Ajit Pai accused of tilting broadband committee toward industry representatives.

A broadband deployment advisory group organized by the Federal Communications Commission is trying to make it harder for cities and towns to build and operate their own Internet services.

The Broadband Deployment Advisory Committee (BDAC) was set up by the FCC last year and is now releasing draft versions of its recommendations. One member—the mayor of San Jose, California—quit the group today out of frustration that the recommendations favor the interests of private industry over municipalities.

The problem "became particularly apparent at our most recent meeting in Washington, DC," San Jose Mayor Sam Liccardo told FCC Chairman Ajit Pai in his resignation letter.

Liccardo continued:

One working group, which did not have a single municipal representative among its 30+ participants, created a draft model state code that included provisions to eliminate all municipal control over when, how, and whether to accept industry applications for infrastructure deployment. Another working group had an industry representative dramatically re-write its draft municipal code in the 11th hour, pushing aside the product of months of the working group’s deliberations. The result, in each case, were provisions that plainly prioritized industry interests.

It has become abundantly clear that, despite the good intentions of several participants, the industry-heavy makeup of BDAC will simply relegate the body to being a vehicle for advancing the interests of the telecommunications industry over those of the public. The apparent goal is to create a set of rules that will provide industry with easy access to publicly-funded infrastructure at taxpayer-subsidized rates, without any obligation to provide broadband access to underserved residents.

FCC Commissioner Mignon Clyburn also criticized the recommendations.

"It is regrettable that the concerns of localities do not appear to have been fully addressed," Clyburn, one of two Democrats on the Republican-controlled FCC, told the advisory committee yesterday. "While I appreciate the BDAC's acknowledgement that public-private partnerships may provide solutions to bridge those divides, I noticed that there was an expressed preference for industry over municipalities in broadband deployment efforts. As I have said many, many times before, one size does not fit all, and private industry infrastructure investments do not always flow to communities that are most in need."

Clyburn expressed further dismay today after hearing of Liccardo's resignation. "It is deeply disappointing to me that it has reached the point that San Jose Mayor Sam Liccardo felt compelled to resign," she said. "Disregarding an elected official representing one of the largest US cities in the nation is unconscionable."

Pai did not respond directly to Liccardo's and Clyburn's accusations.

"The Broadband Deployment Advisory Committee and its working groups have brought together 101 participants from a range of perspectives to recommend strategies to promote better, faster, and cheaper broadband," Pai said in a statement provided to Ars. "Bridging the digital divide continues to be my top priority, and I look forward to continuing to work with the BDAC and many others to remove regulatory barriers to broadband deployment and to extend digital opportunity to all Americans."

Little focus on underserved areas
San Jose officials were disappointed that the BDAC focused on unserved rural areas to the exclusion of underserved areas where broadband exists but is insufficient, San Jose Chief Innovation Officer Shireen Santosham told Ars.

BDAC recommendations could reduce municipal control over the public rights-of-way used for broadband infrastructure, Santosham said. And while final details are still being worked out, Santosham is concerned that telecoms could get easements to the private property of homeowners without having to negotiate directly with the property owners. That would let ISPs pay lower rates and have the same access rights as utilities without being regulated as utilities, she said.

Another problem is that "there's literally nothing in the model code for municipalities around digital inclusion; making sure that we're getting [broadband] to all Americans is just not there," Santosham said.

Liccardo served as vice-chair of the BDAC working group that drafted the model broadband deployment code for municipalities. It was chaired by a representative of the New York State Wireless Association, a lobby group for wireless ISPs.

Among others, the municipal working group included representatives of AT&T, Mimosa Networks, the City of New York, Cox Communications, the USTelecom industry lobby group, T-Mobile, and Google Fiber.

The working group that created a model code for states included representatives of Comcast, the CTIA mobile industry lobby group, the Fiber Broadband Association lobby group, Facebook, the Satellite Industry Association, the Utah governor's office, and others.

The model code for states discourages city-owned and operated networks.

Model state code discourages city-run networks
When contacted by Ars, Clyburn's office said it was concerned about language in the draft of the state model code, which is meant to be adopted by individual states as their public policies for encouraging broadband deployment.

"The preference of the State is that municipal Broadband networks be built, owned, and operated by private industry," the model code says.

