In July 2020, the City Council of West Des Moines, Iowa, voted (1) to spend $50 million to construct within public rights-of-way (ROW) a so-called "open access conduit network" that it readily concedes is designed for the exclusive use of fiber-to-the-premises (FTTP) broadband providers, and (2) to enter an "anchor tenant" agreement with Google Fiber that raises serious factual questions as to the ability of even other fiber-based Internet service providers (ISPs) to utilize that infrastructure on reasonably equitable terms.
Given that West Des Moines (the City) also serves as the gatekeeper to those ROW, these actions inevitably create worrisome conflicts of interest. They also violate the principle of technological neutrality and are at direct odds with our nation's longstanding and proven (intramodal as well as intermodal) competition-based approach to the deployment and expansion of broadband access. Moreover, given the abysmal financial track record of municipal involvement in the broadband marketplace generally, a topic I addressed in an August 2021 Perspectives from FSF Scholars, they unnecessarily place taxpayers in economic jeopardy.
MCC Iowa LLC, a subsidiary of Mediacom Communications Corporation (Mediacom), is the local cable system operator in West Des Moines. It provides broadband service throughout the City via a hybrid fiber coaxial (HFC) network at speeds up to a gigabit (1000 megabits per second (Mbps)) downstream and 50 Mbps upstream. Notably, these rates far exceed not only the definition of "broadband" embraced by the Federal Communications Commission (FCC or Commission) – 25/3 Mbps – but also the threshold for a "served" area agreed to by a bipartisan group of Senators in the $1.2 trillion infrastructure bill currently before the House – 100/20 Mbps.
Mediacom is able to provide this level of service to City residents only because it has (1) committed the large amounts of private capital required to build out its network, and, critically, (2) complied with the City's formal permitting processes in order to gain access to ROW.
In May of this year, Mediacom filed with the FCC a Petition for Expedited Declaratory Ruling (Petition) pursuant to Section 253 of the Telecommunications Act of 1996 arguing that the City's actions, which reduce substantially the construction and permitting obligations of fiber-based providers – and, as a result, their costs and time to market – as a practical matter constitute an "effective prohibition" under Section 253 for providers other than Google Fiber. This is particularly so for broadband providers that embrace distribution technologies other than end-to-end fiber (for example, cable HFC networks rely upon coaxial cable for the last-mile connection to the home) and therefore are foreclosed, at least in part, from utilizing this taxpayer-funded infrastructure.
More recently, the City and Mediacom informed the Commission on October 15, 2021, that they have agreed, at least at a high level, to resolve this dispute. As a result, the FCC's Wireline Competition Bureau issued an Order earlier this week pausing the pleading cycle in order to provide the parties with additional time to hammer out the specific details of a settlement.
The fact remains, however, that the City's underlying decision to align its economic interests with a specific distribution technology (if not a specific company utilizing that distribution technology) violates the competition-fostering principle of technological neutrality, incentivizes the City to perform its permitting function in a discriminatory fashion, and arguably implicates Section 253 itself.
Given that Mediacom and the City are in the process of negotiating specific settlement terms, it is conceivable that at least some of the disputed provisions of the City's agreement with Google Fiber will change. In one important respect, that is something we already have observed: a month after Mediacom filed its Petition, the City and Google Fiber agreed to reduce the length of time that the latter would have exclusive use of completed portions of the conduit network from 18 to 6 months.
Accordingly, at this time I will not discuss in detail other aspects of the agreement, particularly those relating to the implications of the conduit network's technical design for other providers, whether fiber-based or not. (I will note, however, that Mediacom's Petition did make numerous compelling allegations regarding the practical ability of other fiber-based ISPs to utilize the conduit network in a manner equivalent to that afforded Google Fiber.)
Instead, I want to highlight a more fundamental question raised by the City's decision to not just express a preference for fiber-based service, but to take substantial steps to reduce the costs and administrative burdens solely for fiber-based providers: Should a municipality's actions to promote a specific distribution technology be evaluated under Section 253?
As Free State Foundation President Randolph May and I explained in "Biden Broadband Plan: 'Future Proofing' Is Likely 'Fool's Proofing'," a June 2021 Perspectives, progress towards reaching the goal of universal broadband access hinges upon adherence to the pro-competitive principle of technological neutrality.
The United States is a large nation, one that encompasses areas with vastly different geographic features and population densities. Truly ubiquitous broadband coverage, as well as price competition and heightened innovation, will be realized only through policies that embrace the unique strengths and weaknesses of the range of distribution technologies – not just FTTP but also cable HFC networks, mobile and fixed 5G, fixed wireless, and satellite – that ISPs leverage to provide consumers with the capacity that they in fact demand.
As such, a policy approach that exclusively prioritizes fiber – for example, the Biden Broadband Plan as articulated in a March 2021 White House Fact Sheet – is wasteful and ultimately counterproductive. But when pursued by a municipality, is it also at odds with the pro-competitive thrust of the Telecommunications Act of 1996, specifically Section 253?
Section 253(a) states that "[n]o State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service" (emphasis added). And subsection (d) empowers the Commission to "preempt the enforcement of such statute, regulation, or legal requirement to the extent necessary to correct such violation or inconsistency."
Per the FCC's 2018 Declaratory Ruling and Third Report and Order, (1) "a state or local legal requirement constitutes an effective prohibition if it 'materially limits or inhibits the ability of any competitor or potential competitor to compete in a fair and balanced legal and regulatory environment'" (emphasis added), and (2) "an insurmountable barrier is not required to find an effective prohibition under Section 253(a)."
It seems evident that the City, in choosing to spend $50 million on a conduit network that can be used only by those ISPs that embrace a FTTP model, is making it relatively more difficult for providers utilizing other viable distribution technologies to compete.
In its Opposition to Mediacom's Petition, Google Fiber dedicates an entire section to the concern that the grant of Mediacom's requested relief could have "broad, negative implications on local investment in broadband infrastructure." In response, I offer the following two points. One, as Free State Foundation scholars have pointed out on many occasions, attempts by municipalities to enter the broadband marketplace overwhelmingly have failed to achieve independent financial viability. (See the "Further Readings" at the end of this recent Perspectives from FSF Scholars for examples.) Consequently, those claimed "broad, negative implications" in fact, may generate positive economic outcomes for taxpaying residents.
Two, where the policies and/or spending by a municipality discriminate so heavily in favor of a specific provider (as alleged here, Google Fiber) or a subset of providers (as freely acknowledged here by the City, those ISPs that embrace a FTTP model), does a line exist that, once crossed, benefits one or more competitors rather than, as Congress intended in 1996, competition?
If so, a scenario may arise where preemption pursuant to Section 253(d) by the FCC of a project that so strongly rejects the principle of technological neutrality is warranted.
As noted above, this proceeding remains open. The Wireless Competition Bureau only temporarily suspended the deadline for replies. I will provide further updates on this dispute as developments warrant.
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