Community Broadband Snapshot Report™

How to Navigate, Mitigate or Eliminate the Impacts of State Restrictions on Public Broadband

Analysis report prepared by:

Craig J. Settles craig@cjspeaks www.cjspeaks.com

January 2015 Copyright2015

 

 

 

Table of Contents

Executive Summary Page 3

I. Defining the challenge and its importance Page 4

II. Dissecting the laws against public-owned broadband Page 7

III. Analysis Page 27

IV. Recommendations Page 35

Conclusion Page 38

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ExecutiveSummaryAcrosstheUnitedStates,businesses,localgovernments,institutionsandindividualsofallstripesandpoliticalbeliefswantfaster,betterbroadband—speedsmeasuredinhundredsofmegabits,ifnotgigabits.Legislativerestrictionsonpublic‐ownedbroadbandin21statesareacollectivebarriertothisgoal,plusthereisalwaysthedangerofbarriersbeingintroducedintootherstates.Currently,20stateshavestatutesaddressingpublicnetworks,andIowalegislatorsexpandedalong‐standinglawthatgovernspublicutilitiestoalsoapplytopublicnetworks.Theselawsinmanycasesnegativelyaffecttheabilityofcommunitiestopickthebestsolutionstomeettheirbroadbandneeds,subsequentlyshortchanginglocalopportunitiestoexpandeconomicdevelopment.Whiletheselawsoftenaredescribedasprohibitions,carefulexaminationuncoversthreetypesofbarriers:mandatedproceduresthatrequirevaryinglevelsofefforttonavigatelitigationminefieldsand,yes,totalbans.Dissectingtheseobstacleswithacriticaleye,however,canuncoveravenuestomitigatingorremovingsomeofthem.Itmaybebettertoleaveseveralofthelawsinplaceratherthantrytoremovethem.Someofthetotalbansleavepublicentitieswithoptionsformovingforward.Wilson,NorthCarolina,andChattanooga,Tennessee,in2014broughttheissuetonationalprominencebypetitioningtheFCCtorescindtheirrespectivestates’barriers.Thishasincreasedconstituents’interestsinallthestatestoforceachange.ButwhathappensifFCCChairmanTomWheelerheedsthecallsto“Teardownthesewalls”?Insomestates,thegatesholdingbackcommunitynetworksmightnotopentotheextentweexpect.Basedonreviewsofthestates’statutesandinterviewswithcommunitystakeholdersandtelecomattorneys,thisreportexaminespotentialremediesfromthefederalleveldownandfromthegrassrootsuptothestatehouse.Startingwiththemostbasicadvice—knowyourstate’slawthoroughly—thereportprovidesinsightsonincreasingnetworks’financialsustainability,buildingpoliticalallies,uncoveringnewfundingsourcesandsecuringprivate‐sectorpartners.Thereportalsoconfrontstwoofthemostpervasivemythscriticsusetoenforcethesestatutes,anditexplainshowtoeffectivelycounterthefalsehoodswiththefacts.Finally,interviewsandonlinesurveyswithdozensoflocalgovernmentofficialsandmunicipalutilitymanagersresponsibleforpublicnetworkshighlightwhywecannotconfuseWallStreet’smeasureofsuccesswithwhatdefinescommunities’successes.Asamatterofcourseandforthepublicgood,municipalitiescarrydebttomakeinfrastructureinvestmentswitha15‐orevena25‐yearpayback.Thoseinterviewedbelievepublicbroadbandsuccessstoriesarethenarrativescommunitiesmustenlisttorollbackattemptstocreatenewadversestatutes.

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I. Definingthechallengeanditsimportance

Thisreportisa30,000‐footviewofwhatinsomestatesareverycomplicatedsetsoflegalissues.Theseobservationsandrecommendationsprovideageneralunderstandingofeachstate’slawregardingpublicnetworksandarenotlegaladvice.Communitiesshouldseeklegalcounselskilledinthisareaduringbroadbandplanning.

EverydayyoureadaboutatleastoneortwoU.S.citiesrequestingassistancewithplanningabroadbandnetworkbecausethey’reindireneedoffaster,betterbroadbandfortheirconstituents.Thisbyitselfisnotableduetotheacceleratingpaceofcallsforassistance.ButwhatiscausingadisturbanceinthefreemarketForceisthedesireofpublicentitiestorunthesenetworks.Thisisn’taflightoffancybyelectedofficials,norisitsomeperversedesiretokeepupwiththeJoneses,orrathertheChattanoogas,ofthecountry.Almosteverycitythatcurrentlyownsabroadbandnetworkstartedwithnumerous,mostlyfruitlessappealstoincumbenttelecomandcablecompanies.Frustratedbyrepeatedrejections,communityleadershavedone—andcontinuetodo—whattheirpredecessorsdidwhenprivateelectriccompaniesinthe1930srefusedtobringelectricitytoareasbeyondthebiggestcities—theybuiltitthemselves.Some400communitieshavecommunitywideorpartial‐reachnetworksownedbylocalgovernmentsorpublicutilities.Thesenetworksareownedsolelybythepublicentityoraretheresultofpublic‐privatepartnerships.ThismapfromtheInstituteforSelfReliancepinpointspublic‐ownednetworksButthisdrivetoprovidepublic‐ownedbroadbandsolutionsinunservedandunderservedcommunitiesisstymiedbyadauntingbarrier.Twentystatelegislaturespassedlawsrestrictingtovaryingdegreespublic‐ownednetworks,andIowalegislatorsexpandedanexistinglawforpublicutilitiestonowrequiremunicipalitiespassreferendatobeabletoprovidebroadband.Everyyearitseemsthatanewstatelegislatureortwohasnothingbettertodothantrytopassitsownanti‐muninetworklaw,aswesawGeorgiadoin2013andKansasin2014.Constituentsandtheirleadershavefinallysaid“Enough!”andareactivelypushingbackoraggressivelyplanningwaystoworkaroundtheselegislativebarriers.Evensomeofthemoreconservativelegislatorsinthecountryarere‐examiningtheselawswithagrowingsensethatmaybetheyweren’tthewisestdecisionsevermade.Mostnotably,Chattanooga,Tennessee,andWilson,NorthCarolina,eachhasliterallymadeaFederalcaseoutofthisissue,petitioningtheFederalCommunicationsCommissiontorescinditsstates’anti‐muninetworklaws.Asthebattlelinesovertheselawsaredrawnnationallyandinthestates,thebigquestionsare1)shouldthelawsberolledback,and2)ifthelawsdisappeared

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completely,whatwouldbethepracticalimpactsoncitiesandstates?Wouldweseefloodgatesopeningandbroadbandprojectsspringingupeverywhereinthosestates?Partoftheanswertothesecondquestiondependsonhowwellcommunitiesplanandbuildthesenetworks.Large‐scalenetworkdeploymentsarecostlyandcomplex,andsomemunicipalitieslackin‐houseresourcestosuccessfullydesign,buildandoperatetheirownfibernetworks.Forthesecommunitiestojoinanywaveofnewprojects,they’llneedtohireorretainknowledgeexpertsinfundingsources,infrastructureandmultivendornetworkintegration.WhysuperfastInternetaccessisimportantIftheInternetwerejustanentertainmentmediumthatexistedmainlytonumbthemind,therewouldverylittlecauseforstokingtheflamesofprivateversuspublicsectorconflict.OriftheprimaryroleoftheInternetweretofacilitateacademicresearchandmilitarycommunications,thebloodpressureoffewpeoplewouldriseatthethoughtofpublicownershipof“thetubes.”However,thenetworkofnetworkshaswovenitselfintonearlyeveryaspectofprivate,publicandnonprofitlifetothepointthatthereisanewtechworldorder.Startinglargelywiththefeds’broadbandstimulus,thepastfiveyearshaveseenthevaluepropositionofthisworldorderhighlighted,tested,hypedandslowlyvalidatedintownsbigandsmallnationwide.Acommonanalogytohelppeopleunderstandwhybroadbandhasbecomevitalinfrastructureisthatofelectricutilitiesinthelate1890s.Onceitbecameobviouselectricitywasgoingtoenablealotmorethanbetterviewsofdancingladiesandpokergames,thedoorsbrokeopenforallmannerofinventions,opportunitiesandbenefitsthataffectedmanyaspectsoflife.TogetelectricityintosmallandruraltownsthatprivatecompaniesrefusedtoservebecauseofpoorROIprospects,localgovernmentsneededtostepinortheircommunitieswouldnothavebeenserved.Seeingbroadbandasabasiccommunication“utility”similartoelectricity,andknowinglargeincumbentsweren’tgoingtobringevenbasicInternetaccesstotheirsmallandruraltowns,localgovernmentsonceagainaresteppingup.However,twothingsarequitedifferentthistimearound.Privateelectriccompaniesinitiallymadethesameargumentsweheartodaythatmunisshouldnotbeintheprivatesector’sbusiness.However,thereweren’tlawspreventingpublicutilitiesbecausemuniownershipwasviewedastheantidotetotheillsofthenaturalmonopoliesthatelectriccompanieswerebecoming.Also,todaymidsizeandlargecitiessuchasChattanoogaandSeattlehavebuiltorareplanningbroadbandnetworks,andtheirsizewilladdconsiderableweighttodrivestoremovestatebarriers.Citiesthissizehadbeenlessinclinedintheearly1900stogetintotheelectricitybusiness.

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MorethanautilityWhilethe“broadbandasutility”analogyispertinentandpowerful,thefourprimarybenefitsthathigh‐speedInternetaccessdeliversvalidatecommunitybroadband’simportance.Whenpeopleunderstandthese,theinsidiousanti‐economicdevelopmentnatureofthesestatelawscomesintoclearfocus.Basedonevidencefromdozensofpublicnetworks,thefourmaincategoriesofbenefitsderivedare:

1. Improvinglocaleconomiesbymakingcurrentcompaniesmoreprofitableandrecruitingorgeneratingnewones

2. Transforminghowmedicalservicesandhealthcarearedelivered

3. Evolvinghowteachersteachandstudentslearn

4. Increasingtheefficiencyandloweringthecostsoflocalgovernment

operationsSuccessstorieshighlightingthesebenefitsaretheleveragepointsforinfluencingconstituents,electedofficials,themediaandotherswhocaneffectchangesinstatelaws.Whenweseesupportfortheselawsdecliningamonglegislators,itisoftenbecausethoselawmakersfullyappreciatehowthebenefitswillaffecttheirconstituents.Furthermore,electedofficialsatalllevelsaresupportingandfundingtechinitiativessuchaslaptopstoeverystudent,electronichealthcarerecordsmanagementandtech‐assistedtrafficcontrolandothergovernmentoperations.Thesetasksdemandfastbroadband.AsaschooldistrictadministratorinoneIowatownlearned,thedistrict’sinvestmentinthelatesteducationtechnologyisonlypartiallysuccessfulbecausemanyhomeslacksufficientInternetaccessorspeedsforkidstousethattechnology.It’sdifficultforlegislatorstochampionlawsthatrestrictpublicaccesswhenatthesametimetheyarepromotingbroadband’sroleasatechnologyenabler.Anincreasingpublicpressuretogetbroadbanddeploymentseverywhere(typifiedbytheFCC’sGigabitCitiesChallengein2013)elevatestheimportanceofbroadbandinpublicpolicycircles.SubsequentlyelectedofficialsinstatessuchasIowa,MinnesotaandColorado(ironicallyanti‐muninetworkstates)preachedin2014thegospelofbroadband’simportance,drivingmediastoriesonthetopic.Whiletheremaynotbeanotherfederalmultibillion‐dollareffortsimilartothe2009broadbandstimulus,communitieslocatednearstimulus‐fundedmiddlemilenetworkswanttotapintothisinfrastructure.TheFCC’sConnectAmericaFund(CAF)couldevolvetoincludemoneyforcommunitynetworks.TheCAFpotentiallycoulddistributeover$4billionannually,sothisevolutionlikelywouldputbroadbandonthefrontburnerofevenmorecities.

