Sep 1 2005

Strings Attached

Telecom industry’s spin machine casts net over community broadband

Over the past few years, the war over the Digital Divide has spread to a new technological turf: “broadband” Internet access. Broadband allows for much faster and more efficient data transmission than traditional dial-up modems. The catch: The telecommunications companies that offer broadband don’t necessarily offer it to all customers, and for those who can order broadband, it comes with a substantial price increase over dial-up.

In response, public and non-profit entities are challenging the telecom industry with homegrown broadband-access schemes offering free or low-cost connections to homes, businesses and institutions. As the United States continues to fall behind other industrialized countries in per capita broadband usage—it now ranks 16th—government-sponsored high-speed networks are mushrooming across the country, often with the support of citizens who see the Internet as the public utility of the Information Age.

Community Internet advocates tout public networks as part of a movement toward a more democratic, community-centered communications infrastructure, which generates wealth not in pure financial terms, but in the areas of education, political participation and intellectual as well as consumer freedom. They also say that far from creating a budgetary burden, these initiatives could spark entrepreneurial creativity and investment that monopolies tend to squelch.

But the potential social benefit of open, affordable Internet access for all registers as a net loss in the books of dominant telecom companies. Protecting their profitable monopolies from grassroots networking projects, the telecoms have issued what proponents of municipal broadband call a web of corporate lies.

Activists say that while media outlets seem keen on broadcasting the budgetary shortfalls of nascent municipal networks as “cautionary tales,” they have not approached the shortcomings of the incumbent telecom providers with the same level of alarm, despite plain evidence of the industry’s role in keeping the Digital Divide ominously wide. Of course, critics expect about as much from a press that is fueled by the same matrix of mergers and monopolies that fuels corporate Internet services—and in their view, this makes community-based alternatives that much more crucial.

Covering failure with alarmism

Major telecommunications firms fiercely guard their digital fortress on the grounds that it is unreasonable, even unethical, for governments to interfere with their business. Testifying at a Senate hearing on telecommunications mergers in March, SBC chair and CEO Ed Whitacre claimed that because government agencies are tasked with regulating the industry, “to compete against us makes it an unfair competition. From a taxpayer’s standpoint, I don’t really want my tax dollars to be used . . . to build something in competition where many other businesses already are.”

Warning that undermining the market share of monopolies could decrease the quality of services, Verizon CEO Ivan Seidenberg added, “In all these places where municipalities want to get into this, with all due respect, they don’t do a very good job, either.”

The editorial page of the Pioneer Press of St. Paul, Minnesota (10/4/04) faithfully echoed this leeriness of publicly supported technology development, arguing that such ventures were fundamentally “unfair” to corporations. “‘Government’ and ‘cutting edge’ are rarely uttered in the same breath,” wrote the editors. “Government is not known for its innovation and nimbleness in reaction to market changes.”

But media activists counter that on those criteria, the track record of the telecommunications industry itself leaves much to be desired. In a recent white paper titled “Connecting People: The Truth About Municipal Broadband” (4/05), the media reform groups Media Access Project, Consumer Federation of America and Free Press reported that monopolistic telecommunications companies tend to be slow and inflexible in adjusting to consumer needs or technological trends, making them “a major factor in restricting technological innovation in broadband service.”

As for the argument of municipal broadband disrupting the market in places “where many other businesses already are,” community Internet proponents point out that there are many places where mainstream service providers simply aren’t. A recent study by the Pew Internet & American Life Project (2/17/04) found that Internet usage in rural areas is just over 50 percent, compared with 67 percent in urban areas. Among rural Internet users, 19 percent have broadband connections, compared with 36 percent of urban Internet users.

The U.S. Department of Commerce (9/04) reported that as of 2003, approximately 40 percent of households with only dial-up access cited the price of broadband service as the main deterrent, and another 10 percent said that broadband service was not available for their homes. In rural areas, more than one in five households reported unavailability of service as the main reason they had not upgraded their connections.

