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Imagine a world where government needs to ask permission from a private company before trying to provide public services for its citizens. It sounds far-fetched, doesn’t it? Well, we may be heading into such a world. Pennsylvania has adopted a telecommunications “reform” bill that sharply curtails a municipality’s ability to create a broadband infrastructure for its citizens, in exchange for the usual vague promises from telecommunications monopolies to improve their networks. To this point, the story is perhaps unremarkable and repeats itself time and time again in local government and regulatory law all around the country: Powerless cities are outgunned by clever and well-paid industry lobbyists who cozy up to a few influential state politicians. House Bill 30 in Pennsylvania, however, reflects a new temerity on the part of telecommunications monopolies, which should give pause to readers in every state. Let’s say a city or town in Pennsylvania is interested in providing broadband access to its citizens for a modest fee — perhaps to spur economic development and education, to serve rural residents or to bridge the digital divide between wealthy neighborhoods and the inner city in an era of rapidly escalating telecommunications costs. The artfully worded �3014 of the bill essentially gives the local telephone monopoly the power to veto a municipality’s future plans. This right is, quite simply, stunning: a private entity dictating whether or not the government can provide a public service. NO CHECK ON THE MONOPOLISTS The very premise turns sound regulatory policy on its head. A fundamental principle of local monopoly regulation has been that in exchange for being granted access to public land, the monopolist should be kept in close check by government regulators. An example of this would be setting consumer rates or forcing would-be monopolists periodically to compete for local franchises. With a new law of the type being tested in Pennsylvania, not only are monopolists not kept in check, they become the ones keeping cities in check. Quite a coup. One may fairly ask why any of this would be interesting to anyone other than lawyers who spend their time worrying about regulatory esoterica. The answers begin with telecommunications, but ultimately implicate deep public policy concerns. MORE COMPETITION IS NEEDED Evidence repeatedly suggests that price and quality improve in areas where municipalities compete with private telecommunications firms. And broadband deployment can use all the help it can get. America now ranks 11th worldwide in terms of broadband penetration, increasingly falling behind a number of European and Asian countries. Even those homes with broadband access rarely have connections fast enough for applications such as high-definition video or videoconferencing. Lack of competition in the United States has contributed mightily to this sad state of affairs. Faced with few, if any, rivals, neither cable nor telephone companies currently feel compelled to innovate or lower prices. One does not need a doctorate in applied microeconomics to realize that private monopolists seeking to maximize their own cash flow do not want local governments as competitors. PUBLIC GOODS The usual muddy arguments suggesting that it is unfair for government to compete with private parties (for instance because government can use tax revenues to fund its activities) are especially problematic when government is providing public goods — such as highways, health care, the military and telecommunications — that at least a hundred years of economic history have shown are not well met by private actors. The concerns of cities and towns must be heard at both state and federal levels. As municipal telecommunications networks — from Kutztown, Pa., to Cedar Falls, Iowa, to Hermosa Beach, Calif. — develop to meet real needs, incumbent telecommunications providers are lobbying a growing number of state legislatures. State officials, of course, could side with their cities. For its part, Congress also has an opportunity to make clear that municipalities should be allowed to provide broadband services. The problem in telecommunications is only symptomatic of a larger movement that extols private influence over public deliberation. We must be vigilant not to allow private corporations to veto the provision of public goods. Otherwise, we should brace ourselves for what might be next. A few years from now, will cities need approval from private corporations to run schools, power plants, hospitals or any other of life’s necessities? The possibilities for mischief are endless. Buyer beware. Reza Dibadj is an associate professor of law at the University of San Francisco School of Law. If you are interested in submitting an article to Law.com, please click here for our submission guidelines.

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