Subject: [NEXTEL-1] Utilities Becoming Digital Pioneers

From: [email-masked]
Date: Tue, 05 Aug 2003 04:00:12 -0400

Utilities Becoming Digital Pioneers

Contributed by mmasnick on Mon, Aug 4 2003

From the WSJ - no, not the Wall Street Journal, but the Wisconsin State Journal -
we find an article about the growing trend for local municipalities to take on the
job of supplying broadband, often via a wireless link. Private companies are
increasingly upset with the fact that they're competing with publicly funded
organizations, but in many cases, private companies are slow to offer such
services to rural communities, and having public utilities come in is the only way
they're going to get access in a reasonable time-frame. Some states are looking at
banning municipal utility firms from offering broadband, and the article points
out that it's a situation that is likely to end up before the Supreme Court in the
near future. While I can understand both sides of the issue, it seems like it
should be up to the taxpayers. If they're willing to have their tax dollars go
towards supplying broadband, then let it go. However, if they would prefer their
tax dollars be spent elsewhere (or not at all), then let them vote in favor of
that.

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Utilities becoming digital pioneers
11:57 PM 8/03/03
Marv Balousek Wisconsin State Journal

Charles Leiby of Centerline Machine in Waupaca used to spend about 20 hours on the
Internet downloading an upgrade to his blueprint software. Last week he downloaded
an upgrade in about two hours thanks to fast wireless Internet service offered by
the city's municipal utility.

Municipal utilities nationwide are offering Internet access and other
communications services in an effort to bridge a digital divide that leaves
smaller communities without the services and ability to compete of larger ones. In
Wisconsin, some view Waupaca, Sun Prairie and Reedsburg as pioneers for being
among the first communities to offer high-speed Internet access through their
municipal utilities. Others, however, say its unfair for a private provider to be
forced to compete with a publicly supported utility.

When the Sun Prairie School District wanted to link its schools with high-speed
fiber-optic lines a few years ago, the municipal utility won the bid and now
offers high-speed wireless Internet access. A similar thing happened in Reedsburg,
a city of about 7,800 located 65 miles northwest of Madison, when the school
district wanted to link its schools and the city wanted fiber-optic lines to
monitor its wells. Mayor Carl Stolte estimates Reedsburg will spend about $8
million wiring every home and business to offer its own cable television and
telephone services as well as Internet access.

Waupaca, a city of about 5,600 located 120 miles north of Madison, began offering
wireless Internet service in response to concerns about inadequate dial-up
service, city administrator Henry Veleker said. He said the city built a 192-foot
tower to get better coverage. The system, which began operating last October, now
has about 125 customers. The cost was $300,000, which was financed through a loan
from the sewer fund.

"When you talk about this digital divide and the rural areas being left behind,
this is an inexpensive way to get broadband into the hinterlands," Veleker said. A
disadvantage of wireless broadband is that trees or other obstructions can block
the service. That's why Reedsburg is wiring the city's homes and businesses with
fiber-optic cable. Sun Prairie is considering it.
However, with tighter municipal budgets, this option may be out of reach for many
communities.

More than 500 communities nationwide now offer some kind of communications service
through their municipal utilities. Many found that private providers weren't
interested or charged too much. Not everyone favors public entities competing with
private cable, Internet and telephone providers. Arkansas, Missouri, Nebraska and
Texas have approved prohibitions or restrictions on public utilities offering
telecommunications services. A proposal introduced but not approved during the
past couple of sessions of the Wisconsin Legislature would ban utilities from
offering cable television services.

A century ago, many small towns in Wisconsin and other states were bypassed by
electric companies because they believed it wasn't cost effective for them to wire
these towns. The bypassed towns realized that the only way for them to get
electricity was to start their own municipal electric utilities and that their
survival depended on it. David Benforado, executive director of the Municipal
Electric Utilities of Wisconsin (MEUW), sees a parallel in today's desire by
municipalities to offer their own Internet access and other telecommunications
services.

"We believe that communities should have the unfettered right to offer these
services," he said. "I think Sun Prairie and Reedsburg will be seen as pioneers in
Wisconsin." Private operators say it's unfair competition because municipal
utilities don't have to make a profit, pay their shareholders or worry about
long-term debt. But Benforado said municipal utilities must operate under public
scrutiny unlike private operators.

The U.S. Supreme Court ultimately may resolve the issues in state law about
whether municipal utilities can offer telecommunications services. The 1996
Telecommunications Act said "any entity" could provide services. Private companies
have argued that "entity" doesn't mean municipal utilities.

The Federal Communications Commission and a federal appeals court in Washington,
D.C., have agreed with that view but a federal district court in Virginia and the
Nebraska Supreme Court have ruled in favor of the municipal utilities.

http://www.madison.com/wisconsinstatejournal/local/54045.php

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