In the world of essential infrastructure, thousands of years of history have taught us that entities, acting on their own narrow interest, cannot be trusted to build or govern the building blocks of commerce or transportation. The temptation to abuse that powerful position has always proved too much for those without accountability to the public. For instance, if the only way to move goods is a canal, private canal owners will price at a high level or use their position to take a stake in all the industries using the canal. Such an arrangement is great for the canal owners but poor for the rest of society. Witness the history of canals and railroads. Two options to dealing with this problem have historically been either regulation or public ownership of such infrastructure. Readers of this site are undoubtedly well aware of our preference for public ownership - a structural approach using coops, local government, or non-profits to ensure the interests of the public at large receive the highest priority. This post explains one of the reasons a regulatory approach, whereby private companies still own the infrastructure (and often make key decisions) but must go through some form of public body that is supposed to prevent the natural interests of the private company from taking over and reducing the benefits to society at large. Writing in the Financial Times, John Kay explains regulatory capture, the process by which the agency or commission supposed to regulate effectively begins to act more in the interests of those regulated rather than the public. An obvious example of this is the Minerals Management Agency that has long improperly overseen the extraction industry, leading to the BP Gulf Oil Hole. As Kay rightly explains, there are multiple kinds of capture from outright corruption to something that leads some political science geeks bring up Gramsci and Hegemony...

But the most common form of capture is honest and may be characterised as intellectual capture. Every regulatory agency is dependent for information on the businesses it regulates. Many of the people who run regulated companies are agreeable, committed individuals who are properly affronted by any suggestion that their activities do not serve the public good.

Andrew Cohill has made some apt observations regarding a likely future of broadband in the United States. The thesis is that a few providers can effectively disrupt the likelihood of an entire community getting next-generation services by locking up key customers. And I agree.

But today, the market for bandwidth continues to grow along a nice smooth curve, with the demand doubling every two years, and we have fifteen years of data to back this up. While the incumbents are busy trying to convince us they can meet this demand with 1950s copper cable plant, smaller telecom firms are busy spreading bits of fiber through communities to cherry pick the more profitable business customers. These companies tend to have no interest in full fiber build outs, and instead just want to lock up a portion of the local business market.

Some [not Cohill] have argued that when local governments stop overpaying for T1 lines and build their own networks to be fiscally responsible, incumbent telcos will be unable to continue investing there due to the reduced revenue. Of course, incumbent telcos have long ago ceased investing in these communities, so the proposition is off from the start. But even if it were true, it is an incredibly inefficient system (no matter how lucrative for the incumbent telcos). We need to actually start treating broadband as infrastructure (rather than simply talking about it as though it were infrastructure -- which most elected leaders seem to do). This means that when the community needs broadband, they are able to build it themselves and ensure the network will remain accountable to them in the future. The longer communities wait to build these networks, the more difficult a prospect it will be as private companies continue to pick off the high-revenue easy-to-serve subscribers.

I recently heard that the only place one finds a free lunch is in a mouse trap. As we sift through the lessons from the broadband stimulus programs, we have learned that the federal government preferred funding private projects rather than those that are structurally accountable to the community. Before the first round of stimulus applications were due, many communities recognized the costs of applying were too high for them. Now, some are recognizing the high costs of complying with the many federal rules that come with accepting federal grants and loans (as detailed by Craig Settles). And now, North Carolina's city of Wilson has found that applying for the broadband stimulus may have disadvantaged its FTTH network. Though the application was not accepted, the city has had to turn over its full application (chock full with proprietary information) to its competitors. This is yet another example of ways in which the "playing field" is tilted against the public. The Wilson Times explained the situation and settlement.

The application included a proposed expansion of the network to provide reduced-cost or no-cost broadband lines to homes of Wilson County school children, a health network, increased lines for police and other improvements that would enhance the network in the city, Goings said.

When the North Carolina Telecommunications Association (with prominent member Time Warner Cable - incumbent cable provider competing with Wilson's Greenlight) asked to see the full application, the City refused to turn it over -- even after a court ruled against the City. The City argued the application contained key information regarding the policy and utilities that should not be made public for security reasons. When the Department of Homeland Security ignored the City's requests to intervene, the City was compelled to release the documents. This is a particularly interesting juxtaposition as privately owned telcos and cablecos regularly argue against having to disclose any information about about their networks as a security concern.

Confused about the inability of the Federal Communications Commission to regulate the massive telecom and broadband carriers? You are not alone. This article explains some of it quite well, but the ultimate lesson is that we would greatly prefer local ownership of networks that are accountable to our needs. The FCC proves time and time again it cannot be trusted to regulate in the public interest. We need to ensure this infrastructure is operated for us, not distant corporate shareholders.

The open access UTOPIA network in Utah has been awarded broadband stimulus funds that will allow the network to serve hundreds of community institutions in several communities, which will aid them in the continuing last-mile rollout.

The grant was awarded to begin connecting nearly 400 schools, libraries, medical and healthcare providers, public safety entities, community college locations, government offices and other important community institutions in sections of Perry, Payson, Midvale, Murray, Centerville, Layton, Orem, and West Valley City.