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Privatesectorfirmsnotinthetelecomorcablebusinessareaddingevenmoreurgencytobroadbanddeployment.Googleraisedtheprofilenationwideofbroadbandasamust‐havetechnology.InUtah,astatewithoneofthemostoppressiveanti‐publicnetworklaws,aprivatecompany,MacquarieCapital,arrivedonthescenein2013withmajorinvestmentcapitalandproposedtoformapublic‐privatepartnershipwithelevenUTOPIAcitiestoprovideawayforwardandbreakthecycleofunderperformanceinwhichtheirnetworkismired.IntheSanFranciscoBayArea,OSIsoft,asoftwarecompany,madeabigsplashasaprivateinvestorcreatingLitSanLeandro’sfibernetwork.CommunitieswithpoorornoinfrastructuregrowincreasinglyfrustratedseeingsuccessstoriesforChattanooga,KansasCityandothercitiesdominatingthenews.Manyoftheseunderservedcommunitiesrealizepublicownershipofthisvaluableassetisanoptiontheyshouldexplore.Beinginstateswithrestrictiveanti‐muninetworklawsmakesthefrustrationworse,leadingtoanintensesearchforreliefthataddstothechorusdemandingchange.

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II. Dissectingthelawsagainstpublic‐ownedbroadbandIt’sgoodtohavecontextwhencommunitiesdiscusstheselaws.Contexthelpskeepexpectationsrealisticasleadersworktocomplywithrestrictionsorfindwaystogetbetterbroadbanddespitetherestrictions.The20states’restrictivenetworklawsarenottheonlybarrierstomorecommunitynetworks,orinsomecases,theyarenotthesignificantbarriersthatpeoplebelieve.Quiteafewlocalgovernmentshavetightbudgetsandchallengingroadstofunding.AccordingtoCurtisDean,broadbandservicescoordinatorfortheIowaAssociationofMunicipalUtilities,“Bondmarketsareimproving,butthere’sstillahesitationamongcityofficialstopursuethisoption.Inanotheryearweshouldseeanoticeableincreaseinbondmeasurestofundbroadband,andsubsequently,moreprojects.”Evenwithoutthelaws,progresscanbeimpededbythepoliticsdrivenbythefree‐marketphilosophythatonlytheprivatesectorshouldundertakebroadbandprojects.Thisphilosophyultimatelywastherallyingcallthatenabledstatelegislatorstopasstheselawsinthefirstplace.Inthepoorestareas,themostsparselypopulatedareasorboth,thebuild‐outchallengesandongoingoperatingcostsaresohighandrevenueprospectssolowthatmarshalingsupportforpublicnetworkscouldbedifficult.Togetasenseofwhethertheseregionswouldbenefitifanti‐muninetworklawswererescinded,justcomparetheprogressoflast‐milenetworksinsimilarlypopulatedstateswithoutrestrictivelawssuchasWyoming,MontanaandArizona.Threecategoriesofanti‐muninetworklawsI’vearrangedthe21statelawsrestrictingpublic‐ownednetworksintothreecategories:theIf‐ThenLaws,theMinefieldLawsandtheTotal‐BanLaws.Eachcategorypresentscommunitieswithadifferentdegreeofdifficultyinpursuingbroadbanddeployments. If‐ThenLawsTheIf‐ThenLawsarefairlystraightforwardrequirementsratherthanrestrictions,andtheydon’trequirecommunitiestojumpthroughtoomanyhoopsinordertomoveforward:ifyoumeetrequirement“x,”thenyourcommunitycanbuildanetwork.Acoupleoflaws,suchastheoneinWashingtonstate,areprettysimple.SeveralstatessuchasIowaandColoradorequirecommunitiestoholdreferenda:ifaballotmeasurepasses,thenthecommunitycanbuildanetwork.Pennsylvaniaisoneofthestatesinwhichcommunitiesneedtopresenttheirbroadbandwishesto

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theincumbentforthearea.Iftheincumbentwon’tbuildit,thenthecommunitycanmoveforward.AbiggerbarrierintheseIf‐Thenstates,though,appearstobeoneofperception.BethMcConnell,policydirectoratPhiladelphiaAssociationofCommunityDevelopmentCorporationsstates,“Unfortunately,manycommunitieshonestlybelievethatthestatehasacompleteprohibitionofanykindofpublic‐ownednetworks.”OnecountyintheKeystoneState(Cambria)navigatedthewatersandbuiltanetwork.Butdespitethatcounty’ssuccess,nootherPennsylvaniacommunityhasfolloweditslead.Statesrequiringreferendaofferexamplesofcommunities’perceptionsholdingthembackfrombuildingnetworks.Manycommunitiesfearareferendumisanearimpossiblemountaintoclimbbecausetheincumbentswillcrushtheminanelectoralbattle.However,theyfailtorealizethatLongmont,Colorado,andahandfulofsmalltownsinColoradoandIowahavecreatedaroadmapforwinningreferenda.Longmont,backedwith$5,000incontributions,passeditssecondreferendumbya2–1margindespiteComcast’sspending$350,000toopposethemeasure.InNovember2014,eightColoradocommunitiesfacedalmostnooppositiontopassingreferendatotakebacktheirauthoritytopursuepublicbroadband.

MinefieldLawsThesestatelawswerewrittenwiththeprimaryintentofprohibitingpublic‐ownednetworkswithoutcomingrightoutandstatingit.Thelawscreatemultiplelayersofrulesthataresoonerousastomakecomplianceasignificantfinancialburden.Ortheyarewordedsovaguelythattheybecomeminefieldsinwhichonewrongstepcouldtriggerincumbentstotakelegalaction.NorthCarolinaandLouisianaaretwostateswithlawsofthistype.Wilson,NorthCarolinaunsurprisinglyjoinsChattanooga,TennesseeinpetitioningtheFCCtohavetheirrespectivestatelawsrescinded.Smallandruralcommunitiesinthesestatesareparticularlydisadvantagedbecausetheydon’thavethelegalresourcesandexperiencetobattlegiantincumbents’legalteams.MidsizecitiessuchasLafayette,LouisianaandChattanoogahavegreaterresourcesandwereabletoovercomemajorlegalchallenges.Butthesecommunitieswouldprefertoavoidtheadditionalcostsandtimedelayswhilelegalbattlesragetowarduncertainconclusions.Ingeneral,theselawshavesomanylevelsofrestrictionsandrequirementsthatthebestwayforcitiestomoveforward—thoughnottheonlyways—istogetlegislatorstoreverseallorpartsofthelaws.OrfortheFCCtostepinanduseitsauthoritytorescindthelaws.Neitheroptionisparticularlyeasy.

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Total‐BanLawsTheselawstypicallyareshortandunambiguous—publicentitiesareprohibitedfromprovidingservices,ortheycanprovideservicesonlytoalimitedaudienceandonlyonawholesalebasis.However,theremaybeloopholesinacoupleofstatelawsthatcanbeexploited,asyouwillreadlaterinthisreport.ItmaysurprisemanypeoplethatTexasisnotinthereportatall,particularlysincetheLoneStarStatehasalawthatsayspublicentitiescannotownoroperatetelecommunicationsservices.However,aswaspointedoutbyTexastelecomattorneyClarenceWestinafilingwiththeFCC,“TexascitiesarenotprohibitedfromprovidingInternetconnectivity,asitisa[sic]federallyclassifiedasan‘informationservice,’andnota‘telecommunicationsservice.’”ThereareTexascitiesthathaveprovidedInternetconnectivityonacitywidebasis,andGreenville,Texas,currentlyprovidesbothcableandInternetaccessservice.”StateswithIf‐Thenlaws

Alabama WhenAlabama’slawwaswrittenin2006,itwouldhavequalifiedasaMinefieldLawbecausethreeofitsmainrestrictionswouldhavecreatedbarrierssufficientlyoneroustocausecommunitiestogiveuphope.Butin2014,thelawismoreaseriesofIf‐Thenrequirementsthataremanageable.Everycommunityhastoholdareferendumtogetapprovaltobuildanetwork.Itwasagiven,atthattime,thatincumbentswouldspendsomuchinareferendumcampaigntherewaslittlechanceofitspassing.Longmont,Colorado,in2011andseveralColoradoandIowatownshaveshownhowcommunitiescanwinthesereferenda.Anotherrestrictionis,iftownsofferatripleplayofvoice,Internetandvideoservices,theycan’tcomminglefunds.Essentially,theyhavetorunthreeseparatebusinesses.In2006,itwasconsideredimpossibletohaveasuccessfulnetworkwithoutmarketingthethreeservicestogether.Today,citiesareprovingtheycanoperatejustanInternetbusinessandsucceediftheymarketprimarilytobusinesses.Sellingintheresidentialmarketsstillputspressuresonproviderstooffertripleplayservices.Thelawprohibitscitiesfromusingtaxesorbondstopaybuild‐outcosts.Butagain,citieshaveworkedaroundthisbybuildinganetworkforinternalcityorpublic

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utilityuseand,bydoingso,coveringthebiggestpartofthecosts.[Textofthestatute.]

California ProbablyfewpeopleareawarethatCaliforniahasanyrestrictionsbecausethereisnolawthatbanstraditionallocalgovernmentsfrombuildingandoperatingbroadbandnetworks.However,there’sanoddityburiedinanout‐of‐the‐waysectionofCaliforniastatutes.ThestategivesunincorporatedareastheoptiontocreatetemporaryCommunityServicesDistrictstoprovideservicessuchaswastewatermanagement,garbagecollectionandsecurity.Some3000districtsexist.Thelastitemona32‐pointlistofstateregulationsgoverningthesedistrictsisarulethatallowsdistrictstobuildbroadbandnetworksifnoprivateproviderrespondstotheirrequestsforservices.Thedefinitionofbroadbandis,essentially,whatevertheFCCdefinesasbroadband(e.g.,10Mbpsdownload,1Mbpsupload).Seeminglybenigninitslanguage,thelaw’s“gotcha”isthatdistrictsthatbuildanetworkhavetoturnitoverorleaseittoaprivatepersonorentityifoneshowsup“ready,willing,andabletoacquire,construct,improve,maintain,andoperatebroadband.”Languageintheregulationsaystheprivatepersonorentitywouldhavetomatchthenetwork’sservice,pricingandquality.Thebottomlineisthatthereisenoughgrayareaandopen‐endednesstotheregulationthatit’spossibleforadistricttofacelegalchallenges.AsinterestinbroadbandbuildsinCalifornia,andagenerallyprogressivephilosophydrivesthelegislature—asevidencedbyarecentbilltoincreasefundingoptionsformuninetworks—therelevanceofthisstatuteshoulddecrease.[Textforthisstatute.]

