Municipal Broadband Is Roadblocked or Outlawed in 20 States

. . . but as you can read here — Municipal Broadband is allowed in California!

A State-by-State Report on all 35 State Laws Holding Back Public Internet Investment

By Jameson Zimmerm, April 3, 2018 } Original Broadband Now article here.

The April 17, 2019 Broadband Now Review is here.

Since our last municipal broadband state laws report in 2016, we’ve added Montana to the list of states with legal barriers. We also added Wyoming to the “honorable mentions” alongside California. Both states have taken legislative actions that indirectly impact the viability of municipal broadband, without attacking it directly.

As of 2018, there are twenty states with anti-municipal broadband state laws discouraging the development of publicly-owned Internet networks.

These state laws — which range from outright prohibition to outlandish bureaucratic circus hoops — are largely developed under pressure on legislators from Telecom corporations. These companies spend tens of millions of dollars lobbying on Capitol Hill each year [1], and hundreds of thousands running anti-municipal-network ads in local communities. Lobbyist spending from major Telecoms was in excess of $11 Million in Q1 of 2017 alone. [2]

States like Tennessee with the toughest anti-municipal-broadband regulation also have some of the most well-known smart grid success stories, like Chattanooga. The successes of Chatanooga and others caused much of the Telecom-driven lobbying.

In spite of these corporate efforts, 108 communities throughout the USA currently offer citywide access to publicly-owned fiber Internet, and 24 states feature at least one citywide FTTH municipal broadband network. [3] Those numbers have only grown in the wake of the FCC’s removal of Net Neutrality.

There are still substantial roadblocks in front of many communities aiming to develop municipal broadband networks to address the digital divide in their communities — or at least provide affordable Internet. This report breaks down those municipal broadband roadblocks in each state.

Municipal Broadband State Laws Overview

Overall, the state laws blocking municipal broadband development fall into five categories:

States with bureaucratic barriers to municipal broadband:

States with direct sale prohibitions on municipal broadband:

States with prohibitive referendum requirements on municipal broadband:

States with population caps on service areas:

Nevada

States with excessive taxes on municipal services:

Florida

Honorable mentions:

Breakdown of State Municipal Broadband Laws

Michigan

The climate for municipal broadband in Michigan has only worsened since our original report on the issue. Citing our own data on the state, Michigan Rep. Michele Hoitenga submitted a bill in 2017 decreeing that no “federal, state, or local funds” can go towards publicly-owned broadband networks.

When questioned on the issue by the tech media, Hoitenga pointed to our datasets on Michigan as evidence that residents have dozens of options. Hoitenga failed to notice that a list of every provider doesn’t mean that every address has access to all of them. On the contrary, a shocking 14% of Michigan residents currently have access to two or fewer providers — making these areas effectively monopolies. The law ultimately did not get a hearing after public outcry over inaccurate statements in the bill (reversing the terms “upload” and “download” in the FCC broadband definition) and alleged relationships with telecom lobbyists. [4]

While this law didn’t pass, Michigan upholds state laws detailed in § 484.2252 that require local governments to produce an RFP (Request for Proposal) with no more than two bids before any local network operation can move forward. This requirement is considered anti-municipal broadband as it requires a public vendor to use the same procedures as for-profit vendors, eliminating some advantages of creating public networks in the first place.

Michigan Broadband Map

North Carolina Municipal Broadband Legislation

NC Statutes Chapter 160A, Article 16A

North Carolina has been a battleground of the municipal broadband issue, with a range of laws including Pricing requirements, financing barriers, and referendum requirements. Municipal networks are required to add “phantom costs” so that plans aren’t cheap enough to compete with private providers. Additionally, North Carolina requires municipal networks to shut down if a private company decides to enter the area — making it difficult for communities to invest in something that may get turned off or turned private at any moment. Ironically, this law was actually considered a “win” for consumers, since without it the small town of Pinetops was going to be shut off from gigabit Internet thanks to a complex legal loophole. (Their service came from the municipal network of Wilson, a nearby small town.) [5]

The lawsuit in question held the unwieldy title of The Matter of City of Wilson, NC, Petition for Preemption of North Carolina General Statute 160A-340 et seq. and The Electric Power Board of Chattanooga, Tennessee Petition for Preemption of a Portion of Tennessee Code Annotated Section 7-52-601, 30 FCC Rcd. 2408 (F.C.C.), 2015 WL 1120113. This lawsuit essentially determined that so long as a law didn’t directly outlaw municipal broadband, the FCC had no jurisdiction to overrule it in defense of a local public network — yet another setback for local North Carolina communities looking to improve rural access.

