Netflix: Local Governments Should Set Up High-Speed Web Networks

Tuesday, 02 Sep 2014 08:24 PM

By Greg Richter

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Netflix, the company that streams movies and original programming over the Internet, has weighed in on a petition to the FCC seeking to allow local governments to set up their own high-speed Internet services.

Netflix argues that cities should be allowed to build their own networks to serve their residents, much like they do public utilities —  especially in areas where private companies refuse to provide service.

Doing so can provide competition and spur innovation, the company said.

Netflix made the filing on Friday and it was released publicly on Tuesday.

Chattanooga, Tenn., and Wilson, N.C., each are seeking to have state laws overturned that prevent them from expanding their current broadband networks. Twenty states have laws restricting local governments from setting up broadband Internet.

Private Internet suppliers favor the bans, saying they encourage private-sector investment.

But Netflix, in its filing, said the opposite is true. Government-funded broadband has resulted in fiber networks 100 times faster than those of private industry, the filing argues, and can spur private companies to offer faster Internet speeds themselves.

Before the launch of Chattanooga's gigabyte broadband service, Comcast raised its cable TV rates every year, leading to a 154 percent increase in rates between 1993 and 2008, the filing says. Afterward, annual rate increases stopped and Comcast offered two tiers of service.

"The presence of a fiber-based competitor also incentivized Comcast to improve its broadband speeds, with the fastest advertised speed going from 8 Mbps in 2008 to 105 Mbps in 2013," the filing says.

Similar results in Wilson led to private-sector broadband providers offering "better services and rates to their customers," Netflix argues.

Netflix acknowledges its own interest in the case. It has 21,000 customers in Chattanooga and 1,800 in Wilson. But in addition to helping Netflix and its customers, the company says, the FCC the expansion would "encourage other edge providers to invest in innovative content and services."

The filing also notes that because Internet communications cross state and even national boundaries, "it is the ultimate example of interstate commerce."

FCC Chairman Tom Wheeler hinted earlier this year that he would consider overriding  state laws against municipal Internet companies, National Journal reported.

In addition to private Internet providers, the National Governors Association and the National Conference of State Legislatures also say the FCC doesn't have the authority to strike down state laws on government-run Internet, the Journal noted.

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