Internet access is an important tool for rural economic development. The Progressive Populist is edited in Austin, Texas, and published in Storm Lake, Iowa, largely because high-speed "broadband" Internet connections allow us to transmit stories, graphics, layouts and databases a thousand miles in a few seconds.
But many rural communities and even large cities have been unable to get telephone or cable TV companies to provide broadband services at popular prices.
Activists are working with municipalities and utility districts to provide high-speed Internet access to underserved communities, but they must overcome barriers set up by telecommunication giants, such as SBC, Verizon, Qwest, Bell South and Comcast, who have worked to protect their monopolies.
The Telecom Act of 1996 required phone companies to make their networks available to other service providers. It also stated that neither Congress nor any state should prohibit any entity from getting in the telecom business. But those requirements have been effectively stripped out by courts and the Federal Communications Commission, as phone companies have argued that unregulated businesses should not be able to profit from regulated utilities' investments.
In an unregulated, uncompetitive broadband market that exists in much of the country, Keith Wilson noted, fiber-optic lines that support broadband services tend to go to wealthier neighborhoods and business parks in cities.
Wilson is CEO of DynamicCity of Lindon, Utah, a private enterprise that is building open-source fiber-optic networks in 14 cities in Utah with 160,000 potential subscribers. The system offers consumers access to data, telephone and video services at speeds up to 100 megabits per second (Mbps). That's much faster than phone companies' digital subscriber lines that typically offer 1.5 Mbps, or cable modems at 4 Mbps, or regular dialup service at 56 kilobits per second.
DynamicCity stepped up after other potential service providers failed to offer state-of-the-art telecom services. The president of Qwest, the regional phone company in Utah, has said customers should be satisfied with DSL service, where it is available. "Why provide a Rolls Royce when a Chevrolet will do?" he told the New York Times (11/17/03).
But only 60% of Utah households even have access to DSL. Because many phone and cable companies are unwilling to invest in fiber-optic lines in rural areas and low-income inner-city neighborhoods, 75% of Americans do not have access to high-speed digital communication. In comparison, 75% of South Korean households have broadband access.
Many people assume that the US has state-of-the-art Internet service, but Ben Gould, DynamicCity's chief marketing officer, said the US actually ranks low among industrialized nations. In Japan, 50 Mbps of service costs about $25 a month. In Texas, where it is available, 3 Mbps costs more like $50. "When you talk in terms of being competitive I think people can clearly understand that we're in trouble," Gould said. DynamicCity's UTOPIA project recently started offering 10 Mbps service in Orem, Utah, for $39.95 monthly and expects to upgrade the service to 100 Mbps later this year.
Phone companies have been active in promoting legislation to stop government involvement in developing commercial telecom networks. After Philadelphia officials last year announced plans for "Wireless Philadelphia," which would assure city residents access to broadband Internet services, Verizon got the Pennsylvania legislature to pass a bill that requires local governments to present broadband proposals to the phone company before proceeding with the plan. Philadelphia was exempted from the bill and the city expects to start offering the service in 2006.
Texas, Pennsylvania, Missouri, Virginia and Colorado already have laws limiting local governments' role in providing telecom service. Legislatures in Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Nebraska, Ohio, Oregon, Tennessee, Texas and Virginia are considering bills that would limit or destroy opportunities for cities to provide Internet access. (See FreePress.net for bill status.)
Utah, South Carolina and Washington adopted some limits, but allow cities to offer wholesale telecom networks so that private entities can come in and use the networks to offer services.
"The phone companies say it's wrong for the government to compete with the private entities," DynamicCity's Wilson said, "but some say it's wrong for private entities to get the legislature to inhibit competition." He added that DynamicCity and its municipal partners were trying to provide a free-enterprise solution. "When we were faced in Utah with the attempt to prohibit this kind of network, we found that the best way to talk to people was to explain to them that we were attempting to deliver choice."
Harold Ford of the Media Access Project recently wrote at Muniwireless.com that competition is evaporating in most broadband markets. But a Florida Municipal Power Association study showed that municipalities offering broadband increased the number of broadband providers. "The same thing happened in Kutztown, Pa.," Ford wrote. "Before Kutztown built its network, it couldn't interest anyone in providing services. Now they have offers from several companies to provide service in their market."
Even the threat of municipal entry can spur incumbents to provide better service, he wrote. "Consider the example of the Tri-Cities area of Illinois. That area has twice tried to offer municipal systems, only to have it defeated by referendum. Comcast and SBC, the local cable and DSL incumbents, spent a good deal of money to fight the campaigns. But they also started offering better service, because they knew that if they didn't, the referendum measure would eventually pass."
And in isolated Storm Lake, Iowa, population 10,000, citizens five years ago passed a $6 million bond issue to build a municipal telecommunications system. The vote itself attracted a competing telecom firm that offered high-speed Internet and cable access. The bonds never had to be issued. Storm Lake now has two phone competitors, two cable competitors and numerous Internet providers. Without the threat of municipal competition, Storm Lake likely would still be riding a mule into the Internet.