North Carolina also requires municipal networks to use only specific pricing and funding mechanisms, and hand over commercial information to local incumbent providers on request. While many existing networks have been grandfathered in without these requirements, they make it nearly impossible for new networks to reach viability.

North Carolina Broadband Map

South Carolina Municipal Broadband Legislation

S.C. Code Ann. § 58-9-2600 et seq.

South Carolina is similar to their northern neighbor in the requirements placed on municipal networks, which include proposal-stage barriers, phantom cost requirements, and additional tax burdens. Overall, South Carolina legislation treats municipal networks as private entities, requiring them to contribute to stimulus funds and other requirements associated with the telecom industry. The damage done by these regulations isn’t so much the requirements themselves, as in the vague and unspecific wording which opens a series of opportunities for incumbents to protest or slow down projects during the planning phase.

South Carolina Broadband Map

Tennessee Municipal Broadband Legislation

Tennessee Broadband Map

Virginia Municipal Broadband Legislation

Municipal networks are permitted in Virginia, but they have to adhere to the following requirements:

Do not provide subsidized service
Do not undercut incumbent providers on pricing
Complete additional reporting requirements

Virginia also requires publicly-owned Internet networks to add “phantom costs” to their pricing. Feasibility studies are also required before a municipal network can service an area, and it is effectively illegal to provide cable or “triple play” services. I say “effectively” because the law specifically requires any cable system to satisfy a feasibility study showing that it will be profitable within one year of installation. (This is virtually impossible for any cable operator, public or private.) Some networks are grandfathered past this requirement, as in the city of Bristol, where municipal cable service is available.

Virginia Broadband Map

Utah Municipal Broadband Legislation

Utah Code Ann. § 11-14-103(4)

Utah’s municipal broadband regulation is similar to Virginia in terms of limitations on retail services. The climate is more favorable towards wholesale models. Municipal broadband advocates generally maintain that wholesale-only models are difficult to justify and can make it trickier to solve rural service issues that networks are often proposed to solve.

Utah Broadband Map

Wisconsin Municipal Broadband Legislation

Wisconsin Statute Annotated § 66.0422

Wisconsin requires municipal cable services to be funded by subscribers only, which poses some problems for funding and maintaining systems in less densely populated areas. Wisconsin state law uses minimum pricing restrictions to force “phantom cost” additions to public offerings, as well as specifying that subsidized services are not an option. (Many large incumbent providers in Wisconsin do offer subsidized service however.) Feasibility studies and exhaustive public hearings are required before any network can move forward, creating opportunities for incumbent providers to roadblock or stall a project if desired.

Wisconsin Broadband Map

Montana Municipal Broadband Legislation

Montana’s main roadblock to municipal broadband is the requirement that service can only be installed in areas where there is no private Internet option, or where the service the municipal network provides is sufficiently advanced to be considered a separate service. Since Montana has relatively few areas with private service that can meet these requirements, Montana’s state laws aren’t considered a major barrier to municipal broadband although that could change as technologies advance in the coming years.

As for the paperwork side, if a private Internet provider decides to enter a market served by a municipal network, they are only required to inform the town in writing 30 days before entry. The municipal network may discontinue service within 180 days of notice, but this does not seem to be a strict requirement to discontinue service.

Montana Broadband Map

Arkansas Municipal Broadband Legislation

Arkansas Code § 23-17-409

Arkansas specifically prohibits local exchange networks, which municipal broadband advocates claim makes the installation of public networks unfeasible in most cases. Arkansas also doesn’t allow municipal networks to serve other communities, as in the case of Wilson and Pinetops in North Carolina.

