Laws Prohibit or Restrict Municipal Broadband Networks in 20-Plus States

• By Richard Chang
• 09/08/16

Laws in more than 20 states restrict or prohibit local governments from building their own broadband networks, according to a report released today by the Education Commission of the States.

In six states — Alabama, Colorado, Louisiana, Minnesota, North Carolina and Utah — a referendum is required by localities seeking to offer broadband service.

In three states — Alabama, North Carolina and Tennessee — public providers are only permitted to provide services within their service limits or territory. In addition, some states like Florida, Louisiana and Utah require a feasibility study or proof of profitability.

In five states — Missouri, Nebraska, Nevada, Texas and Washington — statutory language prohibits municipal broadband. For example, in Nevada, cities with more than 25,000 residents and counties with more than 55,000 residents are prohibited from selling telecommunications services.

The reasons for the restrictions and prohibitions against broadband vary state to state. However, some of the reasons include the following arguments:

• Government broadband networks should not compete with private providers because they have inherent advantages, like rights of way and public financing, which significantly reduce the costs associated with entry into broadband markets.
• Providing broadband can be a high-risk endeavor, and if the network fails, taxpayers face significant financial liability.
• Public funds used for broadband are taken away from higher priority systems, including roads, electric grid updates and water systems.
• Municipal broadband discourages private sector investment.

“Where private markets have underserved or failed to serve communities, municipal broadband networks have the potential to increase access to internet service,” wrote the authors of the report, Lauren Sisneros and Brian A. Sponsler, who are employed by the Education Commission of the States, a nonprofit organization. “Expanding broadband to these communities is a critical component of holistic efforts to provide the infrastructure necessary to support higher education access and success for non-traditional and geographically isolated student populations — populations that have a significant impact on achievement of state educational attainment goals.”

The authors concluded that it is vital that state and local leadership understand the ways state laws can impact the provision of local broadband and fair online access to their constituents. The full report is available on the commission’s website.

The Education Commission of the States was founded in 1965 by John W. Gardner, president of the Carnegie Corporation of New York, and Terry Sanford, former governor of North Carolina. Its headquarters is in Denver.

The commission is non-partisan and focuses on pre-K through postsecondary education research, with a particular interest in policy, said Amy Skinner, director of communications for the organization.