Much has been written about the role of money in American national politics, especially after the Supreme Court’s 2010 ruling in Citizens United. Sometimes overlooked in this debate, however, has been the ways in which political spending influences lawmaking at the state level, ultimately resulting in state polices which are favored by powerful corporate interests, but may not be in the best interests of the public as a whole. The battle over community broadband offers a troubling case study in how this happens.
Earlier this year, the Federal Communications Commission (FCC) ruled in favor of a petition filed by cities in North Carolina and Tennessee, and agreed to restrict the ability of state governments, to prevent these towns from offering their own Internet services (often known as community broadband) in certain areas.
The FCC’s action was prompted by the successful lobbying efforts of telecommunications firms, in North Carolina, Tennessee and elsewhere, to pass laws which limit the ability of municipalities to develop and expand community broadband networks, designed to serve local businesses and individuals.
Why would a city or town choose to get involved in providing Internet service? In some less populated, rural areas, Internet access is slow and rather limited, with private telecommunications firms (such as Charter Communications, AT&T and Comcast) demonstrating minimal interest in expanding and improving broadband capacity (likely because such ventures would not be profitable, given the relatively high costs involved in expanding such services to serve a fairly small population).
To bridge this market gap, some cities and towns have begun expanding community broadband, which individuals, families, and private businesses can pay to access (generally at a lower price than private telecom providers might have charged). Additionally, these localities have often sought to expand these services to neighboring towns and counties in need, so that they might increase overall revenue, and improve the financial viability of community broadband ventures.
Advocates of community broadband have often argued that high-speed broadband is a critical part of the personal lives of millions of Americans, necessary for everything from communicating with friends and family, to conducting a variety of commercial activities, and allowing primary school students to more easily complete their homework. They also cite to data suggesting that it can play an important role in attracting businesses to a city, and improving local economic growth, since firms across a variety of industries are reliant on rapid Internet connectivity.
Major telecom firms, and those wary of community broadband programs, take a more skeptical view. AT&T CEO Randall Stephenson observed that the “idea of private capital competing with taxpayer-provided capital just feels inconsistent to us with what a free-market system looks like”, raising the specter of aggressive government encroachment into what has traditionally been the domain of for-profit (privately held or publicly traded) companies.
These fears might resonate even more since the passage of the Affordable Care Act, which many opponents criticized as a “government takeover” of the healthcare market. To some, these trends suggest an ever-expanding state, which increasingly crowds out private investment.
Some critics of community broadband also fear that it might place taxpayer money at risk. They argue that government has neither the efficiency nor the expertise to successfully operate such networks, and that since these projects have access to funds from the government, they can charge less for a service than it costs (unlike private firms, which would be unable to survive with such a cost structure), leading to financial losses that will ultimately be absorbed by taxpayers.
Detractors of community broadband often cite to the example of Utopia, a troubled community broadband project in Utah, which racked up more than $350 million in debt, and had $146 million in negative assets. They also point to Solyndra, a solar panel company which received over $500 million in taxpayer loans before eventually going bankrupt, as an example of the pitfalls of government involvement with technology businesses that are normally founded by entrepreneurs and backed by venture capital funds.
A piece from the Center for Public Integrity details how telecom providers have fought efforts by municipalities to develop community broadband. Janice Bowling, a Republican state senator from Tullahoma, Tennessee, believed that many of her rural constituents would benefit from faster Internet access.
People living in more isolated parts of Bowling’s district often faced slow connection speeds, with major Internet service providers offering somewhat spotty access. Bowling thought that Tullahoma’s city government could help, by developing their own, speedier networks through which residents could get online quickly, and possibly attract outside businesses to set up shop in the area.
However, under a 1999 Tennessee law, municipalities which run their own Internet service networks are not allowed to provide online access outside of areas where they offer electrical service. This restriction was an impediment to Bowling’s hopes for community broadband in Tullahoma and surrounding areas. Bowling thus introduced a bill in the Tennessee Senate, seeking to amend existing legislation.