Arkansas Broadband Map

Missouri Municipal Broadband Legislation

Missouri Revised Statutes § 392.410(7)

Compared to battleground states like North Carolina and Tennessee, Missouri actually comes close to outlawing municipal broadband as a category outright. Statutes here ban municipal networks from selling or leasing any sort of telecom service, and only allows them to operate in the fields of education, emergency, health care, 911, and “it’s [private company’s] own use.” The wording exempts “Internet-type services,” so essentially municipal networks are able to serve local residences so long as Internet is the only service being offered. This limitation hasn’t halted the development of municipal broadband in Missouri completely, as projects like GoSEMO are still in development in 2017 and 2018.

Missouri Broadband Map

Nebraska Municipal Broadband Legislation

Only public power utilities are permitted to provide municipal broadband service in Nebraska. Some restrictions are also placed on the sale of dark fiber, particularly for public power utilities. This creates a situation where the only viable model for municipal broadband is for cities to partner with private providers . . . except that public-private broadband partnerships are explicitly banned in the state. Even with these roadblocks, cities like Lincoln, Nebraska have been able to set up de facto municipal networks by leveraging public conduit to “pave the way” for private Internet providers like Allo Communications to enter the area and compete. As of 2016, the city had seven providers offering some level of service in the area over government-owned conduit. [6]

Nebraska Broadband Map

Pennsylvania Municipal Broadband Legislation

66 Pa. Cons. Stat. Ann. § 3014(h)

Pennsylvania makes municipal broadband particularly difficult for rural areas by requiring groups to request service from local telephone providers, through local political subdivisions, before moving forward with a public network. If the telephone operator “refuses to provide such services within 14 months of request,” then the community may move forward with a municipal network.

However, If the telephone network is willing to provide service, the community is only allowed to object if the company cannot meet the throughput needs of the community. When assessing whether or not the local community is “served,” the state of Pennsylvania is not permitted to consider any factor other than speed. This includes pricing, quality of service, specific coverage area, and etc. Hypothetically, this means that if there is one provider in the area, and the cheapest plan they offer is $500/month, residents are still unable to pursue public options so long as that $500 plan meets the speed benchmarks requested by the community.

Pennsylvania Broadband Map

Texas Municipal Broadband Legislation

Texas Utilities Code, § 54.201

Texas is surprisingly brisk in their statutes on municipal services, and outlaws certain categories of telecommunication service without ever using the words “broadband” or “Internet.” Overall, the legislation discourages public broadband services and public-private partnerships to provide service, while leaving some allowances for communities with no private options.

Texas Broadband Map

Washington Municipal Broadband Legislation

Wash. Rev. Code Ann. §54.16.330

Public utility districts in Washington state are directly prohibited from offering telecommunication services of any kind directly to customers. Only wholesale models are permitted, under a series of conditions including nondiscriminatory rates and terms, and that such networks may not use eminent domain to acquire any telecommunications facilities.

In the wake of the 2018 Net Neutrality repeal, Washington has passed several additional bills and amendments related to broadband access. One of them, HB-2664, makes it possible for ports in Washington state to create public-private partnerships that provide Telecom services. However, it’s worth noting that the** bill requires only one provider to be included in such deals, which means granting de facto monopolies on high speed service in some rural areas**.

Washington Broadband Map

Alabama Municipal Broadband Legislation

Alabama Code § 11-50B-1 et seq.

Alabama’s biggest roadblock to municipal broadband is limitations on funds that can be used to finance such projects, until a public network is “self-sustaining.” Each individual service is additionally required to be self-sustaining, which effectively blocks public networks from following private industry patterns like “bundling.” Finally, Alabama law also requires communities to complete extensive referendums before providing cable services.

