TCS Daily

Broadband Roadblocks

By John Merline - March 15, 2002 12:00 AM

What does a Manhattan Beach, Calif., "beach improvement fund" have to do with a speech last week by Federal Communications Commission chairman Michael Powell about broadband deployment? You'd think the answer would be "nothing." You would be wrong.

Deep in Powell's speech he mentions local "rights of way" and the roadblocks they are putting in front of "effective deployment of new services." Powell could have been talking about Manhattan Beach.

Last year, the southern California beach town managed to squeeze $350,000 out of Global West, a fiber company, to help fix up its beach area. Global West was trying to pull some of its offshore fiber into the city. The local government got the "voluntary" payment in exchange for the right to land fiber there.

This is just the sort of behavior Congress intended to prevent with the Telecommunications Act of 1996, which specifically limited what local governments could charge for access to their rights of way. Without that provision, they recognized, local governments could set up tollbooths for any broadband company hoping to construct networks under city streets. If every town in the country tacked on its own version of a telecom tax, companies could never afford to build out their networks and hoped for competition would not flourish.

Yet, even with that provision in the federal law, and some similar laws at the state level, many local governments continue to treat their rights of way as a private piggy bank. Examples:

  • Metromedia Fiber Network Services wanted to put some fiber in Arlington, Mass. According to a Metromedia filing with the FCC, the city initially demanded $2 million for the privilege of using its rights of way, finally agreeing nearly a year later to a payment of $200,000.

  • Medina, Wash., wanted Metromedia to, among other things, provide free high-speed Internet service to all the city's residents, cough up an annual fee of $250,000, and build a fiber network for city use.

  • Chula Vista, Calif., wanted Global Crossing to build pipes to 10 city buildings, including "access boxes, manholes, and splice boxes." The tab for that, according to Global Crossing, would have been $629,000.

Other companies have been asked, and at times agreed, to plant trees, pave roads, install sidewalks, build community recreation centers, provide hospital equipment or pay a percentage of gross revenue. Obviously, not every one of these demands ends up getting met. But the delays and legal challenges all add needlessly to the cost of undertaking what is already a risky business.

When the economy was booming, the stock markets flying, and venture capital money pouring in, broadband companies racing to construct networks typically just paid off the local bureaucrats. That's a luxury none of these companies can afford today, which is why they are complaining loudly to the FCC for some relief.

When pressed, cities argue that rights of way are a valuable asset, one local officials would be foolish to give away. They claim the federal law still gives them the right to do that. In any case, they argue, blocking cities from charging or otherwise managing their rights of way, "does nothing to accelerate the rate of deployment of advanced services," as the Texas Coalition of Cities for Utility Issues put its case in a recent FCC filing.

But companies don't have unlimited funds. Any money that goes to pay off cities, or is spent in court arguing against charges, or is wasted while city bureaucrats dawdle over permits is time and money not spent building fiber networks. And in some cases, the cities were so unwelcoming that companies simply abandoned them.

That was the case in Shreveport, La., which puttered around for so long, Adelphia Business Solutions dropped plans to build there, the company says. Money demands by Trenton, N.J., convinced Metromedia to rethink plans to build a network of fiber rings in the downtown area.

Powell at least has recognized that a very real problem exists here. Now he needs to make it clear that the federal government will not tolerate greedy, lawbreaking local bureaucrats who stand in the way of broadband's future.

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