This proposal quickly met with determined resistance from the telecom industry. Representatives from AT&T and other firms aggressively pressed Republican members of the state legislature to table the bill, and threatened litigation if it were passed. Shortly afterwards, Bowling’s bill died in committee, and the existing barriers to community broadband remained in place.
Bowling’s dream of improved Internet access for her constituents in Tullahoma, would thus not become a reality. She admits she was surprised by the intensity of the efforts directed against this proposal, noting that “I had no idea the force that would come against this, because it’s just so reasonable and necessary.”
In Tennessee (and many other states), the telecom industry has spent considerable amounts on influencing politicians, and donating money to campaigns for public office. According to public disclosure reports, in recent years, AT&T has been one of the largest spenders on lobbying Tennessee’s legislature, with nearly $300,000 dedicated to such efforts in 2014. AT&T has also been a large-scale donor to state political campaigns in Tennessee, with nearly $370,000 given in 2014, nearly five times what was spent in 2000.
Thus, when AT&T went to battle against Bowling’s reforms, their efforts were backed merely by words, but also a deep war chest of political cash. AT&T’s spending is backed, to a lesser but still very substantial degree, by Comcast and other telecom firms.
In North Carolina, advocates of community broadband have faced many of the same challenges as in Tennessee. In 2009, the city of Wilson began offering a service called Greenlight, which allowed residents to purchase access to high speed Internet service. The service quickly gained traction, turning a profit by 2013 (like many private businesses, it was not initiallyprofitable), and cornering 1/3 of the market in Wilson County. Local officials hoped to expand this service into neighboring counties, which could further improve it’s financial position, and possibly allow for further cost savings for customers.
However, leaders in Wilson soon found themselves hampered by a 2011 state law, heavily backed by the telecom industry, which imposes significant restrictions on the ability of municipalities to develop and expand government-backed broadband services, beyond their immediate boundaries. Just as in Tennessee, the telecom lobby is deeply involved in the legislative process, donating substantial sums of money to politicians.
A report from Follow The Money, a project of the National Institute on Money in State Politics, offers some troubling details on how political donations might have influenced votes on the 2011 bill. Follow The Money’s analysis indicates that in the 2010 election cycle (which immediately preceded passage of the bill), a staggering 3/4 of North Carolina legislators received campaign donations from political action committees organized by telecom firms, with legislators in key positions, or those who were sponsors of the bill, bringing in several times the amounts of other, less powerful lawmakers.
What’s more, in many instances, the most influential lawmakers were given several times the amounts donated to them in the 2006 or 2008 election cycles. The most prominent example of this is Thom Thillis, a Republican who until recently served as Speaker of the North Carolina House of Representatives (in 2014, Thillis was elected to the United States Senate).
Despite running unopposed in 2010, Thillis received nearly $37,000 in donations (more than any other state lawmaker), from telecom-backed political action committees (known as PACs), topped off by donations from Verizon, Time Warner and AT&T, shortly before he was sworn in as Speaker. This sum was more than eight times what Thillis took in during the 2006 and 2008 election cycles combined.
Donations from these PACs to the state Democratic and Republican parties, while not unusually large in terms of dollar amount, were unusual in terms of timing. In 2011, just a few weeks before the bill in question was filed, the PACs sent donations to both parties, and repeated this action just a few weeks after the bill was passed. Given that 2011 was not an election year, the timing of these contributions raises some troubling questions.
North Carolina and Tennessee are hardly unique in their restrictions on community broadband; at least 18 other states impose similar sorts of regulations, often passed at the behest of telecom firms. Frustrated by these restrictions, in 2014, the city of Wilson, as well as Chattanooga, Tennessee, filed a petition with the FCC, seeking preemption of state laws which restrict community broadband service.
In February 2015, the FCC ruled in favor of this petition, finding that the aforementioned state laws in North Carolina and Tennessee were “barriers to broadband deployment, investment and competition, and in conflict with the FCC’s mandate to promote these goals.”
