The decision to block Indiana's House Bill 1148 highlights a growing clash between cities looking to build their own broadband Internet networks and local phone and cable companies opposing these measures.
Supporters of the bill, including SBC Communications, which serves Indiana, were critical of the outcome. Local groups opposing the bill applauded the decision, claiming that building broadband networks would help cities attract more businesses into the area.
"Several municipalities in Indiana are already providing broadband service," said Andrea Johnson, a spokeswoman for the Indiana Association of Cities and Towns, lobbyist organization. "We consider it a necessary part of economic development."
Johnson pointed out that smaller cities such as Marion and Scottsburg have unveiled their own municipal networks.
House Bill 1148, introduced in January by Rep. L. Jack Lutz (R-House District 35), would have prohibited municipalities across the state from building their own broadband Internet networks if a private provider were already offering these services, according Lutz's spokesman Matthew Symons. If there were no private provider in the area, the bill would have let cities go ahead with their plans, but barred them from using public bonds for funding.
SBC expressed disappointment with the Indiana bill's failure, but said public debate on the issue was important. Like most arguments presented by the Bells, SBC's said municipal broadband projects would do harm to taxpayers.
"When you look at a time when state and local budgets were severely strained, we think there needs to be a system in place that monitors government entry into what could be high-risk telecom investments on the backs of taxpayers," said Mike Marker, a spokesman for SBC in Indiana.
The public debate
Interest in public Internet systems is increasing across the country. Proposals are springing up in smaller cities such as Provo, Utah, and Chaska, Minn., and larger metropolises such as Philadelphia and parts of Los Angeles.
At the same time, the Baby Bell phone giants and cable conglomerates are aggressively lobbying state legislators to introduce laws prohibiting these efforts. In December of last year, a bill endorsed by Verizon Communications was, banning cities and townships from providing "any broadband or wireless services if a fee is charged."
The bill was hotly contested by the city of Philadelphia, which plans to build its own wireless broadband network and sell it to residents at a significant discount from Verizon's DSL service. Verizon argued that cities should not be competing with private companies and that residents would see higher taxes if the network went belly-up. Philadelphia and Verizon eventually struck an 11th-hour agreement that would allow the city to go ahead with its plans.
While Indiana rejected Lutz's bill, Marker said 14 states across the country have passed similar legislation, and six more are considering proposals.
A spokesman from Rep. Lutz's office echoed SBC's contention that the government should not use public funds to compete with private companies spending millions of dollars upgrading their systems to provide broadband.
"It's not a good idea for political subdivisions to be in competition with private business," said Matthew Symons, a spokesman for Rep. Lutz.