Pennsylvania bill seeks ban on local government supported broadband

I thought I’d never see this one again, an incumbent’s wet dream. There’s a bill proposed in Pennsylvania that would prohibit local governments from “competing with the private sector” in delivering broadband service. The bill further says that local governments cannot fund, capitalize, securing the indebtedness of, or lease the obligations of, or subsidize, any charitable or not-for-profit institution which would use such support to compete against private enterprise. Why is private enterprise being placed on such a pedestal, especially after the recent round of private-enterprise led financial disasters?

I’d like to know if this is another Verizon-sponsored bill because I’ve seen this one before, a bill signed by the Pennsylvania governor back in 2004 (Act 183) where cities have to ask Verizon for permission before they can roll out broadband service. Yes, Pennsylvanians, you know who’s the boss of your state’s broadband future. Back when Act 183 was passed, cities like Philadelphia and Kutztown, which has municipal broadband networks in the planning, were graciously given an exemption.

The current bill, like Act 183, does nothing but protect large telecom and cable companies’ monopoly. Its timing is very suspicious: the NTIA is about to give grants to local governments and private entities (as well as non-profits) for broadband projects. No doubt the telecom and cable incumbents do not want to see more public entities creating broadband options for Pennsylvanians.

Read Harold Feld’s post about the new Pennsylvania bill.

*Pennsylvanians, call your representative if you hate this bill and tell them to start encouraging true broadband competition and supporting more broadband options.

UPDATE: Response from Verizon

First, Verizon had nothing to do with the introduction of S.B. 530.  The bill sponsor, State Senator Pat Browne, has introduced this legislation for the past three sessions.  You should contact the senator for his views on the legislation.  I repeat: It is not a Verizon bill.

Second, on House Bill 30 from 2004: That legislation has been a success – with commitments to ubiquitous broadband deployment throughout Pennsylvania and a Bona Fide Retail Request program that, to date, has accelerated broadband service to 124 communities in some of the most rural parts of the state in addition to the many hundreds of communities whose residents and businesses already have broadband.

Further, even with the municipal broadband provision of the legislation, which gave the incumbent provider the right of first refusal in providing broadband in a municipality and which actually was proposed not by Verizon but by another company, Verizon has never stood in the way of a municipality that sought to provide broadband services in Pennsylvania – nor will we.

Thanks for the electronic ear.  I’d appreciate it if you’d update your post to reflect these facts.

Harry J Mitchell
Verizon Communications
Director-Media Relations, Mid-Atlantic/South-Central Regions


  1. Fransico D'Anconia says

    When governments are having a tough time running themselves, why should they take on another project that they can’t handle? Why is it that you think they should take this on as well? Leave it to the consumer to determine what they want in the course of broadband services and the private sector will deliver it.

  2. Esme Vos says

    I agree that the consumer should determine what he or she should buy, but the problem in the US is that there is no real competition in the market for broadband services. In most areas, there’s only one or two broadband providers, the telecom incumbent (Verizon in the case of Penn.) and a cable company. Let the private sector deliver it? What if the private sector is a semi-monopoly?

    When cities have the leeway to partner with anyone – private companies, non-profits – or even to roll out broadband service itself, it introduces a new entrant into the market for broadband and threatens the monopoly. What a surprise that in France for example, when the local government announces “plans” to deploy broadband service in an underserved area, suddenly France Telecom wakes up and begins rolling out broadband.

    Don’t mistake that bill for something that truly benefits the consumer. It’s got Big Telco or Big Cable written all over it. As far as I’m concerned, Big Telco or Big Cable is akin to the old Soviet national telephone company – a monopoly.

    The failure of the US government to get the telecom incumbents to open up their lines to competitors in the broadband market has resulted high prices / low bandwidth for American broadband consumers. The incumbents have lobbied Congress to prevent this from happening, under the guise of “let the free market work”. Well it has not worked – either in broadband or in the financial sector.

  3. Fransico D'Anconia says

    Well, we accept that now with the telecoms and cable services. What is the real differnce there when we add the broadband service? If you want ot be honest, let’s get rid of the franchises that limit what companies deliver services in a specific area and then broadband will really open up. How about this for an idea, since they deliver the same services, treat the cables and telecoms the same. That way they can operate under the same laws and see what comes from that competition.

  4. Fransico D'Anconia says

    Well, to a degree I can agree with your last statement. We do need to remove political interference from this discussion. It is when politics is incorporated that the consumer suffers.

  5. Esme Vos says

    We have to figure out what sort of government regulation will encourage robust competition in the market for broadband services. In the EU, the regulation that forced the incumbent telcos to open up their lines resulted in more competition.

    So the EU took a step further: they are now pushing for structural separation of the infrastructure layer from the service layer. Here’s how it works. Deploying broadband infrastructure is very expensive and results in a natural monopoly. So many local governments (such as Amsterdam) have decided to partner with private companies in creating a fiber network, which is owned partly by the city. The fiber network is open to all broadband providers, including the incumbent telco, on a non-discriminatory basis. The wholesale rates are kept low to encourage new market entrants. The city itself does not act as a broadband service provider. But it participates as an owner of the infrastructure to ensure that the network remains open to all. Moreover the city is a large user of the network (an anchor tenant).

    In the Pennsylvania bill, local governments would be prohibited from doing what I just described above. In many parts of the world, it is the regional or local government that pays for and owns the fiber network, but wholesales access to broadband service providers. This ensures that the incumbent telecom operator does not dominate FTTH. People can then choose from a variety of service providers who compete on price, bandwidth and quality of service.

    This is what I think of when I use the words “free market”. But this requires *some* government intervention, albeit the appropriate kind.

  6. Fransico D'Anconia says

    Have you actually looked at the Municipal governments in Pennsylvania? The first assumption that you have for them is that they actually are concerned with what the citizens want. If that were the case, then you could assume the Amsterdam model, however, their concern is not messing up so bad they don’t get re elected in 4 years. Second, let’s elevate the construction to the state level, how long does it take Penndot to finish a construction project? And how much are the cost overruns?

  7. Brett Glass says

    If you want to REALLY make sure that there is no competition for the incumbents, then go ahead… let government come in and compete with private business. This will drive small businesses — the would-be competitors — out of business and also dry up their supply of capital. (After all, who in his right mind would invest in a business with which government, with an infinite supply of capital, vast infrastructure, an ability to legislate advantages for itself, and no need to make a profit — after all, it can just tax people to make up losses — was competing?) And municipal wireless is a PARTICULARLY bad idea, because not only does it compete with private wireless broadband providers for customers; it also jams their signals. Instead of killing competition, government needs to foster it.

  8. Brett Glass says

    I see that comments here are being censored, because my previous one has not appeared.

  9. Brett Glass says

    Ah…. Scratch the above; after I wrote the second comment, both appeared.

  10. Yes Brett sometimes it takes a while for yours to get through the NSA filter…