Colorado Colorado’smuninetworkrestrictionviaStateSenateBill152,passedin2005,isaninterestingmixoflegacylegislationandpoliticalcompromise.In1992,statevotersaddedaTaxpayerBillofRightstothestateconstitution,includingaprovisionthatacitycannotincreasetaxesordebtwithoutavoteofthepeople.

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SB152tookawaycities’authoritytoownandoperatebroadbandnetworksunlessvotersrestoredthatauthority.Schooldistrictsareconsideredseparatepublicentities,andthesamerequirementsapplytotheirnetworks.ClickhereforSB152text.Acitymustconductareferendumtore‐establishitsauthoritytoexploreoptionsforbroadband,whichLongmontdidin2009(lost)andagainin2011(won).Afterward,ifresearchshowsahighlikelihoodforanetwork’ssuccess,thecitycanholdasecondreferendumtogetapprovaltoraisetaxesorcreatedebttobuildthenetwork.In2013,Longmontconductedandwonthatsecondreferendum,whileCentennialwonitsreferendumtogetitsauthorityback.Until2014,thegreaterbarriertoColoradocommunitiesmovingforwardwithbroadband,however,wasthefearofthereferendumprocessratherthantheprocessitself.Thisfearwasamplifiedin2009whenpro‐ComcastastroturfgroupcalledNoBlankCheckspent$300,000todefeatLongmont’sballotmeasure.Referenda,however,arewinnable.IndustrylobbyistsoutspentLongmontconstituents60:1in2011,yetthereferendumpassedbynearlya2:1margin.OtherColoradocommunitiescanreplicatethisfeat.In2013,Centennialwonitsreferendumbyasimilarmargin.Montroseisoneofthemostconservativecitiesinthestate,anditsreferendumpassedwith70percentofthevote.Whateverdoubtswereremainingaboutcities’abilitiestowinreferendashouldhaveevaporatedwiththeNovember2014electionwheneightColoradocommunities,someheavilyconservativeandothersheavilyliberal,prevailedwiththeirmeasures.InColorado,asinotherstateswithIf‐ThenLaws,somebelieveitwouldbebettertocomplywiththelawthantrytochangeit.Ontheotherhand,rescindingthelawwouldaccelerateeffortstobuildcommunitynetworks,accordingtoKenFellman,vicepresidentatDenver‐basedKissinger&Fellmanlawfirmandadvisortomanypublicbroadbandprojects.“Localgovernmentswouldseriouslyexploretheoption,andcitieswithpublicelectricutilitieslikelywouldbuildnetworks.IfaGig.UorGooglecametotownofferingtoassistinaproject,theywouldbewellreceived.”Fellmanbelievesthethreatbyincumbentsthattheywillnotinvestincommunitieswithpublicnetworksismostlyemptyrhetoric.“Thelimitedexperiencesinthestatesuggestthereactuallywouldbemoreinterestfromincumbentsandanincreaseincompetitors.OnceMontrosepasseditsreferendum,forexample,incumbentswhopreviouslyhadignoredthetownrushedintoofferservices.”

Iowa

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Iowa’sIf‐ThenLawdoesn’tpertaintobroadbandperse.“Thelegislaturedeterminedthatthebasicauthoritytorunabroadbandnetworkshouldbethesameasforanyutility,whichisalreadydefinedbylaw,”saidCurtisDean,broadbandservicescoordinatoratIowaAssociationofMunicipalUtilities.“Fifty‐onepercentofvotersneedtoestablishthatacitycanhaveabroadbandutility.Inmostcases,communitieswillpassanordinancethatsays‘weoperatethisutility,’andthendecidelaterwhowillruntheutility,howitwillbefundedandsoon.”Citieshavetogotovotersagainonlyiftheywanttoissuegeneralobligation(GO)bonddebtsupportedbytaxes.Bondissuesrequireapprovalby60percentofthevoters.Emmetsburgin1998passedareferendumtobeinthebroadbandbusiness.In2013,thecitycalledareferendumaskingvoterstoapproveabondmeasure,butonly57percentagreed.Thetownisputtingthistoasecondvoteinspring2015.IfacitycanraiserevenuebondsratherthanGObonds,theydon’tneedtohaveavote.Theonlyotherstaterequirementisthatthebroadbandutilitycan’tuseothercityorutilityfundstopayforoperatingexpense.Theycan,though,getaloanfromanothercityagencyorutilityforbuild‐outcosts.

Minnesota ThisstatehasoneofthemoststraightforwardIf‐Thenlaws.Communitieshavetopassareferendumwithatleast65percentofthevoteinordertoownandoperateatelephoneexchange(clickhereforthelaw’swording).“Whatwehaveisapsychologicalbarriertobroadbandthat’sbuiltfromthefearofbeingsuedmorethanarealrestriction,”saidDannaMacKenzie,executivedirector,OfficeofBroadbandDevelopmentforthestateofMinnesota.Besidesthereferendumrequirement,whichisasurmountablechallenge,noone’sconsideringbuildingtelephoneexchangesanymorewhencommunitiesarecontemplatingbroadbandnetworks.Citiescanmakethecasethattheirnetworkisonlyfordataandavoidthereferendumaltogether,whichLakeCountydid.MacKenziesaid,“Theirlegaldepartmentfeltthecountywasnotsubjecttothisparticularlaw.Thecountytookapoliticalhitforbypassingthereferendumbuthasmovedpastittobeginbuildingthenetwork.”MonticellopartneredwithHiawathaBroadbandCommunicationstojointlyownandoperateafiberdatanetwork,andWindombuiltacitywidenetwork.LacquiParleandSibleycountiespartneredwithatelephoneandbroadbandco‐op,respectively.

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ScottCountybuiltitsnetworkinfrastructuretoaddresspublicsafety,cityfacilitiesandanchorinstitutions,andthenstartedofferingservicestobusinesses.Thereferendumactuallycanbeviewedasapositiverequirementforcommunities.Localgovernmentsarenotaccustomedtooperatinginacompetitiveenvironment.Topassreferenda,theywouldhavetodoextensiveneedsassessments,consensusbuilding,planningandmarketingwithinthevariouscommunities.Ultimately,thiscanleadtoabetterbroadbandstrategyandultimatelyabetternetworkwithastrongerpotentialforfinancialsustainability.

Nevada Thisstate’srestrictionisakookykindofIf‐ThenLawwithapartialTotalBanandapairoffinancinghandcuffsthrowninforfun.Thelaw,passedin2003viatwostatues(710.147&268.086),statesthatcountieswithfewerthan50,000people,canstartatelephonecompany,andthosewithfewerthan55,000cancreateandowncablebusinesses.Ifcitieshavelessthan25,000people,theycanownandoperatetelephoneorcablebusinesses.There’snothingwrittenaddressingbroadbandspecifically,butthetextimpliesthatifyouoffercableortelephone,youalsocanofferbroadband.Bydefiningwhocanownanetwork,thislawbanslargecitiesandcounties(primarilyClarkandWashoecounties)fromowningnetworks.Oh,andbytheway,thosecitiesandcountieswitheligiblepopulationsizescan’tusebondsortaxestopayfortheirnetworks.AsonlytwoorthreeNevadacommunitiesownnetworks—there’shere’sbeenalmostzeroresponsetoChurchillCounty’soffertohelpothersfinancenetworks—theredoesn’tseemtobemuchpressureagainstthelegislativeglassceiling.Thefinancingis,ofcourse,achallengegiventheno‐bond/no‐taxeshandcuffs.“Butifyouusepotentialrevenueofthenetworkascollateral,it’spossibleyoucanworkoutsomesortoffundingarrangement,”saidMarkFeest,generalmanagerofChurchillCounty’sCCCommunicationsnetwork.“Theprimarybarrierseemstobethatmanycommunitiesareopposedtopublicnetworksbecauseofpoliticalphilosophy.”Aninterestingsidenotehere:ChurchillCountyprobablyhastheoldestpublicruraltelephonecompanyintheU.S.at125‐yearsold.ThecountyboughtthelocalbranchofWesternUnionTelegraphforabout$900,andin1889becameatelephonecompanyafterseeingAlexanderGrahamBell’snewlyinventedtelephone.ChurchillCountywasoneofthefirstcommunitiestowidelydeployDSLserviceinthe’90s,andin2004,itbeganbuildingafiber‐to‐the‐homenetwork,yearsbeforeFTTHwas

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ablipontheradar.

Pennsylvania ThisstatehasaprettystraightforwardIf‐ThenLawthatpassedin2004,butunfortunately,itiscloudedintherhetoric(a.k.a.perception)thatthereisatotalbanonpublic‐ownednetworks.Ifacommunityapproachesthelargeincumbentinitsareawithaspecificplanforabroadbandnetwork,theprivateproviderhas60daystoagreetoeitherexecuteontheplanorrejectit.Shouldtheincumbentagreetoexecute,ithas12monthstocompletethebuild‐out.Iftheincumbentrejectstheplanorfailstocompletethebuild‐outbeforetheclockrunsout,thecommunityisfreetoexecutetheplan.Onlyonelocalgovernment—CambriaCounty—hasfollowedtherulesandbuiltitsownfiber/wirelessnetwork.SteveEttien,theformerdirectoroftheCountyTechnologyDepartmentwhoheadedupthiseffort,explainedthedetails.“In2006,wewenttoVerizonwithaplanforanetworktodeliveraminimumof3Mbpsdownloadanduploadspeedstoresidencesorbusinesses,upto15Mbpspossible.Verizonreviewedtheplan,whichbythewayisaveryinvolvedlegalprocessanddecidedtheywereunabletobuildthisnetwork.”Ettienfurtheredstated,“OnceVerizonturnedtheplandown,CambriaCountywascleartobuildthesystem.Weaddedthenetworkinfrastructurethatservesconstituentstoourexisting911‐networkbackbonesystem,andthenrecruitedsmallISPstoprovideserviceoverthenetwork.”Therehavebeensomemodificationsmadetothestatutesinceitinitiallypassed.

Washington ManyWashingtoncitiesandtownshavetheirownmunicipalcodes(a.k.a.codecities)butsomedonot.Washington’slawrequiresthatonlycodecitiescanprovidetelecomservices,whichtheycanretaildirectlytoendusers.Apublicutilitydistrict(PUD),however,onlycanprovidewholesalefibertothird‐partyISPsthatofferretailservicesdirectlytoindividualsandbusinesses.AcodecityorPUDcanprovideservicetoanoncodecityifthelatterpermitsit,

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perhapsthroughaninterlocalagreementtogettotherightofwayorviaafranchiseagreement.MountVernonPUD,forexample,initiallyprovidedservicesjusttocityfacilitiesin1995andbeganprovidingwholesaleservicestoanISPin2002.LaterthePUDexpandedservicestothecityofBurlingtonandtheportofSkagitviathoseentities’fiberinfrastructuresstartingin2008and2009,respectively.Clickhereforthelaw’sdetails.KimKleppe,MountVernoninformationservicesdirector,believesthelawwaspassedinresponsetotheTacomapublicutility’sClick!Network,builtin1998toofferInternetservicesdirectlytosubscribers.“PUDsdohavetoworkveryhardatcultivatingISPstoprovideservicesoverthenetwork.ThehardestISPtoclosewasthesecondone,becauseitwasleeryaboutthebusinessopportunityinacompetitiveenvironment.”Codecitieshavenorestrictionsonretailsales,butmanystronglyprefertohaveoneofthepublicutilitiesandISPsdealwithalloftheoperationslogisticsbecauseofthecostsinvolved.“Evenifthelawwentaway,we’dstillhavestrugglesinsomecommunitiesgettingelectedofficialsonboardbecausetheirtownsarelowoncash,andnotenoughcommunitypeopleunderstandbroadband’svalue,”Kleppesaid.

