How Local Governments Can Beat Big Telecoms at Delivering the Internet

How can Verizon, Comcast, and TimeWarner overcharge for outdated broadband service? Because they own the networks, and the FCC is powerless to regulate them. Yet, on September 17, the local power company in the city of Chattanooga, EPB, announced that it was slashing prices for its vastly superior fiber-to-the-home hook up.

Over the next few months, the announcement says, the minimum download and upload speed for EPB's 50,000 subscribers will rise to 100 megabits per second or faster. (The average download speed in the US remains stuck at around 7 megabits per second.) EPB also offers a full gigabit per second for only $69.99 per month, meaning that Chattanooga has a higher concentration of gig users than any city in the U.S., including Google Fiber's Kansas City.

This could be just the beginning. There are nearly 140 independent telcos and municipalities providing fiber-to-the-home in scattered places across the US, and this number is on the rise.

Two other countries, Sweden and New Zealand shed light on the benefits municipal broadband brings to communities. Built in 1994, Sweden's Stokab municipal network has been consistently cash-flow positive since 1998 and has been profitable since 2008. New Zealand's Ultrafast Broadband Initiative intends to create a nationwide fiber-to-the-home infrastructure of unprecedented scale.

Strikingly, Chattanooga's municipal network currently offers a better price on gigabit per second speeds than are available either in Stockholm or in Kansas City. Unfettered access to such fast internet is allowing for experimentation and innovation, as entrepreneurs choose Chattanooga as a testing ground for apps that will drive further upgrades in broadband service nationally—and globally.

From EPB Chief Executive Officer, Harold Depriest:

We have had visits from municipal utilities, government officials, community leaders and private companies from around the globe, including Japan, Australia, New Zealand, Israel, Ireland, Brazil and throughout the U.S. These groups are all looking at EPB as a model for a successful, sustainable gig network combined with a modernized electric distribution system."

Coinciding with EPB's dramatic service upgrade, The Fiber To The Home Council, whose members include major telecom equipment proviers, independent network owners, and Google has announced a new Gigabit Communities Race to the Top Program. This program would mandate that the FCC award grants of up to $10 million to appliants for the construction of municipal fiber networks in communities across the US.

Municipal networks like Chattanooga's make ISP's directly responsible to the communities they serve. Whereas Verizon, Comcast, and TimeWarner's whole purpose is to maximize profits at the expense of customers, municipal networks serve the communities who underwrite them. As Chattanooga's success demonstrates, addition to serving the public interest, municipal networks make long-term economic sense.

There's good reason for other cities and towns to follow Chattanooga's lead. If the more complex public interest considerations of net neutrality, privacy, and autonomy fail to inspire municipalities across the U.S. to undertake the construction of their own fiber networks, perhaps the speed and affordability of muninetworks like Chattanooga's will.