As of 2017, attempts to pass bills with workarounds to these restrictions have been shot down by lobbyists, as in the 7-6 vote against senator Tom Whatley in 2017, who attempted to extend her community’s right to provide Fiber-to-the-Home Internet service. [7]

Alabama Broadband Map

Colorado Municipal Broadband Legislation

Colo. Rev. Stat. Ann. § 29-27-201 et seq

Unless an incumbent provider has directly rejected a request to provide specific broadband services in an area, Colorado communities are required to complete referendums before pursuing any local networks. Perhaps the biggest roadblock to municipal network development in Colorado, however, is the “right of first refusal”, which essentially allows private ISPs to take over any grants won through proposals by a local co-operative or public entity.

On April 2, 2018, Colorado’s governor signed House Bill-1099 that removed this problem. Bill text here.

Colorado Broadband Map

Louisiana Municipal Broadband Legislation

Louisiana has two main barriers to municipal broadband: hearing requirements and phantom cost requirements.

In spite of these roadblocks, municipal networks have thrived in Louisiana, with LUS Fiber in Lafayette being the most notable example. [8] As of 2017, LUS Fiber is working to expand into neighboring in-need communities.

Louisiana Broadband Map

Minnesota Municipal Broadband Legislation

Communities are required to acquire a super-majority of 65% of the community through a public voting period before any public-owned network can move forward into development. If the services provided do not compete with private entities, the council of a municipality is permitted to extend or improve Internet access facilities — but only if there is no case to be made for that service being provided by a private company in the “foreseeable future.”

In an interview with Christopher Mitchell of Community Networks, he pointed out that Minnesota’s laws are particularly tricky for rural areas, since they limit the types of service (phone, Internet, TV) that can or can’t be offered over a public fiber line

Minnesota Broadband Map

Nevada Municipal Broadband Legislation

Nevada has the closest to an outright ban on municipal broadband we found in any US state, with a strict limitation on population that a municipal network can serve. This legislation makes municipal broadband virtually impossible to achieve in the dense low-income urban neighborhoods that can often benefit from it most. It also locks smaller cities out of “smart grid” setups that can drive tech innovation.

That said, the current legal climate doesn’t do much to discourage municipal solutions in rural areas, including CC Communications, a complete FTTH (Fiber to the Home) municipal network serving a population of 24,000+ in Churchill County, Nevada.

Municipalities with more than 25,000 residents and counties with more than 50,000 residents are barred from providing telecom services of any sort.

Municipal broadband is poised to expand rapidly as an option in rural Nevada in 2018 and beyond thanks to a new fiber backbone running north-south along US Highway 95 in the western part of the state. [9]

Nevada Broadband Map

Florida Municipal Broadband Legislation

Florida is a tough place to start a municipal network for two primary reasons: excessive taxes on municipal broadband projects and extreme vetting requirements that make it difficult for projects to get approved. Florida is one of the only states that levies unique, specific ad valorum taxes on municipal providers. Municipal broadband projects are also required to recoup investment within four years, which is virtually impossible for networks in the infrastructure-starved areas that can benefit from public broadband the most.

Florida Broadband Map

Honorable Mentions

States with Borderline Anti-Municipal Broadband Policies

California and Wyoming both have policies that don’t make our list of “states with anti-municipal broadband laws,” but still negatively impact municipal network development and universal communications access in those areas.

California Stance on Municipal Broadband

California isn’t included in the roundup above since their state laws are directed more at “community service districts” rather than municipalities specifically. Community service districts in California are allowed to provide telecommunication services, but may choose to lease or sell their network/system to any private entity that emerges willing to serve a community where the public network operates.

In 2018, lawmakers passed legislation that removed state restrictions on limiting publicly-owned broadband networks for CSD residents. The new law enables CSDs to create enhanced infrastructure financing districts (EIFDs), which can be used to pay for public broadband infrastructure. The new law also removed the requirement to determine whether a private company would be willing to offer service, and ensures CSDs do not have to lease or sell public broadband infrastructure to private telecom companies that enter into the market.