Wisconsin LegislatorsinWisconsinin2003createdafairlystraightforwardIf‐ThenLaw.Beforeapublicentitycanconstructabroadbandnetwork,itmustperformafeasibilitystudywithathree‐yearhorizon.Thisstudymustbemadepublicfor30daysbeforethecitycouncilinapublichearingcanconsideradoptingaresolutionthatwouldcreateautilitytooperatethenetwork.Broadbandutilitiescannotcross‐subsidizetheirnetworkswithfundsotherpublicentities.Thisisalong‐standingrulethatappliestoallpublicutilitiesinthestate.Ifthecouncilapproves,offyougo.Amunicipalitythatdoesn’twanttodothiscost‐benefitanalysiscanconductanadvisoryreferendumelectiontopresenttothecommunitythequestionofcreatingabroadbandutility.Ifamajorityvotesyes,thecitywon’thavetodothestudy.Or,amunicangotoproviderstoapprovethenetwork,butthisissocomplicatedthatcitiesprobablywouldprefertodoananalysisthanpursueeitheroftheseoptions.Thelaw’sdetailsstartat66.0422.Shouldalocalgovernmentdecidetogothedistance,theprocesstogetproviderapprovalissimilartoPennsylvania’srightoffirstrefusalapproach.Incumbentshavethesame60‐daytimeframeinwhichtoacceptorrejectacommunity’splanto

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buildanetwork,andninemonthstocompletethebuild‐out.However,wordingrequirestheplantobea“reasonable”demandwithoutdefiningwhatreasonableis.Otherhoopsandhurdlesalsomakethisanunwelcomedprocess.InWisconsin,theinterestincommunitynetworksisdrivenbythestrongneedtoimprovelocaleconomies.Themostlikelybusinessmodelistoformpublic‐privatepartnerships,bothtolessencostsandtobluntsomeoftheincumbents’opposition.“Reedsbergbuiltatriple‐playnetwork,butthey’reanexception,”saidattorneyAnitaGalucci,whoworkswithmunicipalclientsforthefirmBroadman&ClarkLLP.“OcontoFallsisrepresentativeofcitiespursuingpartnershipsinwhichprivatecompaniesoperatethenetwork.”StateswithMinefieldLaws

Florida Florida’slaw(actually,astringofstatues:125.421,166.047,196.012,199.183,212.08and350.81),isaminefielddesignednottotriggerlawsuitsbutrathertomakeitextremelydifficulttoraisemoney.Citiesthatwanttobuildnetworksmustofferlocalincumbentstherightoffirstrefusal.ButunlikethelawinPennsylvania,Florida’slawdoesn’tappeartospecifyatimebywhichincumbentsmustreply,soincumbentscoulddragthisprocessonindefinitely.Also,conditionsaren’tspecifiedthatpreventincumbentsfromobstructingcities’plans,soaprovidercoulddeclareacity’splan“unworkable,”orsayit’sofferingtheproposedservicealreadybecauseincumbents’adsclaimwideavailability.Acityhastopresentabusinessplanatapublicmeeting,followedbyacouncilvote,acityreferendumorboth.Theserequirementsallowincumbentstobeatcitiestothedraw,executepredatorymarketingorotherwisecripplethebusinessbeforeitevengetsstarted.Thepublicnetworkhastoturnaprofitinfouryears(orlosethenetwork)andthecitycan’tusetaxmoney.Furthermore,revenuebondmaturitiesarelimitedto15years(orthecityhastohaveareferendumforlongermaturities),andbelow‐costpricingisprohibited.Collectively,theseandotherrequirementsmakeitdifficulttosecurefinancingtobuildamunicipalnetworkifacityapproachesthisexpectingtobuildanentirenetworkatonetime.Anetworkthatcosts$8to$10million,forexample,wouldbehardpressedtogenerateenoughrevenueinfouryearstoclearthedebtandmakeaprofit.However,ifacitybuildstheinfrastructuretoconnectcityfacilitiesandthenexpandsthenetwork,theentirefundingstrategychanges.

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CourtneyViolette,SVPofoperationsforMagellanAdvisors,abroadbandplanningconsultancy,wastheITandcommunicationsdirectorforthecityofPalmCoastin2005whenitdecidedtobuildafibernetwork.“Wegotaloanfromthegeneralfundtobuildinfrastructuretoconnectcityfacilities.ThenwepartneredwithtwoISPstoprovideservices.Thecitystillhadtoregisterwiththepublicutilitiescommissionandhavealltherequiredpublichearings.”Violettebelievesthatruralcommunitiesareinterestedintripleplayservices(data,voiceandcable/video),andanumberofthemarewillingtoworkthroughthelegislativeprocess.“Many,though,plantobuildinanincrementalapproachsimilartoPalmCoast’s.Veryfew,inmyopinion,plantoissuebondsunlessthereisahugelocalopportunity.”Ifthelawwererescinded,they’dprobablyjumpinrightaway.Incumbentsoftensaytheywon’tinvestinbroadbandifpublicentitiesrunnetworks,butoddsaregoodthatwithorwithoutpublicinvolvementincumbentswillavoidsparselypopulatedareas.

Louisiana ThisMinefieldLawstatehasafamoussurvivorofthetypeoflegalgauntletthatcommunitiesfaceiftheyattempttodeliverpublic‐ownedbroadbandservicestotheirconstituents.LafayetteUtilitiesSystemmaneuveredthroughthreeyearsofcontinuouslitigationbeforeprevailingandmovingforwardwithitsLUSFiberproject.In2004,thestatelegislaturecraftedaseriesofdauntinghurdles,eachwithhooksandopen‐endedwordingthatinvitemischiefbymuninetworkopponents.Aseparateentitymustbeestablishedtorunthenetworkthatcannotgetassetsorresourcesfromotherpartsofgovernment,soatitslaunch,it’sfinanciallyhobbled.LUSFiberissued$125millioninbondstobuilditssystemandcoverearlyoperatingcostsuntilrevenuescoveredcosts.Thereareadditionalprovisionsforareferendum,andifacitydoesn’tconductone,itcouldnolongercollectfranchisefeesfromprovidersfor10years,potentiallylosingmillionsofdollars.Somethingasrandomasalibraryofferingfreewirelesscouldputacityinviolationofaprovisionthatcouldendangerfranchisefees.Publicentitiesmustpaytaxesinanamounttelcosandcablecompaniessupposedlywouldpay—thisisanextrafinancialburdensince,inreality,incumbentsgetvarioussubstantialtaxbreaks.Thereareconditionsonadvertisingandotherbusinessoperationsthatincumbentsdon’tface.Eventhoughpublicentitiescansellserviceswholesale,complicatedrulescouldtriggercourtchallenges.

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LUSFiberissubjecttoseeminglyendlessaudits,withcompetitorsdemandingexpensiveandlabor‐intensivespecialauditsbeyondtheregularonesmandatedbytheLouisianaPublicServiceCommissiontoensureadherencetoitsrules.Theauditsleavemunisvulnerabletonewcourtactionsthatcouldswampsmalltowns.“Electedofficialsinothercommunitiesmaylookattheselawsandrealizethatabroadbandprojectcouldtriggerlegalbattlesthatcouldlasttheentiretimetheyareinoffice,”statesLUSFiberDirectorTerryHuval.“Apparentlythisintimidationhasbeeneffective,asnoothercommunityinLouisianahasattemptedabroadbandproject.Wewerefortunatetohavestrongbipartisansupportforthisproject.”Thereisprobablylittlehopethatthelegislaturewillmakechangestothelaw.DavidMoore,ITstatewideprojectdirector,believesthechancesare“lessthan10percent.Louisianaisaredstate,and,forsomereason,broadbandavailabilityappearstobeablueissue.Anumberofmunicipalitieshaveexpressedinterestinowningandoperatingtheirownnetworks,assumingthelawcouldberescinded,butfundingremainsasignificantbarrier.Municipalities,forthemostpart,favorafederalfundingmodelonbroadbandandareunwillingtomaketheinvestmentontheirown.”Detailsofthelawthatpertaintobroadbandareat45:844.47‐45:844.56.

NorthCarolina NorthCarolina’srestrictiononmunicipalnetworksplaces15hurdlesinfrontofcommunitiesandeachrequirementisstructuredorwordedtoinviteincumbents’challengesnomatterwhatacitydoestocomply.Forexample,citiescan’tpriceservicesbelowcosts.Thefluidnatureofcomponentpricing,laborcostsandotherelementsofnetworkoperationsmakedeterminingwhat’s“belowcosts”difficult,exposingmunistopotentialsuits.Also,citieshavetoprove50percentofconstituentsaren’tgettingbroadbandalready,soyouhavetogohome‐by‐hometoshowthateachisgettinglessthan1.5megsdownand256Kup.Citieshavetopresentthesefindingstopublicutilitiescommissions,wheretheindustrycanchallengethedatabycensusblock.“Theentirelawisdesignedtocreateprocessesthatareverydifficultandexpensivetocomplywith,orwritteninwordingsovaguethatincumbents’lawyerscantieacityupincourtformonthsifnotyears,”observedWillAycock,generalmanagerfortheWilson,NorthCarolina,Greenlightfibernetwork.“Mostcitiesinthestatedon’thaveenoughlawyers—orenoughwithtelecomlawexpertise—northebudgetto

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fightthesekindsofdrawnoutbattles.”Publicentitiesarefreetocreatepublic‐privatepartnerships,buttheycanonlyprovidedarkfiberandmustallowtheprivatecompanytosellInternetservicestosubscribers.Butevenwiththatarrangement,thecloudofpotentiallawsuitsstillwouldhangoverthepartnershipbecauseofthelaw’swording.Furthermore,thelawforcesthePPPtoreportmuchofthenetwork’sbusinessesoperationsandexposeeverything,makingitpossibleforanincumbenttoreaditandstymiethePPP’sbusiness.“Withthelawaswritten,citiescan’tcomplywithit,”Aycocksaid.“Youhavetogetridofthelawtobeabletomoveprojectsforward.”Ifthelawsuddenlyweretogoaway,it’sasafebetthatplentyofcitieswouldstepuptobuildtheirownnetworks.Fornow,theeconomicsofputtingintheirowninfrastructureismuchlessexpensivethanrelyingonincumbents,evenforserviceasbasicasacity’sphoneservices.Therewere35communitiesin2008eagertobuildtheirownnetworks.Thisnumberdroppedtoahandfulafterthelawwaspassed.Clickhereforthelaw’sdetails.

