To Save the Internet We Must Own the Networks | By David Morris | Common Dreams

To Save the Internet We Must Own the Networks | By David Morris | Common Dreams:

The tools to build locally owned networks may well be there as the author of this article concludes. But adequate funding is another question. Constructing telecommunications infrastructure is very costly and labor intensive. It’s far easier to do in places where local municipal and cooperatively owned electric distribution and telecommunications networks already exist and have supporting infrastructure and funding mechanisms in place. Many of these entities got their start in the early in the 20th century with robust federal funding.

Nearly a century later, there is no meaningful federal funding to support the formation of new local entities to construct and operate advanced fiber telecommunications networks. State and local budgets are strained with obligations to repair and replace other aging infrastructure and honor pension obligations to their workers. They can’t be expected to provide billions to finance locally owned telecom networks.

Without government funding in the form of technical assistance grants and loans, expecting property owners and consumers to come up with the money is highly uncertain outside of highly affluent communities. As price takers rather than the price makers they would be the owners of local infrastructure, they are accustomed to purchasing “broadband” as a commodity monthly service and grudgingly tolerating exorbitant monthly costs and annual rate increases from incumbent telephone and cable companies. They’re unlikely to be motivated to put up the money to build an alternative -- albeit better -- network infrastructure than currently available to them unless they live in a neighborhood redlined by the incumbents.

Local ownership of telecom infrastructure is in concept a meritorious idea. But without a coordinated and well-funded federal program for it that recognizes that local infrastructure is essential to a vital interstate telecommunications network and not a local amenity like a park or playground, it remains only that.

Federal telecom infrastructure funding initiative needed

The American Recovery and Reinvestment Act of 2009 appropriated $4.7 billion in grant and loan funding to support the construction of Internet telecommunications infrastructure. Most of it has gone toward middle mile infrastructure projects to bring fiber backhaul closer to homes and businesses. But it was only a drop in the bucket relative to the need. What’s needed now is last mile infrastructure to link the middle mile to these premises.

According to the Institute for Local Self Reliance, nearly 400 communities in the United States have local telecommunications networks, many providing fiber connections to premises. That’s critical to the nation’s future given that legacy incumbent telephone and cable companies aren’t upgrading their metal wire networks to fiber notwithstanding the burgeoning growth in bandwidth demand and the availability of federal and state government subsidies.

Those 400 community networks represent a good start. But other communities won’t be able to follow them unless state laws restricting them are repealed (shown in red on the ILSR map) and there is substantial, relatively unrestricted funding to help them. A likely consequence is these 400 community networks will end up as one off builds, leaving the rest of America to the tender mercies of the incumbents who lack incentive to build out and upgrade given that costly telecom infrastructure is a natural monopoly.

In the wake of the severe recession at the end of the last decade, local governments are still struggling financially and can’t easily fund these projects on their own. A recent survey by the National Association of Counties found only one in 50 U.S. counties has fully recovered economically since the start of the recession in 2007. The federal government should step up with an expanded telecommunications funding program to build on the ARRA stimulus funding. It should include technical assistance grant funding to help communities plan fiber to the premise network infrastructure as well as grants and loans to help finance their construction. In the end, it would likely prove to be a good investment, generating taxable economic activity to defray the expenditures.

The case for overbuilding incumbent telcos and cablecos

Twentieth century, metal wire-based legacy incumbent telephone and cable companies naturally don’t like it when progress inevitably emerges in the form of 21^st century fiber optic to the premise (FTTP) telecommunications infrastructure offering the proverbial better (and faster) mousetrap as well as protection against technological obsolescence. Particularly if they have opted not to construct it and someone else is planning to do so. Especially if the new fiber infrastructure benefits from government subsidies. No fair, incumbents protest. That’s government subsidized competition that picks winners and losers and we’ll lose.

That argument cuts both ways, asserts Christopher Mitchell of the Minnesota-based Institute for Local Self Reliance (ILSR), one of my favorite incumbent spin busters. Incumbents have benefitted from favorable governmental policies that have been in place for decades including the availability of high cost subsidies and public policy that permitted them to maintain a monopoly. Not allowing government subsidization of FTTP infrastructure built by non-incumbents in the footprints of the incumbents, Mitchell suggests, is a double standard.

Given that telecommunications infrastructure must be broadly dispersed in order to be economically viable and adhere to Metcalfe’s Law, Mitchell accurately notes FTTP infrastructure builders must be able overbuild outmoded incumbent infrastructure when they opt not to upgrade to FTTP -- and receive government subsidies for doing so if available. That’s eminently fair and good old American progress – the same progress that brought electricity to large swaths of the nation in the 1930s when market forces alone could not do so.

As for the incumbent argument they will come out losers, Mitchell observes incumbents have made losers out of nearly 20 million Americans who according to a 2012 Federal Communications Commission estimate live in neighborhoods incumbents redlined and declined any wireline premises Internet connectivity, leaving them to dialup and satellite.

Click here to hear Mitchell and ILSR colleague Lisa Gonzalez elaborate in a 13-minute podcast.