Taxpayer Group Pans Pre-emption of State Broadband Laws

The president of the Taxpayers Protection Alliance said if the Federal Communications Commission pre-empts state broadband laws in Chattanooga, Tenn., and Wilson, N.C., it will hurt local taxpayers.

A Democratic majority of the FCC is widely expected to vote Feb. 26 to pre-empt those laws after the two cities sought that move, saying the states were blocking their ability to expand their municipal broadband efforts. Given that the meeting is the same one where the will vote on imposing some Title II regs on Internet service providers, the municipal broadband vote has not gotten a lot of attention.

TPA president David Williams said that, "for the fiscal wellbeing of taxpayers" and in the interest of protecting states' rights, the FCC should not "override" those laws.

"While there is significant legal debate about whether the FCC even has this authority," he said in a statement, "it is clear [FCC chairman Tom] Wheeler's preferred path would spell almost-certain doom for local taxpayers."

Williams said that while Wheeler has called systems in those two cities "very successful," the numbers don't lie. "[T]axpayers in these cities are hundreds of millions of dollars in debt because of these networks," he said. "In Chattanooga's case, the city's debt rating was downgraded – a fact that raised borrowing costs for other projects, even while the network charged some businesses thousands of dollars a month for its ultra-fast service."

He also cited Provo, Utah, where he said taxpayers "lost more than $30 million after their city was forced to sell its network to the highest private bidder. The highest bid for Provo's network was a mere $1 [Google fiber] – a testament to how little value city-owned networks have."

“Municipalities typically enter the broadband market in areas where the private-sector has usually had ample opportunity to invest and has chosen not to provide or upgrade broadband service to meet community needs, "said a spokesperson for FCC Chairman Tom Wheeler. "The majority of muni projects are successful in key metrics, including financial health. The projects in Wilson and Chattanooga are among these successful municipal builds that do not put taxpayers in jeopardy as evidenced by the excellent bond ratings enjoyed by both cities. In fact, the projects have improved the financial health of the cities, for instance by facilitating the creation of jobs.  Moreover, S&P upgraded EPB’s bond rating in significant part due to the benefits of EPB’s broadband services, which benefits taxpayers by reducing the cost of borrowing.“

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.