SouthCarolina SouthCarolina’sbill,passedin2012andsimilartothelawinNorthCarolina,createsaseriesofhurdlesdesignedtoimmobilizecommunitiesthroughthefearofincumbents’lawsuits.ThebillwasthelegislativeresponsetoOrangeburgCounty’sreceivingan$18millionbroadbandstimulusgranttobuilda300‐square‐milenetworktohelptheeconomyofanareawhereover20percentofthepopulationlivesbelowthepovertyline.Thefinallawallowsthecountytokeepitsnetworkbutcreatesvariousregulatoryboundariesforothercommunities.“Theydictatecustomerratesincorporatingfactorsthatareambiguouslywordedandleaveopendebatesthatcouldgotocourt,”saidOrangeburgCountyAdministratorBillClark.“Thelawusesdefinitionsthatmakeitappearpublic‐ownednetworkscanonlybebuiltforunservedareas,butthendefine‘served’asareaswith768Ksymmetricalspeedsthatreach25percentofanarea.Bythisdefinition,allofSouthCarolinaiscovered.”Othersleight‐of‐handwordingjumblesthemaze.Forexample,textthat,ineffect,sayspublic‐ownednetworksmustincreasetheirsubscriberfeestocovertaxesaprivatecarriershouldpay.Butthelawdoesn’tspecifywhatindustryactuallypaysgivenallthetaxbreakstelcosreceive.Therearerequirementsforoperatingproceduresthatarewayabovewhatarebasicsoundbusinesspractices.Evenifcommunitiescouldaffordlegalexpertiseneededtocomplywiththerules,it’shard

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tofindtelecomlawfirmsthataren’talreadycommittedtolargetelecomandcableclients.Clickherefordetailsonthestatute(warning:itisquiteaverbalmaze).Whileitwouldbeaplustohavethelawrescinded,it’sdifficulttopredicthowmanycommunitieswouldpursuepublic‐ownednetworks,particularlygiventheeconomicconditionsinmuchofthestate.Public‐privatepartnershipsmightbethepreferredmodelcommunitieswouldadopt.

Utah Utahlegislatorsdidn’tcreateasmanyminefieldsasNorthCarolina’s,butneverthelesstheonesthatareinplaceservethesamepurpose,whichistomakecomplianceverydifficultandtodiscourageoutsideinvestorsinmuninetworks.What’smore,somelegislatorsseempreparedtojumpinonshortnoticetocreateanewlawinaminuteshouldcommunitiesfindwaysaroundthecurrentlaw.Wesawthisinthe2014legislativesessionafterfirmMacquarieCapitalofferedtoinvestinUTOPIA.Twobillswereintroduced(HB60andSB190)thatwouldhavecrippledthedeal.Fortunately,broadbandadvocatesralliedenoughpublicoppositiontokillthebills.ThecoreofthecurrentlawisthatapublicnetworkcanonlysellInternetaccesswholesaletoISPswhothenselltothepublic.Additionally,citiescan’tbondformorethan50percentofthenetworkbuildout,asituationthatmakespotentialinvestorsnervousbecauseoftheuncertainty.Withoutfullfunding,citieshavetocarefullypicktherightneighborhoodstobuildthat50percentbecausetheinitialinfrastructuremustgenerateenoughincometosustainitsownoperationplustherestofthebuild‐outcosts.Thelawthrowsinafewfinancialreportingrequirementsthatcancausecomplianceproblemsevenforprivate‐sectorcompanies. Utahisanotherstatethatholdslittlehopeforalegislativechangeofheart.“There'szerochanceofgettinganyexistingrestrictionsonmunisoverturnedintheforeseeablefuture,”saidJesseHarris,editoroftheblogFreeUTOPIA!andlong‐timefollowerofbroadbanddevelopmentsinthestate.“Wecanbarelyholdthelineonexpansionoftherestrictionsthatalreadyexist.Mostofthelegislatorscomefromveryconservativedistricts,andUTOPIAisaneasytargettoattack.Mostpeoplerunningforelectiveofficearegoingtotakethebait.”StateswithTotalBanlaws

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Michigan IputMichiganinthiscategorytomakeapoint.“Theselawsarenowbeingrepresentedbyindustrytomunicipalelectedofficialsasabsolutebans,”saidMichaelJ.Watza,headofthegovernmentallitigationandaffairspracticeattheKitchDrutchasWagnerValitutti&Sherbrooklawfirm.Inarealitycreatedbytheincumbents,communitieshaveself‐imposedanear‐totalbarrieronthemselves.Michigan’slawisactuallyacomplicatedIf‐ThenLawdesignedseeminglymoretointimidatebyvolumeofworkthanfearofalawsuit.“Therearestatutoryrestrictions,competitivebiddingwithanindustrybiasbuiltin,mildlyonerousseparateaccountingandprojectionrequirements,industry‐biasedgeographiclimitationsandartificialtimedelays,”Watzasaid.Incumbentsactuallywantedatotalbanonmuninetworkswhenthebillwasfirstintroduced.Whatincumbentssettledforisaprocessinwhichacityhastogetcouncilapprovalforanetwork,issueanRFPforit,andwait61days.Iffewerthanthree“qualified”ISPsrespond,thecitycantakeontheproject—butonlyafteritpreparesandpresentstocouncilacost‐benefitanalysisthatpredictscostsandnumberofsubscribersandpoststhispubliclyfor30days.AssumingcitiesdecidetomoveforwardandnoISPresponds,theremustbeapublichearingtoauthorizeconstruction,andthenaCPAmustreviewthedocument.Citiesmustpayforallofthesetasks.“Andifthereareresponses,thekeyisdeterminingwhethertheyarequalifiedtodothework,”Watzasaid.“Adecisionthecommunitymaymake,butonepotentiallysubjecttochallengebyindustry.”IfanRFPrespondentwinsit,itdoesnothaveasetamountoftimeinwhichitmustbuildthenetwork.Thestatuteissilentotherthanthe“qualified”term.Thepoliticalclimateinthestateissuchthatitisdoubtfulthelegislaturewillrescindthislawunlessthereisaseriouspublicoutcry.However,ifthatweretohappen,weshouldexpecttoseeasizeablenumberofcommunitiesbeginnetworkprojectsaschambersofcommerceandlocaleconomicdevelopmentstaffsarerealizingtheircurrentbroadbanddeficiencies.Over3,000milesofnewmiddle‐milenetworkwerebuiltusingbroadbandstimulusbyMeritNetwork,Inc.,anonprofitnetworkcreatedin1966toconnectMichiganpublicuniversities.Merrittisavaluableresourceforcommunitieswantingtonavigatethesewaters.ClickheretoreaddetailsaboutMichigan’slaw.

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Arkansas Thisstate’slegislaturecreatesalawthatappearstobestraightforwardatfirstblush.“Agovernmententitymaynotprovide,directlyorindirectly,basiclocalexchangeservice.”However,theTexaspositionthattelecomrestrictionsdonotrestrictbroadbandseemsrelevantwhenreviewingthesecondpartofthestatute.“Afterreasonablenoticetothepublicandapublichearing,agovernmentalentityowninganelectricutilitysystemortelevisionsignaldistributionsystemmaymakeanytelecommunicationscapacityorassociatedfacilitiesthatitnowowns,ormayhereafteracquire,availabletothepublicupontermsandconditionsasmaybeestablishedbyitsgoverningauthority,exceptthegovernmententitymaynotusethetelecommunicationscapacityorfacilitiestoprovide,directlyorindirectly,basiclocalexchangeservice.”Veryinteresting.InthestateofArkansas,arelocalexchangeservicesmeanttoincludeInternetservices?Lawyers,ofcourse,mayinterpretthebilldifferently,butthewayseemsopentochallengeconventionalorthodoxythatthisisabanonpublic‐ownedbroadband.

Missouri Thelaw,writtenin1997,banspublicentitiesfromowningandprovidingtelecomservices,asdoesTexas’,butit’salwaysbeenanimpliedorassumedbanbecauseanexceptionforbroadbandwaswrittenintothebill.OneMissouricityhassuccessfullybuiltanetworkwithoutchallenge,andnowColumbiarecentlyannounceditsplanstoplaythesame“GetOutofJailFree”card.Someincumbents,predictably,havebegunmakingnoiseabouttighteninguptherestriction.Itwillbeinterestingtoseehowthateffortgoes.Missouri’santi‐muninetworklawhasthedistinctionofinvokingtheSupremeCourt’sblessingandthusbecomingaposterchildofsortsforotherstatelegislatorstoemulate.ThelawwaschallengedallthewayuptoSCOTUS,wherethehighestcourtdeclaredittoolegittoquit,whichwentalongwayinreinforcingtheimageofatotalban.ClickherefordetailsofMissouri’slaw.

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Anumberofcommunitynetworksinthestatewerebuiltandarerunbyelectricco‐ops’ratherthanbylocalgovernments.Manyco‐opssuchasCoMoElectric,whosesubsidiaryisbuildinga4,000‐milefiberinfrastructuretosellservicestoconstituents,startedwithextensivefibernetworkstoimprovetheirsmartgridsandelectricityservices.Anincreasingnumberofco‐opsarejoiningCoMoinexpandingthefiberinfrastructure.

Montana Forsomereason,Montanahasnotshownuponanyofthelistsofstateswithlawsrestrictingbroadband.Itisonlyafewsentencesbutisoverlybroadinitsreach.Thissentenceistheheartoftherestriction:“Anagencyorpoliticalsubdivisionmayactasaninternetservicesproviderwhenprovidingadvancedservicesthatarenototherwiseavailablefromaprivateinternetservicesproviderwithinthejurisdictionservedbytheagencyorpoliticalsubdivision.”Justaboutanyonewithevenabasicknowledgeofbroadbandrealizescommunitiesthatcanbuildagigabitnetworkwillbebetterservedthanaprivate‐sectorproviderthatcanbarelydeliver5or10Mbps.However,abroadinterpretationofthewordinggivestheupperhandtoprivate‐sectorcompaniesregardlessofhowbadtheprovider’sservicemaybe.Ifyouhaveaminute,literally,youcanreadthelawinitsentirety.

Nebraska NebraskahasaTotal‐BanLawthat’salsoshortandsweet.Cityandcountygovernmentscannotsellbroadband,telecommunicationsorcableservices—neitherwholesalenorretail.However,theycansellorleasedarkfibertoalistofapprovedcarriersaslongastheyfollowguidelinesfor“marketpricing.”Otherwise,publicutilitiesareallowedonlytotransportdataforinternaluse,usebyotherutilitiesinthestateandforpublicsafetywithintherespectiveutilities’serviceareas.Currentlyonlyahandfulofutilities,includingNebraskaPublicPowerDistrictandOmahaPublicPower,offerdarkfiber.

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TheNebraskaPublicServiceCommissionapproves—ornot—theeligiblecarriers.Theoretically,theCommissioncouldincreasecompetitionbyregisteringalotofsmallercarriersandruraltelecomcompaniesorbyredefiningtherequirementsforbeingacarrier.Buttheredoesn’tappeartobemuchifanypoliticalinterestinthistopic.Ifyouhaveanotherminuteyoucanreadthetextofthislaw.