Municipal broadband is one way underserved communities can obtain low-cost, no-frills Internet access. Networks often take the form of a wireless or “Wi-Fi” “mesh” network, which blankets a given area with high-speed connectivity and offers mobile access to laptop users in parks and cafes. Some local governments have also launched networks based on the existing telecommunications infrastructure, and in many cases, municipal networks are able to capitalize on public facilities—Philadelphia, for instance, plans to use street lamps to power Wi-Fi antennas in its emerging citywide wireless project.

In response to the industry’s criticism that public broadband projects are likely to offer poor services because they supposedly limit private-sector competition, Free Press argues that a sound municipal broadband infrastructure has encouraged innovation, enhanced development and strengthened local markets for information services.

One example is Scottsburg, Indiana, where local businesses were threatening to leave the small city because private Internet service providers were reluctant to establish a local broadband infrastructure there. The city developed a grassroots solution, deploying their own Internet public utility, the Citizens Communications Corporation, which has since grown to make its network accessible to 90 percent of households in the county.

Community Internet activists observe that in some areas, municipal networks have actually spurred more competition by goading dominant private service providers to provide more affordable, higher-quality connections. They contend that corporations are guilty of doing precisely what they accuse local governments of threatening to do: killing competition and entrenching a telecommunications empire that responds sluggishly to consumer demands.

Uninterested or misled?

The industry, and industry-friendly media commentators, have justified lagging broadband access rates in the U.S. by shifting the responsibility to consumers, claiming that those living without broadband simply do not want or do not understand the value of the technology.

Steven Titch, one of the most liberally quoted pro-business tech policy experts at the right-wing Heartland Institute, told Crain’s Detroit Business (2/21/05) that telecommunications companies already provide ample access to communities, and that municipal networks “don’t address the social goals that they’re allegedly supposed to address.” In an interview with Democracy Now! (12/7/04), Titch dismissed studies indicating that low-income families lagged behind the well-off in Internet access. “Higher-income households place greater value, perhaps, on education,” he explained, attributing technological resource gaps to poor people’s underdeveloped values.

Only cursory mention was made of Titch’s institutional affiliations; peeling back the tech-wonk veneer would reveal that he moonlights as a consultant for major communications corporations, including broadband giant Qwest Communications.

Declan McCullagh, chief political correspondent for CNet, also expressed skepticism about public networking initiatives on a recent edition of NPR’s Talk of the Nation (4/25/05), arguing that governments would have difficulty keeping up with evolving technology. Downplaying the country’s poor rankings on broadband access in his column (CNet, 1/10/05), he touted Federal Communications Commission data suggesting that most areas have broadband access, though he did not mention that the government measures nationwide “broadband subscribership” based on a meager benchmark of one connection per zip code. McCullagh further claimed that government investment in communications technology is “simply a case of bureaucrats and other critics objecting to the way Americans have chosen to spend their own money.”

A recent Financial Times article (6/3/05) cited Comcast executive vice president David Cohen’s contention that the country’s low international ranking in broadband access is attributable to “education levels, training and the fact that many people do not even have equipment to connect to the Internet with.”

Of course, if a stubborn industry, emboldened by deficient media coverage, is actively widening the technological gap, people’s “choice” not to access high-priced, monopolized services hardly demonstrates free-market principles at work. Moreover, focusing on a lack of demand couches the Internet as a mere commodity rather than a public resource, despite evidence of its increasingly vital role in educational and economic advancement (, 5/25/05).

Hurting taxpayers or profit margins?

Corporations and pro-industry commentators paint municipal networks as ticking fiscal time bombs. EWeek columnist Larry Seltzer (6/23/05) declared public networks “The Next Great Municipal Crisis,” speculating that Philadelphia’s freshly launched municipal wireless network would strain the city’s budget and sap funds from other areas like education. Defending the corporate service rates that are out of range for many communities, he noted that given the costs of maintaining a secure and efficient network, “it’s expensive to be a good ISP.”

Seltzer acknowledged only in passing that Philadelphia’s network was funded largely through grants, arguing simply, “things like grant money aren’t infinite.”

The Financial Times (6/3/05) downplayed the possibility that unresponsive service providers could be to blame for limited access, and instead focused on the shortcomings of Ashland, Oregon’s public broadband project, the Ashland Fiber Network, which is accumulating debt under loans of over $15 million from city funds.