California Broadband Map

Link to California Community Services District Act

Government Code – GOV

TITLE 6. DISTRICTS [58000 – 62262] ( Title 6 added by Stats. 1951, Ch. 331. )

DIVISION 3. COMMUNITY SERVICES DISTRICTS [61000 – 61250] ( Division 3 repealed and added by Stats. 2005, Ch. 249, Sec. 3. )

PART 3. PURPOSES, SERVICES, AND FACILITIES [61100 – 61226.5] ( Part 3 repealed and added by Stats. 2005, Ch. 249, Sec. 3. )

CHAPTER 1. Authorized Services and Facilities [61100 – 61107] ( Chapter 1 repealed and added by Stats. 2005, Ch. 249, Sec. 3. )

§ 61100 of Community Services District Act.

Within its boundaries, a [Community Service] district may do any of the following:

(a) Supply water for any beneficial uses, in the same manner as a municipal water district, formed pursuant to the Municipal Water District Law of 1911, Division 20 (commencing with Section 71000) of the Water Code. In the case of any conflict between that division and this division, the provisions of this division shall prevail.

. . .

(af) Construct, own, improve, maintain, and operate broadband facilities and provide broadband services. For purposes of this section, broadband has the same meaning as in subdivision (a) of Section 5830 of the Public Utilities Code. A district shall comply with Article 12 (commencing with Section 53167) of Chapter 1 of Part 1 of Division 2 of Title 5 when providing broadband services pursuant to this subdivision. If the district later determines that a private person or entity is ready, willing, and able to acquire, construct, improve, maintain, and operate broadband facilities and to provide broadband services, and to sell those services at a comparable cost and quality of service as provided by the district, the district may do one of the following:

(1) Diligently transfer its title, ownership, maintenance, control, and operation of those broadband facilities and services at a fair market value to that private person or entity.

(2) Lease the operation of those broadband facilities at a fair market value to that private person or entity.

(Amended by Stats. 2018, Ch. 963, Sec. 5. (AB 1999) Effective January 1, 2019.)

Wyoming Stance on Municipal Broadband

Wyoming Senate File NO. SF0100 before lobbyist pressure
Wyoming Senate File NO. SF0100 after lobbyist pressure

Wyoming doesn’t yet have any laws targeting municipal broadband. However, the state garnered some negative press last year for caving to lobbyist pressure to amend (remove) previous laws designed to generate funding for municipal networks across the state. [10]

Wyoming Broadband Map

Looking Forward: What’s Next for Municipal Broadband?

Municipal broadband initiatives are generally attacked on two fronts: by lobbyists, who have the job of defending private providers, and by politicians, who have the job of avoiding spending money unnecessarily.

Ask either of these sources what’s next for municipal broadband, and they’ll tell you that it’s a bad idea to invest in public networks when wireless technologies like 5G and low-orbit satellite Internet are poised to disrupt the broadband industry. (As of 2018, the FCC even moved to classify traditional satellite as sufficient for broadband service, a classification Democrats on the FCC loudly protested.)

Are these claims accurate? Probably not. In the case of 5G, industry reports suggest that 5G wireless will face major last-mile challenges from communities that oppose the infrastructure. [11] This makes it unlikely to solve the rural “digital divide” that’s been a major talking point for both the Trump and Obama administrations. Will 5G replace wired Internet for modern home uses like streaming, remote work, and video communication? That doesn’t seem likely, when fiber is so well-suited to these applications.

As this map from Community networks shows, citywide FTTH networks backed by local grassroots groups have proliferated in spite of lobbyist opposition.

As for the looming prospect of improved low-orbit satellite Internet, that also comes with some large caveats. “Musk’s satellite Internet is pretty darn exciting if you live in rural Alaska, but satellites just don’t have the capacity to replace fiber across America. 5G and satellite are exciting technologies, but we’ve been hearing this for 20 years now, ever since the telecommunications act. First it was powerline, then WiMAX — people who don’t want municipal broadband will always want you to wait a couple years,” warned Christopher Mitchell, Director of the Community Broadband Networks Initiative.

For the time being, interest in state-level broadband legislation is at an all time high thanks to the partisan divide over how to maintain a neutral, affordable, and secure Internet for all. If the growth of municipal broadband is a sign, the future of the Internet will be at least partly local.

Municipal Broadband Resources

The following resources and organizations offer guidance on how local communities can seize control of their digital future: