Verizon, AT&T Blocking Rural Broadband Stimulus?

Last Updated Apr 1, 2009 11:59 PM EDT

Verizon, Comcast, AT&T and other large wireless carriers and cable companies are behind lobbying efforts in state legislatures around the country to prohibit local governments from using federal stimulus money to build and manage their own broadband networks, critics contend. So far, they seem to be succeeding.

The federal broadband stimulus package provides $7.2 billion for projects that bring high-speed Internet connectivity to rural areas and towns in remote locations. The law gives priority to projects sponsored by governments in partnership with local Internet service providers (ISPs), but stimulus money can also go to national ISPs if there are no competing local projects.

Public interest groups and consumer advocates contend that incumbent ISPs are trying to prevent states from funding projects managed by local government entities, even in partnership with private companies. They charge that incumbent ISPs are behind the lobbying efforts of Connected Nation, which counts Verizon, AT&T, Comcast, and the National Cable Telecommunications Association as advisers.

Karl Bode of DSLReports.com summarized the objections raised by consumer advocacy group Public Knowledge quite nicely:
[Connect America] takes state taxpayer funds under the pretense of effectively mapping state broadband services, but then acts by and large as an extension of the incumbents -- obscuring data they don't want public, while lobbying state lawmakers on carriers' behalf.
This lobbying has yielded legislation in Kentucky and bills pending in Pennsylvania, North Carolina and a dozen other states, precluding local government from entering into public-private partnerships. The Pennsylvania bill, the "Free Enterprise and Taxpayer Protection Act," states that the act "is intended to protect economic opportunities for private enterprise against unfair competition by government agencies and to enhance the efficient provision of goods and services to the public."

Craig Settles, a consultant on municipal broadband projects, told me the telcos are engaged in "a disinformation campaign to make the case that communities shouldn't be involved in stimulus money -- that only the telcos should get the money."

Opponents of government-led broadband projects contend they are trying to prevent government from competing unfairly with the private sector, and protecting jobs provided by those large incumbents. But Verizon categorically denies being behind these bills. In a response to a blog posted by Settles, a Verizon spokesman wrote:
Verizon had nothing to do with the introduction of [Pennsylvania bill] S.B. 530. The bill sponsor, State Senator Pat Browne, has introduced this legislation for the past three sessions. You should contact the senator for his views on the legislation. I repeat: It is not a Verizon bill.
And indeed, you have to wonder why the carriers would object to networks managed by small ISPs and regional telcos in areas where they don't see a business case for themselves. Harold Feld of Public Knowledge told me that "the incumbents are going to make it difficult to engage in activities that compete with them or bluntly show them up. Even when they have no interest in areas where there's a low return, having government provide affordable broadband is embarrassing to them."

According to Feld, in addition to legislation, incumbent ISPs could influence some governors to issue executive orders prohibiting local entities from entering into public-private partnerships.

Municipal broadband initiatives first began cropping up in the early 2000s, as small municipalities sought to revitalize business districts or provide low-income residents with access to inexpensive Internet access. It wasn't until Philadelphia attempted to build a free city-wide wireless network that the incumbent carriers began an organized campaign against municipal wireless projects. But the incumbent carriers suffered a public relations backlash to their public opposition to public-private ventures. Settle says the large ISPs learned from that experience, and this time are putting some distance between themselves and the legislation they favor by funding lobbying groups like Connected Nation.
  • Michael Hickins

    Michael Hickins has written about technology and business for BNET, InformationWeek, InternetNews.com, eWEEK -- where he was executive editor from 2007-2008 -- The Curator, Pseudo.com, Multex Investor, Reuters, and Conde Nast's WWD.com. Hickins is the author of The Actual Adventures of Michael Missing, a collection of short stories published by Alfred A. Knopf in 1991. He also published Blomqvist, a picaresque novel set in 11th century Europe, in 2006. Hickins remains passionately interested in the intersections of business, technology, politics and culture, and endures a life-long obsession with baseball. He is married with two children and lives in Manhattan.

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