The Georgia House of Representatives on Thursday voted not to pass a bill that would prevent local governments from building their own municipal broadband network.
Led by a bipartisan group of Democrats and Republicans, who said traditional telecom providers like AT&T (NYSE: T) and Windstream (Nasdaq: WIN) have not fulfilled their promise to expand their respective broadband networks, HB 282 did not pass, with a vote of 70 to 94.
If the bill, which had been sponsored by Rep. Mark Hamilton (R-Cumming), had passed, local governments would only have been allowed to light up service in areas where consumers or businesses could not get access to at least a 3 Mbps connection.
The Atlanta Journal-Constitution said Hamilton argued that "allowing cities, with unlimited tax dollars, to compete with private companies erodes the free market and is a waste of taxpayer money."
However, Rep. Jay Powell (R-Camilla), said the lack of affordable bandwidth inhibited his community's economic development.
"You cannot get it, you cannot keep it without high speed fiber," Powell told The Atlanta Journal-Constitution, adding companies "wouldn't provide it because they knew they didn't have to. They provided whatever crumbs from the table they wanted."
These types of battles involving local governments, who argue they should be able to deliver affordable broadband in areas where incumbent providers have yet to build out sufficient speeds, are a common phenomenon.
According to a Wall Street Journal article, about 19 states have passed laws that limit the buildout of government-backed broadband networks.
Among those states with anti-municipal broadband rules in place is North Carolina, which in 2011 passed a bill supported by local cable incumbent Time Warner Cable (NYSE: TWC) that would make it more difficult for local governments to build their own networks.
Under North Carolina's law, any municipality that wants to offer telecom services would not only be required to hold public hearings detailing their plans, but also to parse out their telecom business as a separate unit and would not be allowed to offer services below cost. Municipalities would also not be able to get funding for any network rollout without public approval and, like incumbent carriers, they would be required to make payments to their tax bills.
While Windstream said it understands the need to expand broadband, the company argued that enabling local governments to build networks creates an unfair advantage.
"We very much agree with the policy direction of extending broadband," said Eric Einhorn, senior vice president of government affairs and strategy at Windstream, in a Wall Street Journal article. "But from our perspective, requiring private industry to compete against government-owned networks is not the way to go."
While there have been a number of failed community broadband efforts, others like EPB Fiber, the municipal broadband arm of Chattanooga-based EPB Power, have flourished.
In February 2012, EPB Fiber reported it had 35,000 Fiber to the Premises (FTTP) customers, 9,000 more than its initial goal of 26,000 customers by the third year in operation. In September 2012, it increased the speeds of its existing Fiber to the Premises (FTTP) tiers.
For more:
- The Atlanta Journal-Constitution has this article
- Wall Street Journal has this article (sub. req.)
Commentary: Chattanooga's EPB Fiber defies tough telecom odds
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