< Fighting Telecom Giants


Friday, February 21, 2014

BOB GARFIELD:  As you’ve just heard, community efforts to build their own broadband services often have been stymied by barrier legislation of the sort that has been enacted in 19 states, so far. This week, FCC Chairman Tom Wheeler said the Commission would look to enhance Internet access competition by, quote, “examining,” as one judge recently advised, “those legal restrictions on the ability of cities and towns to offer broadband services to their communities.”


For years, lawyer James Baller has been leading the legal charge on behalf of municipalities.

JAMES BALLER:  I believe communities should have the right to choose for themselves. They’re the most affected by the decision and should have the right to make it.

BOB GARFIELD:  Stringing cable and fiber is a huge capital investment. Why would a city or a town with, in most cases, diminishing resources, want to get into the broadband business?

JAMES BALLER:  Well, they don't want, necessarily, to get into the broadband business. They want an advanced communications network that will support economic development, educational opportunity, public safety, and that’s what they’re after. They typically go first to the incumbent carriers and ask them to provide the networks. The incumbents typically say that it is not economically feasible for them to do it. And then the communities are faced with the choice of doing it themselves, if that's possible to do, or abandoning their hopes of having access to the networks that they regard as important to their future.

BOB GARFIELD:  What's odd about this circumstance is it seems that the commercial broadband providers, the cable companies and telecoms, want to not have their cake and not eat it too.

JAMES BALLER:  [LAUGHS] That’s good!

BOB GARFIELD:  They pass on a given region because it's not clearly going to be profitable for them, and yet, when the municipalities want to fill in the gaps, then the lobbyists try to stymie the municipal build-out. Is that what’s happening?

JAMES BALLER:  That’s what’s happening. It seems that what the cable and telephone companies that do this are trying to achieve is preserve future markets when they figure that it's time for them to get around to them, or they’re fearful that the municipal projects will actually be successful and stimulate others to emulate those successes.

BOB GARFIELD:  The cable industry trots out any number of very plausible-sounding arguments against municipal broadband, starting with the old standard, that municipal government, with all of its bureaucracy, is incapable of delivering services the way the free market can. Do private companies have an advantage?

JAMES BALLER:  I think that if you were to go to the communities that have their own broadband services, you would hear them say that they’re very satisfied with their quality, with the customer services that go with it. Prices are reasonably competitive. If you're talking about gigabit networks, Chattanooga was first in the country. There are several other municipal networks providing gigabit service. And, in addition to that, the municipal networks support the community's goals and objectives.

BOB GARFIELD:  One of the arguments that the cable industry proffers is that it's too risky for fragile municipalities. I want to play you an ad that was run in Longmont, Colorado, in advance of a ballot initiative that would have authorized municipal broadband.



MAN:  We shouldn’t make the same mistake that so many other cities have made, because when they fail it’s the taxpayers who pay. And it will cost upwards of $17 million.

WOMAN:  As Longmont residents, we’d like to ask you to join us in voting no on 2A.


JAMES BALLER:  Well, I can't speak specifically to Longmont but in the typical case, public networks are backed by revenue bonds which means that they’re not at risk.

BOB GARFIELD:  It’s not coming out of the city's general fund. The city pays a debt service to the investors who are shouldering all of the risk.

JAMES BALLER:  Correct. But let me be clear that project, when it is proposed for a community, will be subjected to extensive debate. The incumbent carriers participate very actively in that process, and they will go forward only if the leadership of the community believes that there is a substantial unmet need and that the project has a high probability of success. Communities are not the hicks on the back of a hay wagon, and when they make those decisions they will be very well informed.

BOB GARFIELD:  You were talking about what these municipal services can mean for the integrity of a community. Do you have one “Kumbaya” example that you can give me?

JAMES BALLER:  Sure. Lafayette, Louisiana is one of the most conservative cities in the country. It has a mayor, Joey Durel. He saw the benefits of fiber network and asked private companies to provide the service. They refused several times. It ultimately went forward with a referendum and ran into opposition from BellSouth and Cox Communications. During the referendum campaign, both the leadership of the Democratic and Republican parties worked shoulder to shoulder in support of the project, and at the end of the day, the project was supported by a landslide vote. It’s drawn thousands of jobs into the community. It's operating financially successfully. And it has, among other things, attracted an entirely new industry, the film industry. Secretariat was filmed in Lafayette, Louisiana, in large part because of the existence of their fiber network.

BOB GARFIELD:  There’s a tear streaming down my cheek.


BOB GARFIELD:  Free marketeers and municipal broadbanders living together in harmony.

JAMES BALLER:  Right. As Joey says, “They each held their noses but decided that on this one exceptional project they had a common interest.”


BOB GARFIELD:  Jim, thank you very much.

JAMES BALLER:  And thank you very much.

BOB GARFIELD:  James Baller is the president of the Baller-Herbst Law Group.


James Baller

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