Jesse at FreeUTOPIA offered some thoughts on what the grant means locally. I'm positively thrilled at the news - UTOPIA continues to push ahead with a unique approach to fiber infrastructure that would solve most of the nation's broadband problems, including the one abandoned by everyone in DC: creating true competition for subscribers. Unrelated to the broadband stimulus award, Pete Ashdown penned an excellent op-ed about UTOPIA: Fiber infrastructure best handled by government.

There certainly are commercial examples of roads, airports, sewers, water treatment, but nothing on the scale of the interstate highways, national and international airports, and facilities that service large populations. The interests of business are narrow — returning a profit and increasing shareholder return. These interests go against broad long-term goals that infrastructure serves — facilitating economic exchange and the general welfare. If every airline was required to build their own airport and every shipping company needed their own road, America would be on par with Somalia as an economic force.

To critics of UTOPIA or more broadly, public ownership of infrastructure, he writes:

There is no doubt that iProvo and UTOPIA have seen mismanagement. The Federal Highways Act saw corruption, graft and bribes during its creation. Yet only a fool would regard our highways as a waste of money. The remedy to government mismanagement is full transparency with active citizen oversight.

On July 27, WAMU's Kojo Nnamdi show discussed broadband. They read a comment from me noting the successes of two community networks. You can listen to the show online from the above link.

The very best value connection in the country is in Lafayette, Louisiana, with 10Mbps symmetrical (up and down) for under $30 /month. The fastest citywide connection is in Chattanooga, Tennessee - 150Mbps. Both are provided by city-owned utilities.

Bruce Kushnick, a telecom analyst, has long pushed for telcos to live up to the bargains they struck with individual states and federal agencies over the years as part of deregulation policies. They were deregulated and (surprisingly enough) failed to make good on their promises. For the most part, governments have refused to punish them or even learn the lesson that companies like AT&T and Qwest simply cannot be trusted. If you have ever stared at an incomprehensible telephone bill and wondered just how badly you were getting ripped off, you will be interested in this article discussing the many ways we are ripped off by these companies. Small wonder these companies are so profitable and can afford their legions of lobbyists. But that is that, and what's done is done, right? Well, Kushnick has another article about the Obama Administration's FCC and approach to expanding broadband. Long story short, the proposed changes will increase the costs most of those with the least ability to pay and the least likely to benefit from the spending. This approach of expanding broadband is awful - more subsidies to terrible telephone companies that have poor service in rural areas because they are structurally incapable of meeting the infrastructure needs of communities. Massive companies like AT&T and even smaller big companies like Qwest are strangling rural communities while they lobby for bills to prevent those communities from solving their own problems. Expanding broadband access and availability has costs and some taxes may need to be raised. But those funds should be used responsibly by expanding broadband coverage from entities that are dedicated to serving the community (munis, coops, nonprofits) rather than simply padding the corporate profits of companies that provide terrible service to communities and upgrade far too slowly.

Though we certainly support the FCC's reclassification of broadband to ensure companies like Comcast do not interfere with the open Internet, we focus on policy at the community level. We fully support the efforts of organizations and people in DC to work at the federal level. But for those who are utterly baffled at the questions being raised the the last 15 years of Internet policy, I strongly recommend a recent op-ed by Wally Bowen: "FCC needs to rethink broadband regulation."

The stakes are high. The Internet's explosive growth – and the spectacular innovation it spawned – were enabled by common-carrier rules that still govern the nation's dial-up telephone networks. Before 2002, online users were at the center of the Internet and World Wide Web, free to choose among competing ISPs, and free to roam and innovate. With the removal of common-carrier rules, the cable and telephone companies occupied the center of a broadband-driven Web, free to pick winners and losers among innovators (e.g. AT&T's exclusive iPhone deal with Apple) – and free to dictate when and where broadband access will be deployed. In short, the definitive battle for the future of the Internet is underway.

This is a great inside look at how one community built a globally competitive broadband network (probably the best citywide network in the US) and the barriers they faced from incumbent providers Cox and BellSouth. Terry Huval, the Director of Lafayette Utilities System in Louisiana, spoke to the U.S. Senate Committee on Small Businesses Entrepreneurship on April 27, 2010, on the topic of: "Connecting Main Street to the World: Federal Efforts to Expand Small Business Internet Access." Huval's full testimony is available here. Huval's presentation told the back story of LUS Fiber, focusing on the barriers to publicly owned networks in Louisiana.

The FCC National Broadband Plan, on page 153, includes Louisiana as one of 18 states that “have passed laws to restrict or explicitly prohibit municipalities from offering broadband services.” While the Louisiana law did not prohibit Lafayette from providing broadband services, its mere presence provided, and continues to provide, a fertile playground for BellSouth (and its successor AT&T), Cox and their allies to create mischief, resulting in discouraging local governments from stepping in to provide these services even when the private telecom companies refuse to do so.

Louisiana, as with many other states including North Carolina, has powerful incumbents that claim there is an "unlevel playing field" and that local governments have too many advantages in building broadband networks (incomprehensibly, they simultaneously claim that local governments are incompetent and publicly owned networks always fail).