The stranglehold that big telecom companies have managed to get on the nation's broadband infrastructure is no mistake—beyond merely staying out of each other's hair in many big cities, ISPs have managed to throw up legal, logistical, and financial roadblocks at every turn to prevent municipally owned fiber networks from taking hold in many parts of the country.
By now, big telecom's competition-killing tactics have been integrated into its well-oiled machine, but the some of the strategies are insidious, under-the-radar, and don't even involve the well-reported lobbying money that flows from national corporations into political coffers (though that certainly helps).
In many cases, locally owned fiber networks are cheaper, faster, have better customer service, and higher satisfaction rates than the so called "incumbents" (that's Comcast, AT&T, Verizon, etc). But still, community networks aren't common—which is often because of specific tactics used by telecom giants to make it difficult, illegal, or expensive to start them.
The Federal Communications Commission, itself complicit in some big telecom bargaining, has decided to throw local communities a bone, however. Recently, the agency said it'd help communities preempt state laws preventing them from building their own fiber networks. So far, Chattanooga, Tennessee and Wilson, North Carolina, have asked the FCC for help expanding their already-existing networks (put in place before state bans) into nearby communities.
That's a good, if controversial, start. But lobbying state legislatures isn't the only trick up big telecom's sleeve. Earlier this year, Catharine Rice of the Coalition for Local Internet Choice, said there were six commonly used tactics that make it tough for local communities to compete.
"What are the challenges to local choice? I thought about this for a long two seconds to figure out the answer—the answer is, of course, the incumbents," she said. "The tactics that are used are typically based on how much of a threat they really think you are."
Contact Local Officials
This is usually the first and most common stage, Rice said. Big telecom will schedule meetings with local elected officials to gauge interest in creating a fiber network and will try to persuade them to not pursue it: "They talk with your local officials to try to convince your elected [officials] that this is way too complex for your community—communities who often provide water [a very complicated service]—but this is too complex for them," she said.
In many cities, telecom companies have local agreements with governments to not compete—even when the government itself is wired with fiber.
There's a lot to this one, and it's probably the most common.
If a city is set to vote on a referendum, you'll see an all-out media blitz. There will be astroturfed op-eds written in local newspapers. You'll see full-page ads ( 26 from incumbents in Illinois during a one week period leading up to a referendum), you'll see misleading mass mailers, and you'll see push polls.
Push polls are perhaps the most insidious—in these surveys, representatives will ask questions like "Do you support a municipal broadband utility if it means cutting police and firefighter budgets?" or " Should tax money be allowed to provide pornographic movies for residents?" They're then used to sway public opinion in mailers, op-eds, and ads. These polls have been seen in Lafayette, Louisiana and Ketchum, Idaho (both polls conducted by Cox), in Illinois (by Comcast and AT&T), and in Wilson, North Carolina (by Time Warner).
Intervene in Local Elections
"We saw this happen in Lebanon, Ohio—not only an election which changed out a couple officials who were going to vote for [municipal broadband], but also a recall election," Rice said.
In the leadup to that recall election, Time Warner demanded that an audit be done on the overall cost to taxpayers of a proposed community-owned fiber network: "Time Warner asked [an] Ohio auditor to review spending on the project," according to a Cincinnati Enquirer story from 1998.
Beyond trying to replace elected officials, there are cases like this, where telecom companies campaign hard—and vastly outspend nonprofit groups supporting municipal fiber—during referendum elections.
Lobby State Legislatures
This is the crux of what's occurring in North Carolina and Tennessee right now. Both legislatures (and 18 others) adopted laws severely restricting community-owned fiber networks after successful ones were installed in Chattanooga and Wilson. Guess who often supports the lawmakers who introduce and champion the legislation? Big telecom. Guess who often actually writes the legislation? Big telecom.
Before the push polls got started in Lafayette, the city had to deal with something else—a lawsuit instigated by BellSouth that demanded the city have a local referendum before building its network. Once that measure passed, two citizens sued the city in a case that went to the Louisiana supreme court. According to ArsTechnica, the chief justice there "asked the plaintiffs' attorney if they were being paid by the telecom company." The city won the case, but not before spending three years and $4 million litigating it.
Except, in this case, "competing" usually means "doing anything to destroy competition."
"You see things like predatory pricing," Rice said. "They'll drop their rates below cost to try to bring the cities out of business. We've even heard things like the suppliers and contractors the city is using. You do business with them, you don't do business with us."
In Wilson, for instance, Time Warner dropped prices or cut prices after the city's Greenlight fiber program started, and increased prices in neighboring counties, where Greenlight wasn't allowed to compete because of a state law lobbied for and written by Time Warner Cable.
"TWC has lowered its promotional rates in Wilson while raising rates on nearby customers who have no other cable or fiber choice," a report by the Institute for Local Self-Reliance published last year said. "As all of these customers are served by the same TWC headend, subscribers in noncompetitive areas are subsidizing lower prices in competitive areas."
In Scottsboro, Alabama, which started a community fiber and cable program, Charter Cable lowered its prices to $19.95 a month for 200 channels; in neighboring communities it charged $72.99. In Scottsboro, it was losing $210 a year on each customer.