Pandemic Possible Inflection Point in States’ Move Away from Restrictions on Community Networks

In years past, states have implemented preemptive laws that make it more difficult or impossible for communities to build their own Internet networks.

These state barriers were often enacted at the behest of large telecom monopolies to limit competition, and include everything from outright bans on municipal broadband networks to oppressive restrictions and requirements which create legal uncertainty for communities attempting to offer telecommunications and Internet services, including via partnerships.

When the Covid-19 pandemic hit the United States in March 2020, there were 19 states maintaining significant restrictions on municipal networks. Today, the number of states upholding these barriers has been reduced to 17. The pandemic served as a turning point in the fight for local authority, and in the past year, Arkansas and Washington adopted legislation significantly rolling back legislative barriers on publicly owned broadband networks.

In February of 2021, both chambers of the Republican-dominated Arkansas State Legislature voted unanimously to send Senate Bill 74 to State Governor Asa Hutchinson, who signed the bill into law. The legislation grants government entities the authority to provide broadband services and expands the financing options available to municipalities to fund municipal broadband projects.

In May of 2021, Washington State Governor and Democrat Jay Inslee signed two bills expanding municipal authority to provide retail internet services to end-users, House Bill 1336 and Senate Bill 5383. Both bills reduce barriers to municipal networks, but House Bill 1336, which completely removes all previously-held restrictions on public broadband in the state of Washington, is expected to take legal precedence.

The recent progress made by Arkansas and Washington is extremely timely as more federal, state, and local funding is available to improve broadband infrastructure than ever before. Momentum for municipal broadband is mounting, but there is still a long road to travel to overturn the legal barriers which remain in 17 states.

Advancing, stalling and nearly retreating

Every year, bills aiming to expand the authority of local governments and municipal electric cooperatives to construct broadband networks are introduced in state legislatures. And every year, these bills stall, are withdrawn, and die as a result of the immense lobbying power of the private monopolies. In 2021, state legislators in Idaho, Montana, Missouri, Tennessee, Nebraska, and North Carolina, all introduced legislation to lessen state-held barriers against municipal broadband. Many of these bills died in committee after action on the legislation was indefinitely postponed.

To give an example, legislation (H.B. 422) introduced early on in Montana’s 2021 Legislative Session – which would have allowed the state’s local governments to own and operate community broadband networks – underwent a dramatic twist of fate when dozens of legislators who previously supported the proposal suddenly turned against it, causing the bill to die in a final House vote.

The bill’s sponsor, Democratic State Rep. Kelly Kortum, told the Daily Montanan that he attributes its failure to 11th-hour lobbying efforts of incumbent telecommunications companies in Montana, which he believes were caught off guard by the vast support the bill initially received.  “I expected it to fail on the House floor. It didn’t, and then the lobbying really began,” Kortum said.

Next door, in Idaho, it has been a cable monopoly and local telephone companies that have pushed hard against municipal open access approaches that would create robust competition. In largely rural states, some local telephone companies are deeply afraid of competing in an actual marketplace.

Many states preserved previously-established barriers throughout 2021, but one state, Ohio, nearly became the first state in a decade to erect new barriers to the establishment and expansion of municipal broadband networks.

In June, the Ohio Senate included an amendment that effectively banned the creation of municipal broadband networks in its two-year, $75-billion budget bill. Thankfully, after local officials, community broadband advocates, and angry residents and businesses from across the state spoke out against it, the anonymously-added amendment was removed from the budget. The governor and lieutenant governor, both Republicans, spoke out against these limits on municipal broadband.

While some state legislators are working tirelessly to reduce barriers to municipal broadband, the largest ISPs are able to use their outsized influence and cash reserves to block legislation that would undermine their control over the broadband marketplace. “In the 116th Congress alone, these corporations spent an astounding $234 million on lobbying and federal elections,” reports Common Cause and the Communications Workers of America, in a recent study, Broadband Gatekeepers: How ISP Lobbying and Political Influence Shapes the Digital Divide.

A partisan issue on the federal level

The Biden administration’s American Jobs Plan centered on bolstering nonprofit, municipal, and cooperative models to develop high-speed broadband infrastructure nationwide. Unfortunately, in the sausage-making, the focus on community broadband networks was dropped and outspoken federal support for municipal networks largely quieted as the monopoly lobbyists descended on Congress and the White House.

This is representative of a disconnect that exists between congressional Republicans and Republican officials on the local and state level. While expanding local internet choice is an overwhelmingly bipartisan issue at the local level, it is a highly partisan issue in Congress.

For example, in the same month that the Republican-dominated Arkansas State Legislature removed restrictions on municipal broadband, Congressional Republicans introduced a bill package attempting to ban communities from constructing their own networks and engaging in public-private partnerships nationwide.

Meanwhile, congressional Democrats have pushed to preempt states from enacting or enforcing laws that restrict municipalities from building and operating broadband networks. In March, congressional Democrats introduced the Community Broadband Act, which would prohibit banning or limiting the ability of any state, regional, or local governments to build broadband networks and provide Internet services. However, the Democrats were ultimately not united in pushing that language into the infrastructure bill.

A web of legal barriers

Common approaches to preempting municipal broadband networks range from straightforward bans to confusing financial restrictions and complicated legal requirements. While some states have established one main barrier to community broadband, many more have adopted a web of regulations that kill any possibility of municipal connectivity, if only because of the legal uncertainty created by complex and vague laws.

Out of the 17 states with restrictions on municipal networks, a few explicitly ban local governments from providing communications services to their citizens. In Nevada, only municipalities with less than 25,000 people and counties with less than 55,000 people can offer telecommunications services. Tennessee bars municipalities without electric utilities from providing Internet access in most situations. Local governments in Missouri and Texas are limited to offering Internet access and no other telecommunications services. Montana and Pennsylvania state laws permit municipal networks, but only in unserved communities, with vague definitions of what that means.

In states that don’t expressly forbid municipal networks, state legislatures can still establish legal roadblocks that deter investment in community broadband networks. One of the strongest examples of this is North Carolina, where an array of burdensome restrictions and requirements “collectively have the practical effect of impairing public communications initiatives,” according to the Coalition for Local Internet Choice [pdf].

Other states, including Virginia, Florida, and South Carolina, require that municipal networks impute private sector costs, pay additional taxes, set excessively high prices, and/or refrain from subsidizing affordable service, in the name of protecting private “competition.” In other states, legislators have established stringent procedural requirements, including a prescribed bidding process in Michigan and community referenda in Alabama and Minnesota.

To learn more

To learn more about the legislative bans states maintain, check out this resource [pdf], maintained by the Coalition for Local Internet Choice (CLIC), which summarizes state barriers to public broadband as of July 2021.

CLIC’s list is focused on a more legalistic look at state barriers and still includes Washington and Arkansas, while they see how the law settles. The Institute for Local Self Reliance focuses on the 17 states where state limits significantly restrain municipal broadband networks and partnerships, while agreeing with CLIC that additional states have barriers that can also discourage investment.

Editor’s Note: This piece was authored by Jericho Casper, a reporter for the Institute for Local Self Reliance’s Community Broadband Network Initiative. Originally appearing at MuniNetworks.org on September 15, 2021, the piece is republished with permission.