Category: Responses to Industry Claims

Texas has an opportunity to take advantage of vast new broadband-driven digital transformations that promise to unleash a wave of innovations that can transform the way we learn, work, and live as well as bridge the digital divide. Cities across the state are hoping to accelerate this opportunity and are stepping forward with creative solutions for extending the benefits of ubiquitous broadband access to city residents. Like their counterparts in other States,the municipalities of Texas also want to do their part to help America shed its embarrassingly low – 13th in the world — global ranking for broadband Internet access. This isn’t the time to be erecting new barriers to broadband when we have communities throughout the state that are ready, willing and able to extend the reach of the Internet through advanced broadband networks. Rather than embracing this future, some opponents of municipal broadband projects are hiding behind a set of unfounded myths in order to pass legislation that would stall, stifle or stop these innovative community-based efforts.

Beware of legislation promising “competition.” A bill passed by the General Assembly last year that was intended to jump-start competition in the cable TV industry has had the unforeseen consequence of costing the state and local governments across North Carolina millions of dollars in lost revenue. And six months after the law went into effect, that promised competition is nowhere in sight.

In its latest “study” entitled Municipal Broadband: Optimistic Plan, Disappointing Reality (June 20, 2005), the Heartland Institute attempts to achieve two purposes simultaneously: (1) attack the municipal fiber project in Bristol, Virginia, and (2) use its criticism of the Bristol system to undermine the Lafayette fiber project. Heartland’s paper contains so many mistakes, misinterpretations, unsupported and insupportable claims, irrelevancies, innuendos, key omissions, and obvious untruths in Heartland’s latest harangue against municipal broadband that it would take a paper many times the length of this one to respond to them all.

Heartland makes five main arguments against public FTTH systems: (1) there is no need for municipal entry because robust competition exists among private-sector broadband providers, which are currently meeting, and will continue to meet, America’s broadband needs; (2) there is no evidence that municipal investments in broadband technology lead to faster economic growth
or higher personal incomes; (3) the private sector is more efficient that the public sector; (4) municipal projects typically encounter higher than expected costs and large operating losses borne by taxpayers; and (5) municipal broadband networks are very risky ventures. None of these contentions holds up under analysis.

This paper provides evidence that municipally owned and operated cable television enterprises are financially viable and provide large rate savings to their communities. The findings contradict allegations in Costs, Benefits, and Long-Term Sustainability of Municipal Cable TelevisionOverbuilds, a 1998 paper authored by Ronald J. Rizzuto and Michael O. Wirth, that such enterprises are likely to be poor investments for cities.

In its written testimony to the Indiana legislature in support of HB 1148, SBC claimed that “the landscape is littered with examples of misjudgments and miscalculations by local government officials who, understandably, bought into the Field of Dreams scenario.” SBC gave seven examples. Not one was correct or supported SBC’s position.

P&FF maintains that public entities should not enter the communications because they have numerous unfair advantages over their private-sector counterparts. Citing two earlier studies and  three new case histories, P&FF also maintains that public communications ventures are likely fail. None of these arguments has merit.

More than 2,000 communities across the country have created public power systems—not-for-profit electric utilities that are owned by the communities and the people they serve. Public power systems share a common purpose—to provide adequate, reliable service at a reasonable price. They are locally owned and operated, giving citizens a direct voice in utility decisions through public meetings, the ballot box, and open policy board meetings. Across the country, not-for-profit utilities have an established track record of delivering affordable services. Nearly 500 of them have already celebrated 100 years in business, with 70 percent of all public power systems serving communities of less than 10,000 people.