Tennessee ThisstatehasaninterestingIf‐ThenandTotalBanhybridstatute.Onthepositiveside,the60TennesseemunicipalitiesthatowntheirelectricutilitybusinessesareallowedtoowntheirownbroadbandandcableTVservicesiftheutilitypassesthroughaseriesoftime‐andmoney‐consuminghoops.Theseincludefeesandfinancialobligations,preparinganetworkbusinessplanthestatecomptrollermustapprove,gettingavoteofapprovalfrom2/3ofthecitycouncilor51percentofcitizensandvariouspublicdisclosurerequirements.Thesearemanageableobligations,asChattanooga,Pulaskiandeightotherpublicutilitieshaveproven.Thelaw’sprohibitions,though,areproblematic.Forone,utilitiesarepreventedfromofferingservicesoutsideoftheirelectricservicearea.CurrentlyquiteafewcommunitieshaveaskedChattanooga’sutility(EPB)toexpandbroadbandtotheirtownsifthelawcanberescinded.ChattanoogahaspetitionedtheFCCforreliefspecificallyfromthisrestrictioninordertomeetthedemandsofcommunitiesaskingthemforservice.Thelikelihoodofsuccesshereisunknown.Additionally,electricco‐opsareexpresslybannedfromprovidingInternetservices,althoughothernonprofitsareallowedtoofferservices.Citieswithoututilitiescanonlybuildanetworkfor“historically”unservedcommunities(neitherbroadbandspeednorunservedisdefined)andcitiesmustrunthenetworksalongwithprivate‐sectorpartners.TheimpactofremovingTennessee’slawwouldbethatEPBandotherutilitieswouldexpandquicklyintosurroundingcities.Thereare22electricco‐opsprovidingserviceto800,000homes,farmsandinstitutions,soeliminatingthebanonthemprovidingbroadband,whichmanyco‐opsareinotherstatesaredoing,enablespotentially2millionpeopletobenefitfromcommunitynetworks.Restrictingcitieswithoututilitiestobuildingoutonlyinunservedareascandebilitatemunisthatfearavarietyofchallengesfromincumbents,soremovingthelawopensthedoorforthemaswell. Giventhateightbillsadvancedinthe2014legislativesessiontoremovesomeoftheseobstacles,includingtherestrictiononutilitiesexpandingtoothercities,itis

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clearthatlawmakersseeaneedforgettingoutofthewayofcommunities.Itseemsincumbents’pressurederailedtheseefforts,butexpecttoseeagrassrootsattempttoenableutilitiestoexpandtheirbroadbandservices.Herearedetailsonthelaw.

Virginia Virginia’slawisaninterestinghybridofaTotalBanandanIf‐ThenLaw.Citieswithoutapublicutilityareforbiddentoprovideservicestoconstituents.LocalgovernmentsthatownelectricutilitiestechnicallycanprovideISPswithwholesaleaccesstotheirtelecomorbroadbandinfrastructure,buttheycandosoonlyunderheavyrestrictionsthatdiscouragestryingtodothis.Bristol’snetworkwasgrandfatheredtobeexemptfromtherestrictions.Ontheotherhand,ifindividualcitiesorgroupsofcitiesarewilling,they’reallowedtocreatebroadbandauthorities,whichareseparatelegalentitiesthatcanfund,buildandoperateInternetaccessservices.Althoughthisoptionappearstobeafairlyfavorablesituationforpublicownershipofbroadband,therearepracticalrealitiesthatcanhobbleeffortstomoveforwardwithnetworkprojects.“TheproblemI’veseenoverandoveristhatthoseprojectsstillrequirefunds,andastartupauthoritytypicallydoesn’thaveanyincomeorfundingofitsown,”saidJeffreyGore,anattorneywiththelawfirmHefty&Wiley,PC.“Soasfarasfinancingprojects,itstillfallsonthelocalgovernment.Theauthoritycouldconceivablyissuedebt,butwithnofinancialtrackrecord,abankorbondholderswillrequirethebackingofthelocalgoverningbody.”Authoritiesleantowardformingpublic‐privatepartnerships,oftenthroughwholesalearrangementsinwhichtheauthoritybuildsinfrastructureandISPssellservicesoverthenetwork.Localgovernmentstypicallydon’twanttousetaxmoneyorissuebondstosupporttheseauthorities,soauthoritieswanttosecurefederalorstategrantstocovertheirpartofthepartnershipinvestment.ForwardmomentumcanstallherebecausefederalgrantsarescarceexceptpotentiallyfromtheFCC’sConnectAmericaFund.Stategrantsareevenscarcerbecausestatelegislatorsarepressuredbyincumbentstoimpedetheriseofpublic‐ownedcompetitors.Overviewofthelaw(bottomofpage).

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III. AnalysisTohelpwiththeanalysis,hereisalistofstatesthatfallwithineachcategory.If‐ThenLaws MinefieldLaws TotalBansAlabama Florida ArkansasCalifornia Louisiana MissouriColorado NorthCarolina MontanaIowa SouthCarolina NebraskaMichigan Utah TennesseeMinnesota VirginiaNevadaPennsylvaniaWashingtonWisconsinThoroughlyreviewlegalsituations,optionsOnebigsurpriseuncoveredwhileresearchingtheselawsisthedepthofbeliefinmanyofthesestatesthattherearetotalbanswhen,infact,manyofthebarriersarerelativelysmalloratleastmanageableforcitieswillingtoputinsomehardwork.OnceyoudigintothenatureoftherestrictionsofIf‐Thenlaws,communitiescangetaclearunderstandingofwhattherealsituationis.TheminefieldstatesareamixofthosewithsomanybarrierstheymayaswellbetotalbansandFloridaandTennessee,wherestoutheartedcommunitieswithgoodlawyershavereasonableshotsatovercomingthebarriers.Thatsaid,formanyofthe21statesthethreat,howevervague,ofanincumbentlawsuitisalwaystherewhencitiesdecidetosellbroadbandtoconstituents,oreveniflegislatorsstarttryingtoappealtheirlaws.Communitieswhoseconstituentshaveastrongneedforfaster,betterbroadbandhavetodecideifthefearoflegalactionisgreaterthanmeetingthatneed.Iexpectinanothertwoyearsthatthepressuretosavestrugglingeconomieswilldrivecommunitiestotaketherisks.Ifthelawsdisappeartomorrow,thenwhat?Allthoseengagedintryingtocountertheeffectsofanti‐muninetworklawsneedrealisticexpectationsaboutwhattheyhopetoachieve.ThepetitionsofWilson,NorthCarolina,andChattanooga,Tennessee,askingtheFCCtorescindtheirstates’lawsshineabrightspotlightonthesestatutesacrossthecountry.Somepeopleassume1)theFCCcanprevailinsuchashowdown,and2)we’llseeafloodofnew

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communityinitiativestobuildmunicipalnetworksiftheselawsareremoved.Butaretheseassumptionsaccurate?TheFCC’schancesatoverturningstatelawspresentacomplexquestionandfoodforanotherdiscussion.However,responsesofthoseinterviewedforthisreportweremixedaboutahypotheticalfloodofmuninetworksresultingiftheFCCissuccessful.Removingthelawswouldbeanetpositiveintermsofincreasingthenumberofcommunitynetworks.Butotherbarrierswouldremainthatcommunitiesmustaddress.Theageandpoliticaldispositionofelectedofficialsarefactorsthatwon’tbeaffectedbychangingtheselaws.Anecdotalevidenceaboundsthatelectedofficialsinquiteafewsmalltownsandruralcountiesarenearingretirementage,technology‐inexperienced,conservative,andnotopentopublic‐ownednetworks,eveninpoliticallybluestates.Alookatstateswithoutrestrictivelawsandthepercentageofcommunitiespursuingpublicnetworksgivesyouagoodideawhattoexpectinthose20statesthatcurrentlyhaverestrictions.“Idon’tthinkfloodgateswouldopen,”statesBillClarkfromSouthCarolina.“Somemunicipalentitiesthathavethepersonnelwhocanhandlethiswillconsiderbuildingtheirown,andafewpublic‐privatepartnershipsmightform.”MarkFeestinNevadaadds,“It’spossiblethatCCCommunicationscouldhelpothersfundnetworks,butourofferwasn’tembracedacoupleyearsago.”Conversely,35NorthCarolinacommunitiesin2008werereadytopursuepublicnetworksbutbackedawayaftertheirstatelawpassed,andChattanooga’sEPBcitesvariousrequestsfromneighboringcommunitiestocometotheirtowns.,IfTennesseeandNorthCarolinagettheirlawsrolledback,thefirstwaveofcommunitiesgettingbroadbandlikelywouldbethosethatconvinceexistingutilities’networkstoexpandintoun‐servedareas.Communitiesinthesestatesthatwanttobuildnetworksfromscratchwillneedwell‐thought‐outstrategiesforfundingthem.InIowa,“Themainbarrieralsoisfinancing,”saidCurtisDean.“Thosecitiesthatvotedtobecomebroadbandutilitiesbuthaven’tbuiltanetworkyetdon’thavealotofmoneysittingaround.”AttorneyKenFellmanbelievesmostColoradocitieswouldexplorepublicnetworkstrategies,particularlyifanorganizationsuchasGoogleorGig.Uofferedtostepintohelpfundthem.EvencommunitiesinwidelyconservativeofLouisianawouldconsidergovernment‐ownednetworksifsomeoneelsepaid.

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RuralAmericacouldwakeupwithzip,nada,nothingbutcellularFewpeopleareawareofthestate‐by‐statestealthcampaignbylargeincumbentstogetoutfromunderCarrierofLastResort(COLR)obligations.Thisisastate‐regulationissue,sothenationalmediahavegivenitlittlecoverage,anditisobscuretelecomlaw,soprobablynotontheradaroflocalmedia.However,theissuewillloomlargeinstateswithanti‐muninetworklaws.Inmanystates,ifnotall,COLRlawswerepassedyearsagotoensureruralcommunitiesgottelephoneservices.Dealsstruckwithlargetelecomandcablecompaniessaid,ineffect,“We’llgiveyoufavorabletreatment,ifnotnear‐monopolyadvantagesinsomeareas,ifyouagreetoprovideservicetocustomerseveninsparselypopulatedareas,comehellorhighwater.”Overthepastthreeyears,carriershavelobbiedstatelegislaturestopassbillstofreethemoftheseobligations,includinginNewJersey,MichiganandKansas(bothpassedin2014),CaliforniaandKentucky(killedin2014).Alotofruralconstituentswon’tbecomeawareofthisactivityintheirstatesuntilaftertheserequirementsarelifted.Communities,particularlyruralones,inthosestateswithanti‐muninetlawswillsufferadoublemiscarriageofjustice.1)Regulationsthathadguaranteedcommunitiesinotherwisepoorlyservedareasdisappearandnowconstituentshavedecrepitcopperinfrastructure,cellularserviceinsufficientforfutureneedsornothing.2)CommunitieswillbelegallyprohibitedfromreplacingtheCOLRswithlocalpublicnetworksthatcouldcompensateforthelossofincumbents’services.SomefeeltheFCCshouldstepinandforcestatestoholdincumbentstotheirobligations,butthisentersintothatpoliticallyriskyrealmofthefederalgovernmentintercedinginstatelaws.Ontheotherhand,youcouldargue“inforapenny,inforapound,”sincewe’realreadyaskingtheFCCtorescindanti‐muninetworklaws.MaybetheFCCandlocalbroadbandadvocatescancombineeffortsandtrytoforceincumbentsintoan“eitherhonoryourCOLRobligationsorallowpublicnetworks”decision.TheFCCshouldpresson,butontwofrontsTheFCC,eitherbydesignorbycircumstance,hasbeenthrustintothemiddleofthenationalfocusonthesestatelaws.ThereseemstobeaconsensusthateveniftheFCCprevails,thelargeincumbentswilltietherulingupincourtforyearsorleanonCongresstotakeawaytheFCC’smoney.BroadbandadvocatesneverthelessseevalueintheFCC’seffortsbecausetheygivetheissuealotofpublicityitotherwisewouldn’tgetandenergizecommunitiestofightformodifyingorrescindingthelaws.However,researchofthelawsrevealstheFCCshouldcontinuedownthepathofraisingthespeedsthatdefinebroadband,whichinadvertentlycanmakesomeofthestatelawslessburdensome.