The article’s depiction of Ashland as a “cautionary tale” mirrors the contentions of pro-business think tanks like the Progress & Freedom Foundation, which issued a report last February detailing the network’s “failure” and “lack of profitability,” based on records of revenues and expenditures.

The Ashland project has indeed been stymied by growth that fell short of expectations and rising debt. But the local government has nonetheless stood by the program, pointing out that it provided a crucial stimulus for the development of the small city’s broadband infrastructure when private service providers proved reluctant to invest (CNet, 5/2/05).

Broadband activists bristle at the notion of measuring the value of a communications service in pure monetary terms. In a second policy report, “Telco Lies and the Truth About Municipal Broadband Networks” (4/05), Free Press cautioned against focusing too narrowly on short-term costs of what should be viewed as a long-range investment.

In its analysis of Ashland’s network, Free Press stressed that the project, which brings low-cost broadband to over 3,000 households, has succeeded in its social mission—“to maximize service for consumers, not to maximize profit for shareholders.”

Corporate strategizing

The brand names of broadband have lobbied federal and state legislators for help in fortifying their local regimes, promoting bills that would restrict or prohibit municipalities from launching networks that could compete with for-profit telecom firms. As of June 2005, according to the telecommunications law group Baller Herbst, 14 states, including Florida, Pennsylvania and Virginia, have passed legislation aimed at locking publicly run communications initiatives out of the market. Meanwhile, two dueling bills in Congress could impact public networking nationwide: One would impede local governments from directly competing with incumbent private service providers, while another would expressly protect the right of cities to do so.

As a facet of the media reform discourse, the clash over municipal broadband reflects a circularity in the public discussion about the information industries. From the perspective of media activists, the information gatekeepers themselves are the subject of the debate about open information access, and so it’s no wonder that those rebelling against big businesses face formidable hurdles in spreading the community broadband gospel.

In legislative chambers and the media, phone and cable behemoths operate discreetly behind the scenes. The industry lobby’s public face is a legion of “public interest” research organizations, which run informational campaigns that blur the line between scholarly analysis and smear. These industry-backed policy groups have peppered the news with critiques of municipal broadband as “a really bad idea” (IT World Canada, 2/8/05), “a lazy public utility” (New York Times, 2/17/05) and “an enormous threat” to economic development (National Journal’s Technology Daily, 2/3/05).

At the fore of the broadband showdown, with a litany of citations in newspapers, magazines and technology journals, is the New Millennium Research Council, a subsidiary of the public relations firm Issue Dynamics.

Think tanks serving as intellectual fronts for industry are nothing new; watchdog groups have exposed similar projects, like efforts funded by oil companies to “debunk” the theory of climate change (see, e.g., Mother Jones, 5-6/05). Exploiting the public’s lack of Internet expertise, well-moneyed Digital Age pundits have rushed to fill the knowledge vacuum with commercial wisdom—and reporters have relied on industry-sponsored analysts for “expert” comment with seemingly little thought about how this impacts the balance of the public debate.

In the case of the New Millennium Research Council (NMRC), the telecom industry is not just a supporter; it’s also a client. While the group looks remarkably like an independent think tank at first glance, its parent company Issue Dynamics Incorporated (IDI) describes itself as a “consumer and public affairs consulting firm that specializes in developing win-win solutions to complex policy issues.” IDI, in other words, is a PR firm, one whose roster of clients includes the key corporations clamoring against municipal broadband: Verizon, which helped push through legislation in Pennsylvania barring cities from launching their own networks (Washington Post, 12/1/04), and SBC and Comcast, which have waged a fierce public relations war against grassroots networking initiatives in Illinois (

When it launched a heavily critical report on municipal broadband, titled “Not in the Public Interest” (2/05), the NMRC blitzed media outlets with soundbites on the shortsightedness and immorality of government networks. Identifying themselves as “a network of policy experts who develop workable, real-world solutions,” the authors, who included Heartland’s Titch, contended that government competition was unfair to industry, and that public-owned networks squander taxpayer dollars through bureaucratic incompetence.

