Fibre in paradise

And the fibre brought jobs. In 2007 both Northrop Grumman,a big American defence contractor,and CGI,an international IT consultancy,said they would hire between them 700 technicians,consultants and call-operators at offices in nearby Lebanon,Virginia,part of BVU’s fibre backbone. Both cited the area’s universities and low cost of living,but neither would have come without BVU’s investment,which Northrop calls absolutely critical. A 2010 paper by Jed Kolko for the Public Policy Institute of California found evidence of a causal relationship in America between the arrival of broadband and employment growth; and the lower the population density,the stronger the effect. Wes Rosenbalm,BVU’s boss,sees the equation much as Joseph Anderson did 150 years ago. “Broadband is jobs,” he says. “This is the next depot,the next highway.”

Should cities be in the business of providing fast internet access? It depends on whether the internet is an investment or a product. BVU could not afford to maintain its fibre backbone without selling the internet to consumers. And it could not build a subscriber base without offering cable television and a telephone line as well; households these days expect a single price for all three services. This has put it in direct competition with firms that already offered limited DSL and cable-modem access,which are fast enough for watching YouTube but not for Northrop Grumman. Fibre is expensive,and a purely commercial business would not have been minded to pay for it.

All this is true for much of rural America,and it is an analogue of the reason why municipal utility companies were launched in the first place: to electrify thinly-populated areas where commercial utilities would not go. But it also raises the prickly question of competition. The Federal Communications Commission will have to take up this matter when it sends its broadband plan to Congress in March. Since 1995,at the urging of telecoms companies,18 states have erected barriers to entry for municipal utilities. In Florida,projects must prove positive cash-flow within four years; in Minnesota they require 65 per cent approval in a referendum.

Rick Boucher,south-western Virginia’s representative in Congress and a key figure in securing BVU’s expansion grants,supported wording in the 1996 Telecommunications Act which,he thought,protected the right of “any entity” to enter the market. But many states have ruled that local governments are not “entities” in the required sense,an interpretation confirmed by the Supreme Court in 2004. Mr Boucher is trying to get a more watertight bill passed. In his district — just as when the railway came — when the fibre arrives,towns throw parties.