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The Battle Is Raging for Control of the Internet -- and Big Corporations May Come Out on the Losing Side

Fed up with Internet monopoly, cities have begun to take things into their own hands.

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“(W)hile Cox Communications can make rate decisions in a private conference room several states away, Lafayette conducts its business in an open forum, as it should. While Cox can make repeated and periodic requests for documents under the Public Records Law, it is not subject to a corresponding obligation – a ‘show me your plans, but don’t dare ask to see mine’ mentality. Louisiana law limits the ability of a governmental enterprise to advertise, but nothing prevents the incumbent providers from spending millions of dollars in advertising campaigns. An important focal point of the legal challenges involved the right or ability of Lafayette to pledge assets of the utilities system as security for the bonds, something that the private corporations do all of the time without the slightest scrutiny.”

“To be sure, the ‘playing field is not level," Huval concluded, “but it is the government which is disadvantaged, not the private companies...”

Unhelpful Federal Government

In the 1930s the federal government actively and successfully intervened to help communities access electricity by directly financing rural electric cooperatives owned by their customers. When the program was created only about 10 percent of farms had access electricity (and about a third of America lived on farms). Ten years later, 90 percent did.

Tragically, the federal government today has offered no help to the brave communities that are trying to control their economic futures. Indeed, it often stands in the way.

The Supreme Court has ruled that states have the right to prohibit cities from offering telecommunications competition. Though the FCC has called for overturning these preemptions, neither the Obama administration nor Congress has taken concrete steps to do so.

Some federal programs inhibit the growth of public networks. The e-rate program is one example. E-rate is a federal tax that generates funds that help local schools and libraries afford broadband. The money cannot be used to build a public network that could permanently solve the problem of access. It can be used only to lease a line, ensuring the need for ongoing subsidies to private companies. Neither the administration nor Congress is moving to change this provision.

As part of its stimulus package, Congress appropriated $6 billion to help bring broadband to rural areas. Hopes were high that this money could help communities build their own networks since the law explicitly favored non-profit or public ownership. The law did allow private companies to bid for federal money but only if a for-profit company, on a case-by-case basis was found “to be in the public interest.” Disturbingly, the administration declared, a priori, that all private companies are in the public interest. Large for-profit companies surged to the head of the application line. The vast majority of stimulus money to date has gone to private providers.

The vast majority of cities with municipally owned networks didn’t want to get into the telecommunications business. But after being spurned by the private sector they built their own networks and have found that a public network has many advantages. Ownership allows communities to establish the rules that will play a large part in determining their economic futures. The success of these public networks has spurred the interest of hundreds of communities big and small, and the implacable opposition of the telecommunication companies that now monopolize the Internet’s future.

Christopher Mitchell directs the Telecommunications as Commons Initiative at the Institute for Local Self-Reliance and is the author of the new report, Breaking the Broadband Monopoly . David Morris directs ILSR’s New Rules Project.