Industry Woes and State Law Limit New Orleans’ Wi-Fi

New Orleans’ hardest hit neighborhoods won’t be getting the wifi system it was promised.

According to an AP story available in print from the Advertiser, online from KATC, which is apparently based on an article from the Times-Picayune, Earthlink is pulling back from its commitment to expand it wifi network into the areas hardest hit by the levee breaches following Katrina. (See Earthlink’s current coverage area at right.—Click for a larger image.) That’s a blow to those who are fighting to rebuild their lives in the worst-hit areas. In the words of a local blogger who assessed the situation last year:

In a nutshell, if your neighborhood did not flood, then you have access to free WiFi, but if your neighborhood did flood, you’re out of luck. The city says the service will be free as long as the city is rebuilding, but the service is only available in places that didn’t flood, and hence don’t need to rebuild. I would argue that the flooded neighborhoods need the WiFi access more than anywhere else in America. For example, I won’t be able to get a phone line working in my house for years, and with information and building permits online, it would make much of the rebuilding process easier and safer.

Earthlink is a partner to the woes that have beset the concept of municipal wifi as a competitor to landline services; a problem that has recently been commented on here. Basically, offering wifi as alternative connectivity to the public based on advertising and subscriptions to higher level tiers has not worked out financially. Earthlink and other participants are demanding that the cities step up and guarantee their income by becoming “anchor tenants.” When you get right down to it that means is that the cities would guarantee the private concerns enough income to provide a secure basis for their making a profit. —It’s not a terrible deal since muni wifi offers a potentially large savings for all sorts of city services (from police, to fire, to emergency services, to meter readers, to code inspectors and more…) that are currently tied into expensive cellular services. Cities like Corpus Christi claim to have saved a bundle.

However the bottom line is that there is no denying that the new business plan of the private providers is for cities to guarantee their income with long-term fixed-cost contracts that guarantee an at least marginal profit for private providers.

But is subsidizing private profit a good deal for the cities? America’s cities, legally dependent on the states, and possessing no independent power, are perennially underfunded. New York, not long ago, almost went into bankruptcy. New Orleans couldn’t afford to rebuild something as basic as its sewer system before the storm. If the cities were allowed to build their own telecommunications systems the expense would easily be paid for from the savings to city services alone. Selling access to citizens would keep dollars in the city and help rebuild a crumbling income base whose erosion has kept city centers that are vital to our economic growth blighted and decaying.

Unfortunately, cities are seldom allowed the freedom to take care of themselves and their own citizens internally. The states have often, commonly at the behest of a single monopolistic outside corporation, effectively forbidden municipalities from providing their own telecommunications services.

That has happened to New Orleans.

New Orleans, long-term readers will recall, is a victim of Lousiana’s famous Muncipal (un)Fair Competition Act. New Orleans has already built a well-regarded municipal wifi system in the downtown area that provided for safety and police functions. When Katrina hit one of the success stories was that network which was quickly repurposed to provide wireless communications in a city where the private infrastructure had been wrecked. Volunteers, using materials generously donated by corporations, extended and upgraded the system in the initial days and months after the storm and the city opened up the network to citizens whose phone service and commercial connectivity was down. It was the feel-good story of the early days: hardworking, visionary local officials, in concert with a flood of talented volunteers, and the generosity of Americas’ telecom equipment providers, cobbled together a bright, shiny, new free muni wifi system—the first of the nation to go into operation.

That happy glow was not enough to save the system.

That Municipal (un)Fair Competiont Act forbids municipalities offering their citizens telecommunications services (wired, wireless, or carrier pigeon) that is in excess of 128 k unless they go through a complex, legally ambiguous battle, with the well-funded incumbents. The law was passed in response to Lafayette’s initial discussion of a retail Fiber To The Home network and was the incumbents first, nearly fatal blow to the project. As it was finally enacted even if a city succeeds it is still subject to a regulatory regime that does not apply to their private competition and which is enforced through an entirely new mechanism created to evade the state constitutions’ prohibition on regulating municipal utility functions. That regulatory regime is openly designed, not to protect the municipalities’ customers, but to protect their entrenched competition: it sets no upper limit on what muncipalities may charge, nor does enforce any quality assurance procedures. What it does do is set a lower limit on what a municipality may charge by insisting that the rate structures never show a loss and that “no loss” be defined in terms of what would be profitable if the municipality had to pay taxes to itself and other governmental agencies and pay itself for the use of its own poles and rights-of-way!

It is a thorough incumbent-protection act that stops just short of outright prohibition and does its best to make sure that even municipalities that win through to owning their own system will face unfair disadvantages during the operation of its telecommunications utility.

It is understandable that, in the wake of the storm and lead by a mayor who had once run the local Cox network, New Orleans would not choose to go through a long battle to keep its network when the emergency status that kept it legal expired. Instead they turned it over to Earthlink with the promise that Earthlink would expand the network into redeveloping areas and provide the leading edge of the spear in battle to reopen the flooded areas of the city. That won’t happen now.

The bright promise of a municipal network that would lead development instead of profiting off the struggling people of the city has, sadly, faded.

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The dark side of US federalism can be found in the way that its greatest cities, the engines of economic growth and the potential seat of political power, have been kept impoverished by state-level political resentments. New York and Philadelphia, for instance, have, like New Orleans, long been kept on a short leash by the states whose wealth and position of influence in the union depended upon them. The rise of a unified city electorate that distrusts state power and hangs together in support of even unsavory local political machines is as much an indictment of how the cities have been treated by “upstate” politicians and their resentful constituencies as any ‘innate’ urban corruption. There is perhaps no better example of this dynamic than Louisiana where cosmopolitan, Catholic, liberal, and yes “chocolate,” New Orleans with its fleshpots, Creoles, Mardi Gras, and French traditions remained leashed to a state whose political engines were controlled by those who were offended by most of what made the city great.

The state’s people, organized by their local communities, should pursue the complete repeal of the law that keeps New Orleans from taking care of itself. Lafayette, the original target of this malign law, who has won through to having its own fiber network, is now morally obligated to lead the way.