AT&T: We Deserve Tax Breaks, Municipal Broadband Doesn't

Government officials shouldn't give local organizations tax breaks and other incentives to build community broadband networks, telecom giant AT&T said in a filing to the Federal Communications Commission on Friday, because that would create a "non-level playing field."

Instead, the government should give tax breaks and incentives to AT&T and other private telecom interests, the corporate giant said in its filing.

AT&T submitted its comments in response to a request by two cities—Chattanooga, TN and Wilson, NC—for the FCC to preempt state laws that ban or discourage local communities from building their own high-speed broadband Internet networks.

Cable and telecom giants like AT&T, Verizon, Comcast and Time Warner Cable oppose municipal broadband networks, which they claim pose an unfair competitive threat.

According to a recent report by Allan Holmes of the Center for Public Integrity, US cable and telecom giants have spent millions of dollars over the last decade to "lobby state legislatures, influence state elections and buy research to try to stop the spread of public Internet services that often offer faster speeds at cheaper rates."

As a result of these efforts, 20 states have laws on the books that ban or pose barriers to municipal broadband initiatives, according to the Institute for Local Self-Reliance.

"GONs [government-owned networks] should not be utilized where the private sector already is providing broadband or can be expected to do so in a reasonable timeframe," AT&T wrote in its filing. "Although many GONs have failed, or at least failed to live up to expectations, GONs can nonetheless discourage private sector investment because of understandable concerns by private sector entities of a non-level playing field. And any policy that risks diminishing private sector investment would be short-sighted and unwise."

If a municipality decides to build a community broadband network, "safeguards" should be put in place to ensure a "level playing field," according to AT&T, so that private broadband providers aren't confronted with unfair competition.

AT&T says that private broadband providers should have a "right of first refusal" to develop a solution to "address the government's broadband deployment requirements." Additionally, community broadband networks should not be granted "preferential access to rights-of-way or preferential rates for such access," nor should such networks "be allowed to enter or enforce exclusive arrangements that prohibit commercial competitors from offering services."

Finally, community broadband networks should not receive any preferential tax treatment, according to AT&T. Instead, private broadband companies like AT&T should receive any tax incentives or exemptions in order "to induce them to expand broadband deployment to unserved areas."

"You almost have to admire AT&T's chutzpah in saying that, given the concessions they wrung out of communities over the years for promised AT&T broadband deployments that never even materialized," said Lauren Weinstein, a veteran tech policy expert who supports community broadband initiatives.

AT&T reported more than $18 billion in net income in 2013.

The battle over municipal broadband has escalated as city officials around the country have realized that high-speed, fiber-based broadband networks can help spur economic development and increase opportunity for citizens, especially in rural and low-income regions.

FCC Chairman Tom Wheeler has made clear that he believes the agency has the authority to preempt state laws that ban or discourage community broadband networks. Wheeler's stance has prompted howls of opposition from lawmakers and industry interest groups who have warned him not to interfere with "states' rights."

In July, Representative Marsha Blackburn, the Tennessee Republican who has received tens of thousands of dollars in campaign contributions from the cable and telecommunications industry, introduced an amendment to a key appropriations bill that would prevent the FCC from preempting such state laws. Although Blackburn's amendment is unlikely to become law, it illustrates the fierce opposition to community broadband among Congressional lawmakers allied with the cable and telecom industry.

"We don't need unelected bureaucrats in Washington telling our states what they can and can't do with respect to protecting their limited taxpayer dollars and private enterprises," Blackburn said. "This Congress cannot sit idly by and let an independent agency trample on our states' rights."

The United States Telecom Association, which describes itself as "the nation's premier trade association representing service providers and suppliers for the telecom industry," agrees.

"The FCC should respect—and thus decline to preempt—the policy judgments of states generally as to how they believe their political subdivisions should participate, if at all, in the broadband market and of the exercise of state authority by the North Carolina and Tennessee legislatures in particular," the group said in a filing to the agency.

For FCC Chairman Tom Wheeler, the question of whether to preempt anti-community broadband state laws is just one of several politically charged issues facing the agency, including net neutrality and the Comcast-Time Warner Cable merger review.

Last month, Wheeler received a political boost from two influential lawmakers—Senator Edward J. Markey, the Massachusetts Democrat, and Representative Mike Doyle, the Pennsylvania Democrat—who urged him to use the FCC's authority to remove roadblocks to community broadband.