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Severalofthelaws,suchasSouthCarolina’s,tiethedefinitionofbroadbandtowhatevercriteriatheFCCusestodefineit.Otherlegislatures,includingNorthCarolina’s,usedtheFCC’spreviouscriteriaof4Mbpsdownloadand1Mbpsuploadspeedstohelppushitslawsintoplace,claimingthatifprovidersadvertisethesespeedstoanarea,thatcommunityisserved.TheFCCinDecember2014proposedraisingthespeedrequirementsforbroadbandto10Mbpsdownloadand1MbpsuploadinordertobeeligiblefortheirConnectAmericaFundgrantsforbuildingbroadbandnetworks.Andnow,notevenamonthlater,welearnthatFCCChairmanWheelerisproposingtoredefinebroadbandacrosstheboardas25Mbpsdownand3Mbpsup.Thesepolicychangesshouldgivecommunitiesinseveralstatesleveragetofightbackagainstrestrictionsdesignedaroundthelowerspeeds,thoughmanyofusadvocateswouldlobbyfor25Mbpssymmetricaldownandup.Youcan’tpredictchangebasedonpartisanshipConventionalwisdomsaysthatmajority‐conservativelegislaturesusuallyopposepublicnetworks,whilestronglyprogressivelegislaturessupportthem.However,in2014youcouldn’talwaystellabookbyitspartisancover.AconservativememberoftheNorthCarolinalegislatureencouragedagroupoflocalgovernmentITofficialstoelectrepresentativeswhofavorcommunitynetworksandindicatedlegislatorsarehavingdoubtsabouttheirlaw.EightbillstomodifystaterestrictionsworkedtheirwaytowardpassageintheTennesseeassemblyandsenateuntilanAT&Texecutive’sveiledthreatof“Well,I’dhateforthistoendupinlitigation”killedtheiradvance.Ontheothersideoftheaisle,severalDemocraticlegislatorsorganizedtoreverseColorado’spublicbroadbandrestrictionsuntiltheirleaderstoldthemthebillcouldn’tbetouched.Democratsatthattimecontrolledthestatehouseofrepresentativesandhadaslimmajorityinthesenate.California,withoneofthebluestofstatelegislatures,in2014sawseveralmeasuresthereandintheCaliforniaPublicUtilityCommissionthatadvancedbroadband,butjustonethathelpsmunicipalnetworksspecifically.Eachstateisdifferent,butcommunitiesoftenfindthatgettingbetterbroadbandislocallyanonpartisancalltoarmsdrivenbystrongeconomicandqualityoflifeissuesthroughouttheirareas.ThebipartisannatureofpublicbroadbandwasonfulldisplayinNovemberwheneightColoradocommunities,somewithdistinctlyleft‐orright‐leaningconstituencies,passedreferendabyover75percentmarginstotakebackbroadbandauthority.This,togetherwithconstantcoverageofsuccessstories,isdrivingconstituentstopressurestatelegislatorstosupportratherthanhinderpublicbroadband.Theriseofpublic‐privatepartnershipsinwhichpublicentitiesownthenetworkinfrastructuresandprivatecompaniesdeliverservicestocustomersfurtherreduceslegislativesupportfortheselaws.

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WhileWilson,ChattanoogaandotherslobbytheFCCtobringgovernmentpressurefromthetopdown,alternativeforcesneedtocomeintoplayfromthelocalleveluptothestate.Bipartisanpressureattheballotboxisoneforcetobringtobear.Anotherisrevvingupelectricco‐opsandothernonprofitstobecomebroadbandproviders,asMissourihasdonetokeeplocalcontrolwhileavoidingtherestrictivetenetsofthisstate’slaws.Finally,ridingthepublic‐privatepartnershipwavecanbeastrongcountertotheeffectsofIf‐ThenLawsinparticularandsomeofthemilderMinefieldLaws.Vigilancemustbethewatchwordwhenitcomestothepoliticallandscapeofstatelegislatures,bothinthe21stateswithrestrictionsandinthosewithout.Thereisalwaysthedangerthatsomelegislatorswillbecomeinspiredtointroducenewrestrictionstoexistinglaws—orcreatenewlawsinstatesthathavenobarriers.Conversely,someconservativelegislatorsareshiftingtheirpositionsandbecomingalliestocommunities.Citiesandcountieswithnetworksneedtobefrequentlypresentinthehallsofthelegislaturewhiletheyareinsession—andinlawmakers’homeofficesatothertimes.Themoresuccessstorieslegislatorshearthebetter.SomelawsactuallyprovideanimpetustobuildbetternetworksIfastatehasalawthatrequiresareferendumorarightoffirstrefusalapproach,considerthisaninvitationtocreateabetterinfrastructurewithgreaterconsensusamongstakeholdersandamuchhigherlikelihoodoffinancialsustainability.Inmeetingtheletterandthespiritoftheselaws,communitiesbydefaultendup(orshouldendup)followingbestpracticesforeffectivebroadbandstrategyplanning.CambriaCounty,Pennsylvania,Longmont,Colorado,andLafayette,Louisiana,throughnavigatingtheirstates’rules,arecitiesthatexemplifythosepractices.Whenyoulookatwhatdrivesthecraftingandpassageofmanyoftheselawsinthefirstplace,youalmostalwayshearafactionscreamingthere’snoneedforpublicnetworksandthatallmunicipalnetworksarefailures.Thethoroughnessofasix‐to‐12‐monthproperneedsassessmentleaveslittledoubtthatifneedsdoexist,theprocesswilluncoverthemanddocumentthem.Andenthusiasmcreatedduringtheassessmentactivitiestranslatesintoreferendumvotesintheshorttermandintopayingsubscribersinthelongterm.Allthisbeingsaid,settingupandrunningspecialelectionscanbeasignificanttimeandmoneysinkthatcommunitiescandowithout.Forthisreason,andthefactthatjusthavingthelawonthebookscanpreventcertainprivateinvestmentsforbroadband,somecommunitiesstillmaytrytohavetheserestrictionsremoved.Creativefinancingforthosestateswithlawsthathobblefunding

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Somanycommunitiesdelaymovingforwardwithbroadbandprojectsbecausetheyseebondsandtaxesastheonlyfundingoptions.However,thereareatleasteightoptionsforfundingthesenetworkswithnewpossibilitiesconstantlyunderreview.Communitiesneedtoreviewthosepioneeringnewstrategies.UTOPIAinUtahispursuingadealinwhichMacquarieCapitalfundsthenetworkbuildout.Steuben,ChemungandSchuylercountiesinNewYorkstateaswellasSanLeandro,CAgotlocalcompaniestounderwritemuchoftheirfibernetworks’buildoutcosts.ThelawssuchastheonesinFlorida,NevadaandUtahthatmakeitdifficulttoraisemoneyforcealevelofcreativityintotheprocessoffundingnetworks.Localgovernmentsorpublicutilitiesfundedquiteafewnetworksinitiallywithcapitalfundstofacilitatetheirbusinessoperations.InfrastructureinReedsburg,WIandMountVernon,WA,forexample,paidforitselffromtheoutsetthroughreducedspendingforoutdatedcommunicationtechnology.Theythenexpandedtheirinfrastructuretoservebusinessesandindividuals,andremainedcashpositivebygrowingnetworkbusinessdirectlyinstepwiththeirincreasingsubscriberbase.Debunkingthemyththatincumbentswon’tgowheremuninetworksexistLegislatorsneednotworryaboutlosingincumbentinvestmentsiftheymodifyorremovetheselaws.Acitysimplyissuingacrediblethreattobuildanetworkisprobablythefastest,leastexpensivethingtodothatwillincreasethekindofcompetitionintheirstatesthatlowerspricesandincreasesoptionsforconstituents.AdayaftertheeightColoradocommunitiespassedballotmeasuretoreturntheirauthoritytopursuebroadband,Comcastannouncedtheyaredoublingbroadbandspeedstoallcustomersinthestateatnoextracharge.Coincidence?Ithinknot.Onepieceofrhetoricjustifyinganti‐muninetworklawsisthatprivateproviderscan’tpossiblycompeteagainstpublicnetworks’unfairadvantages,soincumbentswon’tinvestwherepublicnetworksexist.WhenPhiladelphiagotawaiverfromPennsylvania’slawandbeganbuildingacitywidewirelessnetwork,afunnythinghappened,though.Verizonstartedofferingincrediblediscountstowirelesscustomers.Monticello,Minnesota,announceditwasmovingforwardwithplanstobuildapublicnetwork,andincumbentsthatforyearsrefusedtoimproveservicetheresuddenlystartedpromisingMonticelloinfrastructureinvestments.Timeandagain,onceapublicnetworkisinthepicture,mostplaceswhereincumbentsrefusedtoprovideadequateserviceallofasuddenfindgiantprovidersgettingreligion.Someincumbentsoftendon’tevenwaitforpublic‐ownednetworkstobebuiltbeforetheystartissuingpressreleasesandpromisingfasterspeedsandbetterservice.WesawthiswithAT&T’sFiber‐to‐the‐press‐releaseannouncementpromisinginitiallytobuildgigabitnetworksin100cities,apparentlyinresponsetoallthemediacoverageGoogleisreceivingforanointinggigabitcities.

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Challengingmythofthe“unsuccessful”publicnetworkTheoverwhelmingmajorityofpublicnetworksaresuccesses.Criticsofpublic‐ownedbroadbandwanttomeasuresuccessintermsofprofitmargins,highrevenues,subscribernumbersandquickdebtretirement.Therealityisthatcommunitiesmeasuresuccessbasedoncostreductionsinlocalgovernmentoperations,positivelocaleconomicimpactandqualityoflifeimprovements.Apieceofrhetoricinsupportoftheseanti‐muninetworklaws,andoneofthemostpersistentfallaciespreached,isthatmostoftheseprojectsarefailuresthatwastetaxpayerdollars.Therealityisfarfromit,andcommunitiesneedtounderstandthesuccessstoriesthatdrivetheseprojects.Currentlyover140localgovernmentsorpublicutilitiesowncitywidenetworks,manyofwhichIsurveyedforthisreport,whileover250moreownpartial‐reachnetworksthatcoverportionsoftheircitiesandtowns.Asizeablenumberhavebeenoperatingsuccessfullysinceatleast2003,andsomehaveoperatedsincethelate90s.Thesecommunitiesdefinedsuccessasmeetingthegoalssetthatjustifiedtheinvestmentsintheirnetworks.Fromdatagatheredsofar,wegetagoodideawhattoexpectinthosestatesifanti‐muninetworklawsarerevisedoreliminated.

