How big telecom smothers city-run broadband

Center for Public Integrity

Janice Bowling, a 67-year-old grandmother and Republican state senator from rural Tennessee, thought it only made sense that the city of Tullahoma be able to offer its local high-speed Internet service to areas beyond the city limits.

After all, many of her rural constituents had slow service or did not have access to commercial providers, like AT&T Inc. and Charter Communications Inc.

But a 1999 Tennessee law prohibits cities that operate their own Internet networks from providing access outside the boundaries where they provide electrical service. Bowling wanted to change that and introduced a bill in February to allow them to expand.

She viewed the network, which offers speeds about 80 times faster than AT&T and 10 times faster than Charter in Tullahoma according to advertised services, as a utility, like electricity, that all Tennesseans need.

Related: How telecom fights municipal broadband

“We don’t quarrel with the fact that AT&T has shareholders that it has to answer to,” Bowling said with a drawl while sitting in the spacious wood-paneled den of her log-cabin-style home. “That’s fine, and I believe in capitalism and the free market. But when they won’t come in, then Tennesseans have an obligation to do it themselves.”

At a meeting three weeks after Bowling introduced Senate Bill 2562, the state’s three largest telecommunications companies — AT&T, Charter, and Comcast Corp. — tried to convince Republican leaders to relegate the measure to so-called “summer study,” a black hole that effectively kills a bill. Bowling, described as “feisty” by her constituents, initially beat back the effort and thought she’d get a vote. 

That’s when Joelle Phillips, president of AT&T’s Tennessee operations, leaned toward her across the table in a conference room next to the House caucus leader’s office and said tersely, “Well, I’d hate for this to end up in litigation,” Bowling recalls.

AT&T and Phillips didn’t respond to emails asking for comment.

Related: Where is municipal broadband in Tennessee?

A national fight

Tullahoma is just one battlefront in a nationwide war that the telecommunications giants are fighting against the spread of municipal broadband networks. For more than a decade, AT&T, Comcast, Time Warner Cable Inc., and CenturyLink Inc. have spent millions of dollars to lobby state legislatures, influence state elections and buy research to try to stop the spread of public Internet services that often offer faster speeds at cheaper rates.

The companies have succeeded in getting laws passed in 20 states that ban or restrict municipalities from offering Internet to residents.

Now the fight has gone national. The Federal Communications Commission in Washington, D.C., is considering requests from Chattanooga, Tennessee, and Wilson, North Carolina, to pre-empt state laws that block municipalities from building or expanding broadband networks, hindering economic growth, the cities argue.

Related: Key players in the North Carolina broadband battle

If the FCC rules in favor of the cities, and the ruling survives any legal challenges, municipalities nationwide will be free to offer high-speed Internet to residents when they aren’t satisfied with the service provided by private telecommunications companies.

To better understand the municipal broadband debate, the Center for Public Integrity traveled to two southern cities. Tullahoma, which has a broadband network, and Fayetteville, North Carolina, which doesn’t.

City-provided broadband widespread

More than 130 cities from Norwood, Massachusetts, to Clallam County, Washington, currently offer fiber or cable Internet connections to their communities, according to the Institute for Local Self-Reliance, a group that supports municipal broadband. The municipalities are mostly small to mid-sized cities that critics say large Internet providers avoid because the return on investment is too low.

Related: Key players in the Tennessee broadband battle

Cities build broadband networks to support businesses, improve health care and education, and attract jobs, they say. About 89 cities offer gigabit speeds, a rate that can download a 4.5 gigabyte movie in 36 seconds. The same file takes an hour at 10 megabits per second. Slower DSL or dial-up connections, which are common in rural areas, would take many hours longer.

Instead of investing in improving infrastructure in these communities, the telecommunications companies have spent millions of dollars lobbying lawmakers in 20 states to pass laws restricting or banning municipal networks, according to research conducted by Jim Baller, of the Baller Herbst Law Group, which is representing Chattanooga and Wilson.

When Tullahoma began planning its fiber optic network in 2004, “it got unpleasant real fast,” said Steve Cope, who was mayor at the time. “When you get into broadband you begin stepping on the toes of some of the big boys, the AT&Ts and Charters of the world. They don’t want the competition, and they’ll do anything to keep it out.”

Most of the telecommunications companies say they support municipal broadband, but only for those areas that they don’t serve.

Related: AT&T CEO on private capital versus public capital

“The idea of private capital competing with taxpayer-provided capital just feels inconsistent to us with what a free-market system looks like,” AT&T Chief Executive Officer Randall Stephenson said at a U.S. Senate hearing in June. “But where it’s unserved, it seems like a logical place for government to step in and provide a solution.”

By far, AT&T is the company with the most political influence in states, say statehouse watchers.

“On a scale of 1 to 10 on who is the most powerful lobbying presence in Tennessee, AT&T is a 12,” said a long-time lobbyist in Nashville who asked not to be identified so he could speak candidly about lobbying in the state. “They are the big horse in the race, and they are unstoppable.”

AT&T spent between $250,000 and $300,000 this year hiring 15 lobbyists, ranking it among the largest spenders, according to the Tennessee Ethics Commission.

Related: Where states stand on municipal broadband

AT&T’s political action committee is also the biggest donor among telecommunications companies to state campaigns nationwide. Since 2000, its donations more than tripled to $13.6 million in the 2012 election cycle, according to the National Institute on Money in State Politics, which tracks campaign contributions in the states.

In Tennessee, AT&T’s giving in the 2014 election cycle was more than $370,000, almost five times what it was in 2000. In North Carolina, AT&T’s total campaign giving in the 2012 election cycle, including 2011, when the General Assembly passed a bill to restrict municipal broadband networks, was more than $404,000, 60 percent higher than in 2000.

Comcast, the second-largest campaign contributor among telecommunications companies in Tennessee, also has upped its PAC giving from about $3,200 in the 2004 election cycle to a record of more than $270,450 in the 2012 cycle, according to the money in state politics institute.

Going to court

Related: Key findings from our municipal broadband investigation

Telecommunications companies aren’t hesitant to spend millions of dollars on lawsuits to kill municipal broadband.

There’s more to this story. Click here to read the rest at the Center for Public Integrity.

This story is part of Broadband. Investigating the political power of the information technology industry. Click here to read more stories in this investigation.

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Copyright 2014 The Center for Public Integrity. This story was published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.

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