Is an Executive Order Necessary to Enable City and Municipal Fiber?

Erik Keith

Erik Keith

Summary Bullets:

  • President Obama has threatened an executive order to ensure that U.S. cities and municipalities are NOT prohibited from building their own broadband networks; he needs to follow through, if necessary.
  • Incumbent operators need to view city and/or municipal networks as opportunities instead of threats. For example, they can partner to deliver service bundles over these networks, without having to invest in FTTH network builds themselves.

When I first became aware that legislatures in 20 U.S. states have passed laws banning cities/municipalities from building their own fiber/ultra-broadband networks – in many cases, spurred by lobbying efforts funded by incumbent operators – I was stunned, and then appalled. How un-American. I had a similar reaction when several state legislatures either passed laws or ensured the continuing enforcement of outdated code preventing Tesla Motors from selling directly to customers (with Michigan, unsurprisingly, being the most blatant about it).

However, there is a massive difference between buying an automobile and “buying” a fiber network. With the Tesla, the buyer/consumer can still buy the car from dealers in Tesla-friendly states, adjacent or not. But, unlike a car, one cannot just buy a fiber network infrastructure and take it home.

With President Obama’s recent declaration that cities and municipalities should not be banned from building their own (ultra-) broadband networks, including the potential for an executive order ensuring their right to do so (by pre-empting or overturning said state laws), the President seemed to be embracing his born-again populist vision.

Generally, the U.S. Tier 1 incumbent operators have taken the position that city or muni-built broadband networks constitute unfair competition for cable or telco service providers, even in areas that are under-served (or worse, unserved) by either of these operator/technology types. While there is some limited merit to this argument, the simple answer for the cable or telco is to counter the city/muni service with a comparable offering. Instead, the incumbents have chosen to “lobby” state legislatures to ban city/muni network builds.

Meanwhile, examples of ultra-broadband networks – many of which offer Gigabit services – have already been turned up, with many more coming online in 2015. Never mind Google Fiber, whose hype still outweighs its actual, real world presence; there are now well over 100 Gigabit access networks in North America, powered by FTTH solutions from Alcatel-Lucent, ADTRAN and Calix. Most are smaller operators, but telcos such as CenturyLink (in multiple metros) and alternative operators such as C Spire (in Mississippi) either already offer Gigabit services or will do so this year. Finally, electric utilities such as Chattanooga’s EPB and Bristol Virginia Utilities (BVU) have been offering fiber-based services for years, and EPB was the first provider in the U.S. to offer Gigabit services (in 2010).

So, what is the answer? My suggestion is for the incumbent operators to look at city and municipal network builds as opportunities, instead of threats. Public-private partnerships can be quite beneficial for both parties, if done right. For example, why not let a city incur the massive cost of building a fiber network (i.e., with public funding) and then partner with the city to provide triple-play services over that network? In most cases, the incumbent operators have already done the difficult work of negotiating content distribution rights for TV services, a process in which most cities/municipalities have no experience whatsoever.

Finally, cities and municipalities are not telcos or cable operators; while they may be able to build a world-class, all-fiber Gigabit network, most have no customer service experience, never mind network management expertise (a telco or cable operator can provide both). There are also other areas of potential common ground that can facilitate cooperation between cities and incumbent operators. These include public safety network upgrades and/or smart-grid builds, although the latter is more the purview of electric utilities (i.e., EPB and BVU mentioned above). In an ideal world, an executive order should not be necessary, given the options and opportunities discussed above.

About Erik Keith
As Principal Analyst for Fixed Access Infrastructure, Erik is responsible for tracking major technological, strategic and tactical developments in the wireline broadband access market. Erik's primary areas of coverage include FTTP/PON systems, DSLAMs, DLCs/MSAPs, cable access and head-end systems, as well as digital media infrastructure solutions.

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