Abouthalfofnetworkswereinitiallybuiltwiththegoaloffacilitatinggovernmentorutilityoperations.

Overhalfhadasecondgoalofimprovingeconomicdevelopment,mainlyby

retainingcurrentbusinessesorattractingnewones.

Mostofthoseinterviewedhadoneorbothofthesegoalsinitiallyaddedmoregoalsalongthewaythatfurtherjustifiedtheinvestmentsinthenetworks.Abouttwo‐thirdsreportreachingorexceedingoneorbothoftheirinitialgoals.

Abouthalfreporttheirnetworksincreasedlocalgovernmentefficiency,

boostedeconomicdevelopment,transformedhealthcaredeliveryandimprovededucation.Anadditionalone‐quartersaidtheirnetworksmainlyhelpedtheeconomy.

Initialinvestmentsrangefromaslittleas$160,000to$750,000andtoas

muchas$12to$15million.Investmentamountsvarydependingonarangeoffactors,includingthesizeofthecommunity,numberofpublicresourcestowireandwhetherresidentialsubscriberswereconnected.LargercitiessuchasChattanoogaandLafayettemadeconsiderablyhigherinvestmentsintheinitialyears.

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Somenetworkshaveneveroperatedatadeficitbecause1)theinitialinfrastructureforgovernmentorutilityusepaidforitselfincostreductions,and2)theyincurredcostsforexpandingthenetworkforthepublicthatweredirectlyinproportiontosubscriberrevenuegrowth.

CitiessuchasSantaMonicaandBurbank,California,forexample,coverallcostsforpersonnel,networkoperationsandnetworkexpansionbyaddingjustthreetofourbusinesscustomerspermonth.They’realsoabletobuildfreepublicWi‐Ficapabilitythroughoutthecity,thankstothefiberinfrastructureconnectinggovernmentandutilityfacilities.

Anumberofcitiescarrytheirinitialdebtforbuild‐outanywherefrom10to

25years,andmost(exceptsomenetworksbuiltwithinthepasttwoyears)currentlygenerateenoughrevenuetoretirethedebtonschedule,ifithasn’tbeenretiredalready.This,bytheway,iswhatcitiesdo—theycarrydebtformanyyearsforinfrastructureprojects.Criticstrytopaintthisasanothernegativethatjustifiesanti‐muninetworklaws—“we’reprotecting”taxpayersfromdebt.

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IV. Recommendations

Knowthelaw.Manycommunitieshavebeenmisledintobelievingstatutesplacetotalprohibitionsonthecreationandoperationofmuninetworkswhensomedonot.

Bereadytofightonamoment’snoticeinthestatelegislatureanyattemptto

makecurrentlawsworse,orintroducerestrictivelaws(nomatterhowbenigntheysound)inotherstates.InKansas,acableindustrylobbyistwrotethedraconianbillin2014ANDentereditonthestateSenateCommerceCommitteedocket.InUtahafewweekslate,theincumbentsatleasttriedtomaintainthecharadeofrepresentativedemocracyandinfluencedtheirlegislativeallyinthehousetointroducethatbill.Expectbothstatesandmaybeotherstotryagain.

Communitiesinstateswiththeeasiesttoaddressrestrictionsshoulddeal

withthesehead‐onwithouttryingtorewriteorremovethelaws.

FindoutASAPwhichincumbentsarepushingeffortsinyourlegislaturetoescapetheirCarrierofLastResort(COLR)responsibilities.Thiscouldbealittletime‐consumingbecauselobbyistsarekeepingthiseffortonthedownlowasmuchaspossibleandsomestatuesmasktheintendedultimateresult.Butifsucheffortsareunderway,takeappropriateaction,includingtryingtotieanyCOLRescapelegislationtoaclearunrestrictedpathwaytopublicnetworkoptions.

Instatesthatrequirereferendaorhaveestablishedrightoffirstrefusal

procedures,committoexecutingathoroughneedsassessmentprocessanddevelopingabroadbandplan.Usetheresultsoftheseactivitiestodevelopareferendumstrategy—orastrategyforapproachingincumbents.

FilecommentswiththeFCCinsupportofWilson,NorthCarolina’s,and

Chattanooga’spetitions.Keepthatmomentumgoing,becausewearelikelytoseeactionintheFCCacceleratenowthatthecongressionalelectionsareover.

PetitiontheFCCtoincreasethespeedthatdefinesbroadband.Somehave

floated25Mbpssymmetricalasthenextpossiblespeedminimum,butcommunitiesshouldpushforhigher.Inreality,thedefinitionofbroadbandshouldbethatspeedwhichcommunities(themarket)determinesufficienttomeettheirneedsasdeterminedbycommunityresearch.However,politicalnecessityforawhilelikelywilldictateincrementalminimumspeedincreasesbytheFCC.

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Preparetoplaythelobbyinggameatyourstatecapital.Understandhowlobbyingisdone—influencethrougheducation,cashdistributionanddeliveringsoulstothepolls.Communitiescan’tcompetewithindustrylobbyistsincashandperks.Butif10Coloradocommunitiescandeliver70percentofthevotetopassbroadbandreferenda,thiskindofvotedeliverycommandsrespectamongelectedofficials.Also,legislatorsareforevershortontime,andmanyhavelimitedknowledgeoftechnology.Becomethemasterofdeliveringthe30‐secondelevatorpitchdescribingwhypublicnetworksaregreatandwritingtwo‐pagesummarydocumentsthattellcompellingstorieswhiledeliveringjargon‐freeeducationsonkeypublicbroadbandpoints.

Pushtheenvelopefordevelopingfundingstrategies.TheFCChasfourprogramsthatcouldfundpotentialgrants.Twoofthese,E‐rateandtheConnectAmericaFund,arebeingremodeled.TrackchangesintheseprogramsandworkwiththeFCCtoinfluencereformssocommunitybroadbandnetworkswillbesupported.OtherfederalagenciessuchasRuralUtilitiesServicehavegrantmoneyforbroadband‐relatedprojectsbutarerelativelysmallor,insomecases,shrinking.

Anadditionalapproachmaybetodeterminewhatoutcomesbroadbandcan

produceforyourcommunity,suchasimprovingeducationorhealthcare,andfindagencygrantsthatwillfundyourtargetedoutcomesratherthanthenetworkitself.Considerasimilarapproachforapproachingstateagencies,corporatefoundationsandnonprofitorganizations.Fundtheoutcomes,notthenetwork.

Broadbandstrategiesshouldincludealigningwithtrustedpartnerswithexpertiseinfinancing,infrastructurebuildoutsandmultivendornetworkintegration.Theycanoffersoundguidancesoyoucanmitigateorcircumventchallengesandminimizeprojectrisks.

Rethinkyourapproachtopublic‐privatepartnerships.UTOPIAandSan

Leandrobreaknewgroundbyaddingfundingelementstothestandardwholesaleapproachofcitiesbuildinginfrastructureandprivatecompaniesdeliveringservicesacrossthenetwork.

TakeapagefromMissourico‐opplaybook:holdopenhousesforlegislatorstoshowthemthesuccessofyournetwork.Legislatorslovetohangtheirhats—andphotoops—onhigh‐profile,successfulcommunityprojects.

Also,takeapageortwofromtheKitCarsonElectricCooperativeplaybook.Atonetime,thestateofNewMexicohadastatutethatforbadeco‐opsfromprovidingbroadbandservices.KitCarsonCEOLuisReyes,Jr.,beganasystematiccampaignofbuildinglocalpoliticalsupportthatwasrolledup

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intostatepoliticalsupport.“Westartedwithbigeducationandfacetimewithelectedofficialsatlocallevels.Notjustmayorsandcitycouncil,butanyonewhoranforelectedofficewhowouldbenefitbyhavingbetterbroadband.”Theco‐opalsogotinvolvedwitheconomicdevelopmentprojectsinthethreecountiesitservices,anddevelopedatrackrecordofsuccessstories.

Bysupportingprojectsthatdirectlybroughtjobstothecommunities,KitCarsonbuiltastrongcredibility.Theytheneducatedthecommunitiesonhowbroadbandwouldbringjobstothearea.Withthesupportbuiltamongconstituentsandelectedofficials,theco‐opgenerated1000lettersofsupportfortheirbroadbandplans,whichtheyleveragedwithstatelegislatorstogettherestrictivelawremoved.Furthermore,KitCarsoncreatedalliesbypartneringwithlawmakerstohelplegislatorsimplementtheireconomicdevelopmentinitiatives.“Citiesalwaysgotothelegislatureaskingforsomething,”saidReyes.“Butwedevelopedrelationshipsbecauselegislatorscouldcountonustodeliversupportfromour29,000customers.”

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ConclusionInmanypartsofthecountry,communitiesarepushinghardtofindwaystogetfaster,betterbroadbandtotheirconstituents.Communitystakeholdersagreethatremovingormitigatinglawshinderingmunicipalandpublicpowerutilitynetworkswouldbeahugewinforconstituents.Whatpathyourcommunitytakestoaddressyourstate’sstatutes,orwhatyoudotopreventthesetypesoflawsfrombeingenactedinthefirstplace,variesdependingonthebroadbandneeds,thepolitics,economicconditionsandsoforth.Alotofresearchisrequiredandconsultingwithlegalexpertsaswellhighlyadvisable.Italsoisimportantthateveryonehaverealisticexpectationsofhowaworldwithoutbarrierswouldlookbecause,justbyitself,removingthemmaynotopenthefloodgatestohundredsofnewnetworks.Itisveryfrustratingtomarshalresources,timeandmoneytoreachwhatwasthoughttobethefinalchallengetobetterbroadband,onlytofindoutthatmuchmoreisrequiredofcommunities.Thisreportisafirststepinunderstandingwhatisinvolvedwithaddressingbroadbandinthosestateswithvariouslegislativechallengestoonecategoryofbroadbandsolution,public‐ownednetworks.Thereareseveraloptionsforcommunitiestoconsider.Doyourhomeworkwellandthoroughlyexamineyouroptions.Neverbeafraidtogethelpfromthosewhoseknowledgeandexpertisecanhelpyoubestaddressthechallenges.AbouttheauthorForover25yearsCraigSettles’workshops,consultingservicesandbookshavehelpedpublic,privateandnonprofitorganizationsworldwideusetechnologytocutcosts,improvebusinessoperationsandincreaserevenue.Hiscommunitybroadbandexperience,analysisandstrategydevelopmentskillsestablishMr.Settlesasathoughtleaderonusingpublicnetworkstotransformeducationandhealthcaredelivery,improvelocaleconomies,andincreasinggovernmentefficiency.Hisindustryreportsandbooks,includingBuildingtheGigabitCity,addtohisindustryposition.

Mr.Settlesbeganfollowingcommunitybroadbandconsultingin2005.Hispublic‐sectorclientlistincludesOttumwa,IA,Benicia,CA,Glendale,CAandtheStateofCalifornia,withCalix,Ciena,andAT&Tamongthoseonhisprivatesectorclientlist.Inaddition,hehastestifiedfortheFCCandonCapitalHill.Mr.SettleshoststheGigabitNationradiotalkshow,andisDirectorofCommunitiesUnitedforBroadband,anationalgrassrootsefforttoassistcommunitieslaunchingtheirbroadbandnetworks.