Universal access to broadband is a laudable and achievable goal. Republicans, Democrats, independents, and everyone else seems to be working toward solutions that will ensure everyone has access to affordable, quality broadband. Unfortunately, not everyone right now lives in an area where broadband is affordable. The lack of affordability in these areas, though, is more often driven by local politics than by big corporations trying to extract every last bit of profit from consumers.
Local politicians, rather than recognize the interstate nature of broadband, tend to view the companies building the backbone of universal broadband as sources of endless revenue rather than as partners providing access to all residents. Local politicians, additionally, end up selecting winners and losers in the broadband company, favoring the multi-billion dollar technology companies who promise to help turn the locality into a “smart city” in return for carte blanche access to the city’s infrastructure.
This perspective of broadband companies as sources of revenue was abundantly clear in a recent New York Times op-ed authored by the mayor of San Jose, Calif. In the article, he suggested that big telecommunications companies are using their influence to avoid providing affordable services, obtain access to municipally-owned utility poles, and persuade states to pre-empt local regulation of those poles. Such arguments miss the mark, may result in the Federal Communications Commission pre-empting local ordinances, and may be disingenuous based on what the city is doing to help Facebook develop a wireless network infrastructure.
The next generation of wireless services is known as “small cell” but colloquially referred to as “5G.” The benefits of 5G will include greater connectivity, lower latency, and increased bandwidth. The technology will further enable development of the Internet of Things, which will allow cars to communicate with one another, homes to grow smarter, and so on. 5G technology utilizes antennas roughly the size of pizza boxes. The antennas can be placed on utility poles, street lights, and other similar structures. Because of their size, the public will hardly notice the deployment. As the technology progresses, its enabling devices will become even more ubiquitous.
The cost of deployment will not be cheap. Industry experts predict that wireless companies will spend between $150 billion and $275 billion over the next few years. Laying fiber, for example, may cost between $10,000 - 100,000 per mile, depending on the local topography, according to Department of Transportation reports. Complying with local fees, ordinances, or other conditions across the country significantly adds to the cost of deployment. These are funds that companies would otherwise invest in further infrastructure deployment, jobs-deploying networks, or other positions within the companies.
San Jose is not the only city, or state, demanding excessive fees or unreasonable conditions. Tennessee, for example, as late as 2016 had the nation’s highest pole attachment rates, costing at least one broadband company an estimated $3 million more per year for access to utility poles throughout the state. The same report estimates that each broadband provider pays an estimated $7 million per year per state just to access those utility poles, and in Tennessee that the providers must negotiate agreements with 85 different utilities. This isn't just a state problem — large cities also nickel-and-dime companies such as Verizon, AT&T, and T-Mobile.
Congress and the FCC have both expressed a desire for light-touch regulation of broadband companies, which in turn would increase access to all. The plethora of local ordinances frustrates both deployment and the federal policies promoting minimal regulation.
A deeper dive into San Jose’s policies reveal what could be an ulterior motive for the mayor’s op-ed. While publicly stating that he will not cut any special deal for Amazon, the mayor and San Jose are working with Facebook to provide the social media giant access to publicly-owned assets for the purpose of establishing a city-wide wireless network. Once the network is live, Facebook will offer its services free of charge to the city’s residents. The city’s efforts to help Facebook include providing access to city assets, such as street lights and other “related infrastructure needed to build out the network,” at low or no cost to Facebook. The city is not stopping at providing Facebook free access to city properties, though; it will also “pay for some staff time needed to provide… access to the existing city Wi-Fi system.”
While arguing for the right to charge broadband companies a king’s ransom for access to publicly-owned assets, the City of San Jose is actively working to help Facebook establish a network that will directly compete with broadband companies. In so doing, San Jose is selecting winners and losers in the broadband access marketplace. But it is clearly setting its proverbial thumb on the scale as much as possible to ensure that Facebook’s network will both be successful and, arguably, harm traditional service providers. Facebook, of course, cannot be faulted for taking advantage of the city’s assistance. San Jose may be faulted for extreme self-dealing, essentially guaranteeing that it and Facebook will have a monopoly regarding broadband services.
If local governments fail to recognize that they are significant contributors to broadband deployment costs, both states and the FCC have the authority to pre-empt local regulations.
Broadband companies want to serve customers. To increase their customer bases, the companies need to deploy the latest technologies in ways that will provide access for the greatest number of people. One of the greatest costs associated with deployment is complying with a panoply of local conditions, ordinances, and fees.
If localities such as San Jose truly want broadband companies to serve all residents, rather than selecting winners and losers in the broadband space, and if they want to avoid state or federal pre-emption of their authority, they will streamline their process, reduce barriers, and look at broadband companies as partners of revenue, not sources.
Jonathon Hauenschild is director of the Task Force on Communications and Technology at the American Legislative Exchange Council.
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