended at a time when the nation is falling farther and farther behind on broadband and time is of the essence.

It needs to be tightened up with legislation that would give either public or private sector providers the option to build broadband infrastructure and subject the party exercising the option to deploy it to stringent oversight including incremental progress deadlines, late penalties and completion bonds.

1 comment:

Carol Anne said...

As courts make these rational decisions in favor of citizens, and to the detriment of Telco monopolies, expect the Telco tactics to change.

Like the Satellite TV services, who ran into local opposition to dish antennae sprouting up everywhere, the Telcos will follow suit. The satellite providers lobbied to get the Federal government to prohibit local laws from affecting dish placements. Similarly, expect the Telcos, large and small, to band together to try to get federal laws passed that will prohibit local jurisdictions from trampling on their God-given right (according to them) to refuse to provide services in areas over which they have monopolistic control.

"The best government money can buy."

Web Analytics