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Obama calls for cities to build government-run high-speed internet

Bill Pugliano/Getty Images
  • President Barack Obama is visiting Cedar Falls, IA, today to make the case for local governments building their own broadband networks.
  • 19 states have laws restricting the construction of municipal networks. The president is asking the Federal Communications Commission to preempt those laws.
  • The Obama administration is also planning to offer subsidies to promote investments in local broadband.

Some of the fastest internet service in America is provided by public utilities

Chattanooga, TN, boasts one of the nation's fastest broadband networks. (Bryce Edwards)

Right now, a typical American household has an internet connection with a download speed between 10 and 20 megabits per second (Mbps). But the technology exists to build residential broadband networks that are a lot faster. In fact, a few American cities enjoy network speeds as high as 1,000 Mbps, 50 to 100 times faster than average.

And some of these networks were built not by big telecom providers but by municipal governments or publicly-owned electrical utility companies. For example, the city of Chattanooga, TN, has a publicly utility that decided to get into the municipal broadband business in 2007. As a result, households there can now get 1 gigabit (1,000 Mbps) service for just $70 per month.

Municipal broadband supporters view Cedar Falls, where Obama is visiting today, as another success story. There too, the local public utility company built a municipal broadband network that provides speeds of up to 1 gigabit per second. Gigabit service is expensive — $135 per month — but you can also get download speeds of 100 Mbps for $70 per month. That compares favorably to broadband service offered by conventional cable and telephone companies elsewhere in the country.

While the networks in Chattanooga and Cedar Falls are impressive, it's important to note that private companies have had some notable successes as well. Google has built a gigabit fiber optic network in Kansas City, and is currently expanding to Austin, TX, and Provo, UT. An organization called Gig.U is working to arrange for private investors to finance gigabit networks in college towns.

Traditional telecom companies are also working to make their networks faster. AT&T is now offering gigabit speeds in a few cities, including Austin, and Comcast has said it will start offering gigabit speeds this year.

Municipal broadband is controversial — especially among Republicans

Municipal broadband services have their detractors. Critics argue that building municipal fiber is a big risk, and taxpayers are on the hook if the bet doesn't pay off. For example, they point to Provo, Utah, which was forced to sell its public network to Google at a huge loss after the network failed to match lofty projections.

Many municipal fiber opponents also have philosophical objections to the whole concept of governments building internet service. They believe it's unfair to use taxpayer dollars to compete with the private sector. And they think private companies will do a better job in the long run.

Legislatures in 19 states have enacted laws restricting local governments from entering the broadband business:

(ILSR)

The Federal Communications Commission could preempt these state laws, giving municipalities nationwide the option to build municipal networks if they want to. FCC Chairman Tom Wheeler has signaled that he's open to the idea. This week President Obama threw his support behind the idea, writing a letter to the FCC encouraging the agency to clear away obstacles to government-owned fiber networks.

But House Republicans don't agree. Last year, the Republican-controlled House passed language banning the FCC from banning states from banning cities from building municipal networks. It never became law, thanks to opposition from Senate Democrats and President Obama. But it could become another flashpoint in the relationship between Republicans in Congress and the FCC — a relationship that's already been strained by disagreements over network neutrality regulations.

This is one reason President Obama's support for municipal broadband is important. Now that he's on the record supporting the concept, he's more likely to veto legislation that tried to overrule the FCC on the issue. So Wheeler will have a relatively free hand to promote publicly-owned networks.