The excitement around Google's (Nasdaq: GOOG) selection of Kansas City, Kansas as the first city in which the search engine giant will build out a 100 Gbps open access network has perhaps overshadowed the latest dust-up in North Carolina over legislation that would prevent cities in that state from doing anything similar to what Kansas City is about to do.
It's the endgame in a years-long series of legislative moves to disallow municipal-owned broadband networks from being established in North Carolina cities. Past bills did not make it through the state legislature, but HR. 129, aka the "Level Playing Field/Local Government Competition" bill introduced by Republican Rep. Marilyn Avila was approved 81-37 by the state's House of Representatives in late March and is currently being debated at the state Senate level.
Incumbent cable operator Time Warner Cable (NYSE: TWC) and telcos CenturyLink (NYSE: CTL) and AT&T (NYSE: T) openly support the measure, at the heart of which is a claim that municipally funded and managed broadband networks unfairly compete against them by doing things like offering broadband services at rates below those of incumbent providers.
North Carolina isn't the only state where municipal broadband is on the blocks--14 states have already banned or limited municipal broadband efforts, according to Wayne Caswell, a technology consultant and community broadband advocate. 
But it's a glaring example of the lengths to which incumbent providers will go to prevent competition from nibbling away at their profit margins. At a time when bringing high-speed Internet service to underserved areas across the U.S. is supposedly a high priority, legislatures are bringing down the hammer on innovative ways to get those networks built out.
Municipal broadband advocate Craig Settles was one of the most vocal critics of the North Carolina bills in recent weeks, pointing out in an interview with FierceTelecom that communities are able to build out networks offering higher speeds than the big telcos or MSOs can provide.
"(In the United States there are) 55 community owned fiber networks. Eighty to 90 cable networks are owned by communities," he said. "These networks are delivering the national broadband plan. They are exceeding the requirements, the capability of this delivery... and this is why we are having all these legislative issues. It points to the hypocrisy of these incumbents and their supposed adherence to free market conditions."
If there's a sticking point to municipal networks, it's the up-front costs involved in building them. Fiber is expensive to install--enough so that taxpayers may balk at the amount of money it may take to roll out high-speed services. And the economic pressure on communities today isn't helping. The city of Salisbury, N.C., last week was forced to lay off four employees, including the marketing director at Fibrant, the city's high-speed Internet service launched late in 2010, in a move to trim the overall budget, the Salisbury Post reported last week.
However, that isn't a compelling reason to limit or ban municipal broadband, nor should the specter of competition cause lawmakers to issue blanket bans, either. "Cities have always been in the infrastructure business, building streets, bridges, airports, water works, and electric power systems," Caswell writes in a whitepaper, Big Broadband: Public Infrastructure or Private Monopolies. Funds for such infrastructure are raised through taxes and bonds, and payback is long-term via access fees. He doesn't see municipal broadband as being any different.
That's a key point in the issue of whether to allow cities to own and operate broadband networks. Fiber optic technology may be (somewhat) new, but installing and maintaining public utilities and infrastructure isn't new or unfamiliar to American cities.
Municipal broadband doesn't have to prove itself as a viable option for high-speed networking, any more than incumbent telcos and cablecos have to prove themselves. It's managed by, paid for by, and ultimately owned by the residents and taxpayers of the community it serves. And while failure in the face of competition from private providers or due to a shaky economic climate is a possibility, the advantages of a community-owned and managed high speed network--lower subscription rates, higher broadband speeds, and a resultant economic boost for local businesses-- outweigh the disadvantages.--Sam