Expanding Municipal Telecommunications Systems

Rural areas and small towns are often the last in the country to be equipped with high-speed Internet and other interactive services. Realizing that broadband is as essential as electricity, many municipalities are building their own telecommunications systems, as they once provided their own electricity infrastructure. Indeed, the vast majority of public electrical utilities in the U.S. are located in cities with fewer than 10,000 residents. These municipal utilities are in a unique position to provide these services, as fiber optic networks can be laid over their existing infrastructure.

In an effort to undermine their efforts, private cable TV and telephone companies are lobbying state legislatures to eliminate this source of competition. Fourteen states have passed laws in the last several years prohibiting or impairing the ability of publicly-owned electric utilities to provide communications services. (The American Public Power Association maintains a list of State Barriers to Community Broadband Services. MuniWireless.com offers details on pending Anti-Municipal Broadband Bills in the U.S.)

Despite these efforts, municipal internet service is thriving in some communities. For example, in May 1999, after three years of lobbying by the Electric Power Board of Chattanooga and the Tennessee Municipal Power Association, the Tennessee State Legislature reversed Tennessee's ban, allowing public utilities to provide cable television, Internet and telephone services. (See below for the amended law.) Now Chattanooga’s MetroNet, operated by the Electric Power Board, makes it one of only a few mid-sized cities with very high-speed digital data transfer as part of its municipal telecommunications infrastructure. (See below for the Chattanooga City Council resolution approving MetroNet.) 

Chaska, Minnesota’s municipally owned and managed wireless network went live in November 2004. The city invested about $800,000 in the wireless network, which covers all 15 square miles of the suburban-fringe community. It offers a high-speed internet connection for just $16 per month for homes, and starting at $25 per month for businesses. More than 2,000 of the city’s 18,000 residents are already paying subscribers. In an interview with The Future of Wireless, Chaska’s Information Services manager advises other cities, “Do not underestimate the amount of customers you will have.”

In addition to broadening access, competition from municipal telecommunications providers has been shown to lower consumer rates. For instance, Chattanooga, TN and Glasgow, KY are both served by a private cable company, Comcast. But Glasgow's public power company began cable TV service ten years ago. As a result, Comcast's rates in Glasgow are 1/3 less than in Chattanooga. 

For more information: 

• Freepress’s Community Internet section chronicles pending legislation and up-to-date news stories on municipal broadband.
• The American Public Power Association’s Community Broadband section includes an overview of the issue, Community Broadband: Separating Fact from Fiction, January 2004.
• The Baller Herbst Law Group is the leading legal representative of municipal utilities. Their Library contains testimony, briefs and a number of excellent articles, including The Case for Municipal Broadband Networks: Stronger than Ever, and a Preliminary Analysis of the 9^th Circuit’s Brand X Decision (the case to be reviewed by the U.S. Supreme Court in late-March 2005). 
• MuniWireless.com has information on WiFi, including Hot Cities, and Articles About Legal Stuff. 

Rules:

• Full Text of Tennessee Code Chapter 52 - Municipal Electric Plants
  Authorizes municipal electric plants to "acquire, improve, operate, lease and maintain telecommunications equipment and to provide telecommunications services."

• Chattanooga, TN City Council Resolution approving municipal internet service: 

RESOLUTION NO. 23446 

A RESOLUTION APPROVING AND AUTHORIZING THE INTERNET DIVISION OF THE ELECTRIC POWER BOARD TO PROVIDE CERTAIN ADDITIONAL SERVICES. 

_______________________________________________________

WHEREAS, The Electric Power Board of Chattanooga, an independent board of the City of Chattanooga, (“Electric Power Board”) has developed a detailed business plan for the provision of internet services directly and through MetroNet, Incorporated; has submitted the business plan to the State Director of Local Finance; and has considered the State Director of Local Finance's analysis of the business plan; and

WHEREAS, Pursuant to a notice of hearing published in the Chattanooga Times Free Press, the Electric Power Board conducted a public hearing on June 6, 2002; and

WHEREAS, All interested parties were invited to attend the public hearing and were permitted to ask questions and comment upon the proposed business plan and the provision of internet services; and

WHEREAS, After consideration of the foregoing, including the questions and comments received from all interested parties, the Electric Power Board has determined that the Internet Division of the Electric Power Board should provide internet services directly and through MetroNet, Incorporated under the authority of Tennessee Code Annotated §§ 7-52-601, et seq., and 7-52-103(c) and other applicable law, subject only to the approval of the City Council of the City of Chattanooga, Tennessee (“City Council”); and

WHEREAS, The City Council finds that new businesses consider the level of technological advancement of the City and the surrounding area prior to electing to locate here; and

WHEREAS, The City Council finds that local businesses consider the level of technological advancement of the City and the surrounding area when electing to remain here; and

WHEREAS, The City Council finds that the Electric Power Board’s provision of Internet services directly and through MetroNet, Incorporated will be a significant, integral and necessary step in the City’s economic development efforts and in the continuing technological advancement of the City and the surrounding area; and

WHEREAS, The City Council find that all necessary approvals should be given to the Electric Power Board in accordance with Tennessee Code Annotated §§ 7-52-601, et seq. and 7-52-103(c)

NOW, THEREFORE,

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CHATTANOOGA, TENNESSEE, That the Internet Division of Electric Power Board is hereby authorized to provide internet services directly and through its participation in MetroNet, Incorporated to the fullest extent permitted by Tennessee Code Annotated §§ 7-52-601, et seq. and 7-52-103(c) and other applicable law; provided, however, that nothing herein shall authorize or otherwise permit the Electric Power Board to provide cable television services directly through its Internet Division or through MetroNet, Incorporated. 

ADOPTED:  July 16, 2002