The role of municipalities in providing high-speed Internet access may change in the near future. In July, Wilson, North Carolina and Chattanooga, Tennessee, both of which have public optical fiber networks, petitioned the Federal Communications Commission (FCC) to address laws in numerous states restricting the ability of municipalities to offer broadband services. The North Carolina law, passed by the General Assembly in 2011, placed onerous regulations on any town or city attempting to provide a broadband network to residents or businesses. Since Wilson built its system before the law was put in place, it is grandfathered in to pre-existing rules. However, expansion to the system is not currently permitted.
Many municipalities see high speed Internet as a utility to be treated no differently than other utilities like electricity or water. Conversely, proponents of the existing law, primarily cable companies and other broadband providers, see public involvement in broadband networks as government interference that may hinder private companies. Action by the FCC in favor of Wilson and Chattanooga’s petition would supersede the state law and open the door to public investment in high-speed Internet networks in states where regulations currently exist.
A Tool for Economic Development
Back in 2009, this blog post covered the completion of the fiber network in Wilson and discussed its potential as a tool for economic development. The community decided to invest in the infrastructure (at a cost of about $28 million dollars) after private cable companies said they would not build the network. The upgraded system allows for Internet speeds of up to one gigabit per second, about 50 times faster than the average speed in the US. Fast Internet speeds at affordable prices are critical for the operations of many companies and municipalities see providing access to fiber networks as a competitive advantage in attracting new jobs in promising industries. Playing to this perceived advantage, Wilson markets itself as “NC’s gigabit city”.
The Fiber to Homes Council, a group that advocates for the expansion of fiber networks, estimates the networks have created an increase to GDP of $1.4 billion across 14 communities in the United States where they are available. To this point, a New York Times article earlier this year spotlighted towns that developed their own fiber networks and the boon to economic development seen there from entrepreneurial tech firms. An example given was the decision of Exodus FX to locate in Wilson. The company, which provides special effects for television and film, relocated from Los Angeles specifically to take advantage of the cheap and fast fiber network.
Addressing the Challenge of High-Speed Internet Access
Recently, a blog post by UNC School of Government faculty member Jonathan Morgan covered a report released by the National Association of Counties on the role of county government in economic development. In the report, county governments cited access to broadband networks, along with inadequate public transportation, as the biggest infrastructure challenges to economic development. Rural areas in particular struggle to get broadband access due to higher costs and lower profitability for private cable companies, as was the case in Wilson.
Many towns and cities, both inside and outside of North Carolina, are currently exploring the implementation of fiber systems. Holly Springs, a town of about 24,000 just southwest of Raleigh, recently installed a small network to serve all of its public facilities. Because of the existing state restrictions, the fiber there cannot be routed to any residences or businesses. Excess bandwidth can however be sold to a third party, which can then in turn be sold to consumers. Overriding of the state law by the FCC would permit Holly Springs to provide excess fiber directly to citizens and businesses as a utility and could allow the existing network to serve as a base for a larger system down the road.
The timeline for a response from the FCC to the petition of Wilson and Chattanooga is unclear. Regardless of the FCC’s decision, the ruling will impact the future of public investment in broadband services. If given the right, some municipalities – particularly those in rural areas – may seek to construct their own fiber networks as both a service to residents and a strategy for economic development.
Steven Reilly is a current graduate student in the Department of City and Regional Planning. He is also a Community Revitalization Fellow with the School of Government’s Development Finance Initiative (DFI).