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Obama’s Internet Plan Could Push Out Small Private Providers

January 20, 2015

As CNE reported, last week President Barack Obama visited Cedar Falls, Iowa to promote government-owned broadband networks.

According to the Galesburg, Ill. Register-Mail, small private Internet Service Providers (ISPs) are worried the proposals the president outlined could push them out of the broadband market, a consequence that would reduce competition and employment in towns like Galesburg.

Galesburg does not have a municipal broadband network, though the city’s mayor told the Register-Mail it had, at one time, considered building one. (According to the newspaper, there are nine cities in Illinois that do have municipal networks.) And, despite what many municipal broadband network supporters would argue, business leaders in the city say they don’t see the need for one. Galesburg Area Chamber of Commerce president Steve Brody said, “You’ve got a couple of main providers here in town … I don’t know if there’s a need.”

Those local providers are worried about what would happen to them, and their employees, if Galesburg ever did enter the market. Stratus Networks CEO Kevin Morgan said, “I can’t compete with the government … We as a smaller company sort of get squeezed.” The network’s president, John Petrakis agreed. He told the Register-Mail, “We can’t go and build and pay and create technology in a community if we know we’re going to be up against a tax-funded, government organization … We’re never going to be able to recoup the investment that we put into the market.”

Other providers focused on the taxpayer cost of municipal networks. In a statement to the Register-Mail, CenturyLink said, “We believe government-owned broadband networks are not a good use of limited tax dollars due to their high failure rates.”

In an editorial written after the president’s remarks The Washington Timesalso focused on the taxpayer costs of municipal broadband, and noted how those dollars rarely translated into real broadband improvements. The Times argued, “Municipal broadband networks in Florida, Virginia, Louisiana, Vermont, North Carolina, Utah and Tennessee have cost millions and failed to make good on promises of quality service at low cost to subscribers. … The president’s scheme won’t do much to help deserving and underserved rural areas get better service.”

Instead of trying to get the government into the business of providing broadband access, The Times recommended President Obama and other government officials “lower taxes, cut unnecessary regulations and get out of the way.”

We assume local Galesburg ISPs would agree.