The FCC noted the positive commercial and business consequences of local broadband (including the expansion of companies like Amazon and Volkswagen to Chattanooga), and observed that state laws against local broadband, including those passed by North Carolina, were often heavily pushed for by “incumbent’ Internet providers (that is, major telecom firms).
Lastly, the FCC stated that it had the authority to override the laws of North Carolina and Tennessee, under the Telecommunications Act of 1996, a federal law which orders the FCC to “remove barriers to broadband investment and competition.” North Carolina and Tennessee each responded swiftly, bringing suit in federal court to fight the FCC’s ruling, and to preserve the ability of states to limit community broadband. These states’ arguments focus largely on the FCC’s authority to apply the Telecommunications Act of 1996, to supersede the laws of North Carolina or Tennessee.
Setting aside the legal merits of the states’ cases, it is useful to consider how state attorney generals are influenced by campaign donations. As ProPublica’s Leticia Miranda noted, in the 2012 election cycle, North Carolina’s attorney general, Roy Cooper (who is responsible for the litigation against the FCC), received around $35,000 in donations from the telecom industry, a figured topped only by donations he received from retailers.
Meanwhile, in Tennessee, the state retained Wiley Rein LLP, a powerful (and undoubtedly pricey) Washington DC law firm, headed by former FCC chairman Richard Wiley, as counsel in it’s suit against the FCC. Mr. Wiley’s prior client list is a comprehensive Rolodex of the telecom industry, including firms such as Verizon and AT&T, who stand to benefit from a ruling in favor of Tennessee, and against the FCC.
Given the power of telecom firms within Tennessee’s political system, it is hardly unreasonable to wonder why the state is so eager to devote such significant resources to defending a law so clearly opposed by, and arguably harmful to, the social and economic interests of many local cities and towns,.
In debating the merits of community broadband, just as with any policy matter, it is crucial to consider a variety of arguments, and critically assess the evidence which supports these stances. Legislators should hear from local citizens and their representatives, regarding the benefits of these programs in facilitating personal and business connectivity, and as a part of this process, they should also consider relevant social, economic and legal issues.
Lawmakers must also seriously consider the objections of telecom firms, and advocacy groups opposed to community broadband, which see these programs as a troubling expansion of governmental scope and power, as well as a potentially risky undertaking which might ultimately cause taxpayers to lose money.
Yet, in this deliberative process, no single voice should be amplified, or ignored, due to how much money an individual or corporation has available to dole out to state politicians. Community broadband programs could markedly improve the lives and economic prospects of people in places like Tullahoma, Wilson, and a thousand other towns across this nation. Or perhaps they are a problematic initiative, which must be reimagined or suspended altogether.
Either way, a policy should not be either implemented or discarded due to the financial interests of large corporations, which can direct their considerable profits towards favorably influencing elected officials. We need a serious debate here; one which is driven by facts, and a commitment to the interests of the public as a whole, rather than controlled by big checks and backroom influence peddling. The seemingly incessant flow of campaign cash through state houses across the nation, and to influential “independent” advocacy groups who are deeply involved in the electoral process, ultimately corrodes the plumbing of our political system.
The challenges posed by state-level lobbying and donations, aren’t limited to the debate over community broadband. In the past several years alone, lawmakers in Texas have stymied air quality regulations which were opposed by the energy industry, while legislators in Florida and elsewhere have facilitated the expansion of private prisons, in large part thanks to campaign cash from correctional industry groups. Meanwhile, concernshave grown that state attorneys generals are being heavily influenced by corporations and plaintiffs’ attorneys, who are using aggressive lobbying efforts and campaign donations to obtain their preferred outcomes.
It is more crucial than ever that advocacy groups, independent journalists, and perhaps most of all, private citizens, find creative ways to fight the corrupting impact of money on state politics. Without it, Americans will never have the quality of government which we deserve, but rather, that which can be most easily purchased through lobbying and donations. We will all be worse off for it.
