By Don McIntosh
In the Willamette Valley, you have two choices if you want high-speed Internet access: cable monopoly Comcast or telephone landline monopoly CenturyLink. For decades, without ever investing in fiber-optic cables to residents’ homes, the two monopolies have ratcheted up the rent on their legacy coaxial cables and twisted copper wires, all while confusing customers with complicated package deals and temporary introductory rates — and maintaining legendarily poor customer service. It’s no wonder giant cable and telephone providers are consistently ranked among the most hated companies in America. But what are you gonna do about it?
Now, coming soon to Portland City Council, is a union-backed plan for public-owned Internet access that would be cheaper than Comcast and 40 times as fast. Not only that, but it would pay for itself and cost taxpayers nothing.
Known as Municipal Broadband PDX, the campaign is the brainchild of Multnomah County data engineer Michael Hanna. Hanna is a former president and now chief steward at AFSCME Local 88, which represents employees of Multnomah County. He also serves on the statewide political action committee of Oregon AFSCME.
Unionism and technology are Hanna’s twin passions, and municipal broadband would combine both. In Hanna’s vision, a new public Internet utility would provide good service, good prices, and good jobs. IBEW members would install the fiber optic cables, and AFSCME members would administer the network, just as they do in the Portland Water Bureau.
Natural monopoly
Internet access, it turns out, is what’s known in economics as a “natural monopoly.” Some products and services — think groceries or home repairs — are most efficiently provided by markets with lots of sellers. But others — think electric utilities or railroad transportation — come with high initial investment costs that it makes no sense to duplicate. [Imagine multiple natural gas suppliers digging up the public right-of-way to install competing pipelines.]
Natural monopolies can be publicly owned, like Eugene Water & Electric Board, or privately owned but publicly regulated, like Portland General Electric. Unfortunately for the American public, Internet access has up to now mostly been provided by privately owned monopolies that are very lightly regulated. Monopoly internet service providers have faced no requirement to upgrade from coaxial cable to fiber optic cable, and as a result, the United States has fallen far behind countries like France, Korea, and even China in access to affordable high-speed Internet connections. At the national level, the Communications Workers of America has been trying to raise the alarm about this for over a decade, in a campaign called Speed Matters.
Seeing the missed opportunity, Google even briefly dabbled with the idea of rolling out fiber optic networks in cities around the country, but pulled back after launching networks in eight locations.
Why publicly owned internet is catching on
There are reasons the public sector is better suited to roll out fiber networks than the private sector. For one, the cost of capital is lower: By issuing revenue-backed bonds, public bodies can borrow money at much lower rates than private companies can, and pay it back over a longer time frame. Also, public fiber networks don’t need to earn profits, pay dividends to investors, fill the pockets of high-paid executives, or even pay income taxes. All those savings are passed onto the customers via lower rates.
In fact, the idea of municipal broadband is catching on. Nationally there are now at least 55 city-wide municipally-owned fiber networks. Sandy, Oregon, is one of them. For $39.95 a month, Sandy residents get a 300 Mbps fiber connection (five times as fast as Comcast’s similarly priced “Performance Plus” service) and can add phone service with unlimited nationwide calling for another $20 a month. Hillsboro, too, now is charging ahead, and expects next spring to begin offering 1,000 Mbps service (16 times as fast as Comcast) for $50 a month, or just $10 a month for low-income residents.
Will Portland, Gresham, and other cities in Multnomah County be next? Hanna and the Municipal Broadband PDX campaign aren’t proposing that the municipalities leap before looking. Instead they’re asking local jurisdictions to pay for a thorough feasibility study that looks at existing infrastructure and what it would cost to install fiber door to door. That proposal has been endorsed by the Northwest Oregon Labor Council, IBEW Local 48, Oregon AFSCME and AFSCME locals 88, 189 and 328.
Since Municipal Broadband PDX held its public campaign launch Aug. 1, the Multnomah County Commission and the City Councils of Fairview, Gresham, Troutdale and Wood Village have voted to share the costs of the proposed feasibility study.
The campaign has saved the biggest for last: Portland City Council is expected to hold a hearing on it Oct. 30 and vote Nov. 7 on whether to join the other jurisdictions in the feasibility study. If they give the go-ahead, Multnomah County will move forward with the study, laying the groundwork for a decision next year.
