Who Should Pay for Internet Infrastructure? - Pacific Standard

Who Should Pay for Internet Infrastructure?

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If it’s taxpayers, then maybe we should have a conversation about regulating Internet prices.

By Rick Paulas

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(Photo: 137826074@N08/Flickr)

In August, Illinois Circuit Court Judge James Eder made a quiet, yet important, ruling.

The small town of Altamont, Illinois (population: 2,304), had previously imposed a $1,500 fee on telecommunications business Metro Communications for laying Internet cables under the city’s public right-of-way. The justification was that the roll-out necessitated closing streets and digging, forcing the city to pay engineers as well as various administration fees.

As City Clerk Sarah Stephen put it, “The taxpayers should not have to absorb engineering fees to protect them from a company that’s going to come here and charge subscriber fees where they’re gonna make money.” Eder didn’t agree, saying the city broke the law.

The ruling came down to how the judge interpreted Section 30(a) of Illinois’ Telecommunications Municipal Infrastructure Maintenance Fee Act, which states that “no new franchise fees” can be applied for “the use of public rights-of-ways.” Previous to that, in a 1993 ruling between AT&T and the village of Arlington Heights, the Illinois State Supreme Court had warned that, “if each of these governmental units had the right to charge tolls for conduits going under and over their streets, the effect would amount to legalized extortion and a crippling of communication and commerce as we know it.” In other words, there wasn’t much room for Eder to rule another way.

Does it make sense for private businesses to use public space and burn through tax money in order to make money off the public they’re inconveniencing?

The problem is, these laws and previous rulings were made way back in 1990s, when the Internet was just chatrooms powered by America Online CD-ROMs. Things have changed. Does it make sense for private businesses to use public space and burn through tax money in order to make money off the public they’re inconveniencing?

The disconnect between the obvious answer to the above question (nope, of course not) and the current reality can be explained by the immobility of bureaucratic policy. Internet providers have sort of been grandfathered into the same category as public utilities, despite the fact that they’re private businesses who do not act at all like utilities.

It goes back to the concept of public rights-of-way, systems of interconnectivity that can be above ground (sidewalks, streets, interstate highways) or below (sewage tunnels, gas lines, water pipes). The justification for this public ownership is historic — the Royal Road that connected the Persian Empire in the fifth century B.C. was perhaps the first public rights-of-way — and legal, as every state constitution highlights the necessity of their existence. Everyone pays a little bit for their construction and maintenance, and everyone benefits by being able to use them.

As the American Public Works Association detailed this arrangement in 2001: “To coordinate the use of these areas and ensure that all necessary safety measures are taken to protect the public’s interests, as well as existing facilities, a single entity customarily the Public Works Department, is given the responsibility to control use of the public way.” That responsibility includes deciding when the public benefits from a private company having access. But the game has changed over the past few decades.

“The rules are really old and based on old landline phone service,” says Benjamin Cramer, a telecommunications professor at Pennsylvania State University. “Back when all you needed was voice calls, it was a fairly simply process. States and cities said, ‘If you can give all of our people basic phone service, we will give you a break on building infrastructure.’”

It made sense to put up telephone poles and dig trenches when everyone was able to benefit. But that’s not at all the case with private Internet Service Providers. The excessive cost of service (monthly fees, sure, but also installation costs) means that many don’t have access. “If [ISPs] are rejecting customers, the utility model no longer applies,” Cramer says. “And now, it’s becoming very expensive to reroute traffic around a street being dug up, and there are also conservation issues if you send a line through a forest. But the old laws are still there.”

“Back when all you needed was voice calls, it was a fairly simply process. States and cities said, if you can give all of our people basic phone service, we will give you a break on building infrastructure.”

The main reason ISPs have the ability to take over public property is the Telecommunications Act of 1996, the overhaul that set standards for Internet infrastructure, the country’s first big change in policy since 1934. The Act essentially looked at telecom companies as public utilities, allowing them to do whatever they wanted in these rights-of-ways. Section 253 of the Act, entitled “REMOVAL OF BARRIERS TO ENTRY,” is the relevant area:

IN GENERAL- No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.

This section is not only problematic, but, according to a 1998 paper in the Federal Communications Law Journal, perhaps in direct violation of the Fifth Amendment’s Takings Clause, the section, near and dear to any libertarian’s heart, that disallows the seizure of property without just compensation. What’s “just”? The paper’s author, Jennifer L. Worstell, recommends that cities be “paid by the federal government or by the firms that are the beneficiaries of the appropriation.”

But besides payment going into the city’s coffers — and then, who knows where — there’s probably a better way to solve this problem. All it takes is some realigning of the idea that these ISPs actually should work like public utilities.

“If they want to have free access to rights-of-way, they should get service to everyone,” Cramer says. “If you’re going to dig up our streets and chop down our forests, and you’re going to do that without paying for it, you’re going to give everyone in our town access.”

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