The code doesn't totally rule out city-owned and operated networks in rural areas that lack broadband, saying:

But the State also recognizes that in Rural areas the economics of building such networks may be economically less viable, relative to other areas of the State, such that private industry interest in deploying Broadband Facilities may not exist in a timeframe or at a price to the consumer that the municipality finds reasonably acceptable.

But the code requires cities and towns to conduct extensive analyses of all other options before constructing and operating their own networks. If states make this code binding on municipalities, a private ISP could sue a city or town if the private ISP claims the municipality didn't follow every requirement.

The model code could thus further tip the balance toward privately built networks. About 20 states already have laws restricting the growth of municipal broadband.

Even if a city or town jumps through all the hoops listed in the model state code in order to build its own network, it would have to make the network resources available to private providers. This would ensure that private ISPs benefit even if cities and towns pay for all construction.

What the code would require
The code recommends five possible deployment strategies for rural areas where private ISPs won't deploy broadband without government assistance. The code lists the strategies in order of preference, and the 'networks owned and operated by cities and towns' strategy is listed last among the five.

The first option is for cities and towns to help private ISPs with their deployments and is described as follows:

Private-led Investment with Public Assistance. In which a privately-owned entity constructs, maintains, and operates the Broadband network and the municipality assists by facilitating permitting, granting, and customer sign-ups and ensures that the Broadband service is not discriminatory in its service standards or areas served.

Next are "public-private partnerships" in which a rural municipality "provides all or some of the necessary capital funds to construct the network, and one selected service provider is granted an exclusive franchise agreement for a finite period of time sufficient for the Broadband provider to recover its capital investment."

After the exclusivity period, the network would shift to an open-access model that allows other ISPs to lease network access and resell Internet service to customers. The private ISP would maintain responsibility for system maintenance and operations.

Third among the five options is a community-owned open-access network that leases access to one or more private providers.

Fourth is "public-led contracting," in which "the community serves as the lead entity and Broadband provider by constructing, financing, and owning the network infrastructure with a private sector partner providing crucial network operations or other duties specifically negotiated."

The fifth and last option is a network fully funded and operated by the municipality. The city or town "designs, builds, operates, and manages a community-wide ISP, and the Rural municipality is responsible for all aspects of the network, including customer support and installations."

Cities and towns that want to pursue the fourth or fifth option would be required to pass several tests first. Before beginning to plan or deploy a municipal broadband network, cities or towns would have to "solicit and accept proposals to deploy a Broadband network from private Communications Providers."

The municipality would also have to perform an evaluation to determine three things: "That the benefits associated with purchasing or constructing the facilities outweigh the costs; that the project is both feasible and sustainable; and that the purchase and construction of the facilities is in the interest of the general public."

"If, and only if, the Rural municipality receives no reasonable and credible proposal from a private Communications Provider to build a Broadband network and otherwise determines that none of the first three options in Article 12(b) are viable and if, and only if, the Rural municipality makes a positive determination of costs, feasibility, sustainability, and that the action is in the interest of the general public may the Rural municipality invest in a Fully Public Funded and Operated Network and/or engage in Public-Led Contracting," the model state code says.

Finally, even if the city or town builds its own network using its own money, it has to give private ISPs a chance to use that infrastructure.

"Any facilities constructed or purchased... must be made available to private entities on a non-discriminatory basis," the model code says.

Benefits of municipal broadband
Municipal broadband networks generally offer cheaper entry-level prices than private Internet providers, and the city-run networks also make it easier for customers to find out the real price of service, a study from Harvard University researchers recently found.

Municipal networks are generally financed by selling bonds that are paid back by network revenues.

"Local decision-makers must engage in due diligence before committing to a major investment; in our experience, they do," the Institute for Local Self-Reliance said in a recent report. "They look into the finances of existing municipal networks and find that, in most cases, they are able to pay their operating cost and debts while generating important benefits for the community."

Private Internet providers will surely be pleased with the FCC's model codes, but Liccardo says that nine months of deliberation and negotiation did not "actually further the goal of equitable broadband deployment."

"I joined the BDAC cognizant that the composition of the panel heavily favored the industry, with more than three-quarters of the membership representing telecommunications companies or interests closely aligned with those companies," Liccardo told Pai in his resignation letter. "I'd hoped that through our work, we would be able to engage in constructive dialogue with the industry about how to bridge the digital divide, which you identified as your 'top priority.'"