Some publications, like Computer-World (2/4/05) and Investors’ Business Daily (5/3/05), at least noted the NMRC’s financial underpinnings, but were not deterred from conveying pro-industry rationales as if hard-earned tax dollars were really the only revenue stream the group was worried about.

Other journalists were content to roll softballs on this technologically complex terrain. The Dallas Morning News (2/3/05) cited the NMRC as “a research organization” in its coverage of an emerging city-sponsored network in Southlake, Texas, noting that the group’s report “highlights failures of city-run systems, cost overruns and burdens to taxpayers, and unfair competition for commercial broadband companies.”

Rather than parsing the concept that communities might benefit from affordable local service not tethered to a distant corporate boardroom, the article instead merely quoted the assurance of Southlake’s mayor, who admitted he had not read the report, that the project would not offer any challenge to incumbent service providers: “We’re looking to create some technology hot spots [access points] but not something that is expensive or competes with private industry.”

Alongside the NMRC, the right-wing think tank Cato Institute has joined the municipal broadband fray, advancing its “market-liberal vision” with funding from Verizon, SBC and Comcast ( The New York Times (2/17/05) cited the Cato Institute’s then-director of telecommunications policy, Adam Thierer, in its coverage of Philadelphia’s citywide wireless project, which was hotly opposed by Verizon but celebrated by wireless advocates as a model for other cities. Thierer, whose financial ties to the telecommunications industry were not disclosed, assailed the initiative as “a growing trend, but an ominous and disturbing one” that would turn cutting-edge technology into “a lazy public utility.”

Some critical commentary on the issue has surfaced in eWeek (2/3/05) and In These Times (5/9/05), but tech-savvy bloggers have done the most to lay bare the dubious alliances in the “broadband war.”

Glenn Fleishman, a blogger who runs Wi-Fi Net News (2/1/05), dissected the backgrounds of several NMRC analysts, even as he conceded that the group’s report on municipal broadband did raise legitimate criticisms. “I’ve done this annotation not because I wholeheartedly oppose their point of view,” Fleishman wrote in a blog entry, “but rather because a light needs to be shone on the connections between organizations that call themselves independent but have ties among each other and to the industries about which they are stating they have an objective opinion.”

Ben Scott, a policy director with Free Press, remarked that public support for community-based networks far exceeds the estimations of naysayers, yet also acknowledges that industry and its spokespeople have to some extent succeeded in keeping communities out of the broadband loop. “Sock puppet” outfits like the NMRC, he explained, are by definition better funded and better connected than grassroots movements, and lazy reporting amplifies the puppet-string effect. “Most reporters,” he said, “just don’t bother to learn (or don’t have time to learn) the details of the complex debate.”


Image Consultant, Spin Thyself

The revolving door of the corporate PR system has the power not only to spin out hired-gun experts, but also to sweep journalists directly into its media campaigns. One case study is the raging tech war in Illinois’ Tri-Cities region of Geneva, Batavia and St. Charles, where residents have advocated for a public telecommunications system against the resistance of the local cable monopoly headed by Comcast.

In 2004, a grassroots campaign for a referendum on the issue, following an unsuccessful ballot initiative in the previous year, drew a slew of critical opinion columns in the local daily, the Kane County Chronicle. Columnist Bill Page railed, “the number of profitable municipal ventures is near zero” (4/6/04). More scathing were his allegations of ulterior motives among the initiative’s backers:

Who are these folks, and what do they stand to gain if the network is completed? If it is all for purely altruistic reasons, that’s great. However, of there are ties—financial, spousal, or political—that haven’t been revealed, now is the time for them to do so voluntarily before it’s done for them.

The advocates countered that unlike Comcast, they were motivated by community needs and not self-interest. Yet the accuser’s own motives were called into question in the fall of 2004, when Editor & Pulisher (11/9/04) revealed that Page, whose day job is “image consulting,” was hired by Comcast as a publicist just weeks after running the last in a series of columns on the broadband issue.

Page told E&P that since he did not work for Comcast and write on the topic simultaneously, he did not believe his link to the cable giant amounted to a conflict of interest. In his view, “the chance for a client like [Comcast] is a good thing.” At any rate, the revelation came too late for Page’s opponents; the second ballot measure was defeated on Election Day.