Will the Lege Shut Down Public Broadband?

Rep. Phil King, R-Weatherford (Photo By Jana Birchum)

Although the high-profile matters this Lege session are the usual lightweights like public school finance, property taxes, and, of course, the budget, other questions – like the continuing controversies over how to regulate the high tech economy – are also in the mix. Among the most prominent are two bills filed by Rep. Phil King, R-Weatherford, that attempt to define telecommunications policy in the wake of a slew of new technologies that have transformed the industry. In their current form, HB 3179 and HB 789 would impose statewide standards that will erode cities' influence over the telecom industry. Proponents, including such major telecom players as San Antonio-based SBC Communications, say the bills will remove barriers to local markets, thereby spurring robust competition. Critics, however, fear these bills will instead prematurely bar municipalities from implementing broadband initiatives, and thereby leave too many communities without broadband access.

House Bill 789 originally had a provision that would ban Austin and other municipalities outright from providing free or reduced-rate broadband service, including Wi-Fi connectivity. Telecom providers did not want to compete against municipal broadband initiatives. Said Rep. King, "No business should have to compete with public tax dollars." The provision generated an outcry among cyber-lobby citizens' groups and advocates for cities, who argued that the market chases only dollars and therefore cares little about providing services for small or impoverished communities. The digital divide, they were concerned, would grow larger, leaving unwired communities economically vulnerable. As a consequence of that debate, the effects of HB 789 have been softened a little, or at least delayed – as the bill stands now (passed by the House, pending in the Senate), the ban won't apply to broadband projects started before Sept. 1, 2006. That deadline still leaves municipalities little time to make big decisions. And cities that might come up with innovative broadband programs after the deadline will simply be out of luck.

King's other telecom bill, HB 3179, is still pending in Regulated Industries, and it's possible that it will die there. But the bill may still serve as a bellwether for future trends in telecommunications policy – it would replace local right-of-way use agreements with a statewide standard for access to local markets. Traditionally, municipalities have used right-of-way agreements to ensure that the interests of the general public are served by telecom businesses. Rondella Hawkins, manager of Austin's Office of Telecommunications and Regulatory Affairs, says, "We ensure that a cable company cannot come in here and cherry-pick and only provide service to affluent areas. … We are able to negotiate a lot of assets and in-kind contributions." Austin, for instance, requires that cable companies provide eight PEG (public educational government) channels, free cable for schools and city buildings, and the nation's only economic development channel dedicated to music.

Municipalities can also generate revenue through leasing rights-of-way, through fees charged to cable and telecom providers in exchange for the use of public streets. Last year, Austin took in just under $22 million in rights-of-way fees from cable and telecom providers. But under HB 3179, cities would no longer be able to negotiate right-of-way use agreements. A statewide standard would determine such things as the maximum number of PEG channels any cable provider was required to offer, and right-of-way fees would be replaced by a statewide 3.95% fee on each sale of a communications service. The precise provisions are still to be worked out (should the bill advance), but municipalities fear a legislated sweetheart deal for providers, with a consequent loss in revenue for cities.

It's a pattern familiar from this Lege in its approach to similar questions affecting local revenues, like the fight over property tax caps. The defense relies inevitably on "free market" rhetoric. As currently drafted, for example, HB 789 would amend the Utilities Code to read, "As new technologies become available, all public policy must be driven by free market principles for the benefit of consumers in this state consistent with the public interest." That sounds just peachy – although in telecom policy, as in many things, the state-defined market is only as "free" as the Lege allows it to be, and cities therefore won't be "free" to charge for public resources what the telecom market will actually bear, because the companies simply don't want to pay that much.

Critics fear that leaving broadband deployment solely up to the markets, however defined, will leave many Texans behind. Because of growing international competition, it's even become a national policy question – Foreign Affairs noted, "In the first three years of the Bush administration, the United States dropped from 4th to 13th place in global rankings of broadband Internet usage." The prestigious policy journal blames a lack of government leadership. Critics of the current telecom bills believe that by sidelining municipalities, the legislature is removing a major player in the effort to cover Texas with broadband access.