U.S. President Barack Obama said laws that impede local governments from bringing competitively priced, high-speed Internet to their residents hold back businesses and raise prices for consumers.

Obama used the the well-wired city of Cedar Falls,Iowa, which provides broadband access that’s almost 100 times faster than the national average, as an example for the rest of the country.

“High-speed broadband isn’t a luxury, it’s a necessity,” Obama on Wednesday told an audience at Cedar Falls Utilities, which has extended fiber lines capable of high Internet speeds to all local residences and businesses. “This is about helping local businesses grow, prosper and compete in a global economy.”

The president is urging the Federal Communications Commission to address barriers that keep communities from building their own broadband networks. His remarks were intended to touch on one of the messages he’ll deliver in his State of the Union address to the nation next week.

Obama has made expanding broadband access a priority, pushing for more airwaves for mobile Internet access and calling for greater funding for high-speed Internet in schools. The Iowa visit signals the issue will be a part of his agenda as he works with the new, Republican-led U.S. Congress.

Local Choices

“I believe that a community has the right to make its own choice, and to provide its own broadband if it wants to,” Obama said.

About 21 states bar or impede municipal broadband initiatives, according to a recent filing to the FCC by the Coalition for Local Internet Choice, a group that has been seeking more power for local communities.

The issue has become a partisan political topic, with Democrats like Obama saying municipal networks should be free of state restrictions, while Republicans oppose overriding state laws.

“America’s decades-long policy of promoting private investment and exercising a light regulatory touch has yielded substantial benefits,” Michael Powell, president of the National Cable & Telecommunications Associationand a former FCC chairman, said in an e-mailed statement. “While government-run networks may be appropriate in rare cases, many such enterprises have ended up in failure, saddling taxpayers with significant long-term financial liabilities.”

City Networks

The FCC is considering requests from Chattanooga, Tennessee, and Wilson, North Carolina, to override state restrictions on building networks.

FCC Chairman Tom Wheeler, like Obama a Democrat, has told Congress he has the power to override state laws as part of the agency’s mission to promote broadband, or high-speed Internet service. “If municipal governments want to pursue it, they shouldn’t be inhibited by state laws,” Wheeler said in testimony to Congress last year.

Michael O’Rielly, a Republican member of the FCC, said city-run broadband aren’t the boon that proponents, including the administration, claim.

“This debate is about preempting a state’s right to prevent taxpayer rip-offs,” O’Rielly said in an e-mailed statement. “Instead, we have seen a long track record of projects costing more than expected and delivering less than promised.”

Net Neutrality

Obama also restated his support for net neutrality, saying, “I’m on the side of competition.” In November, he called for strong rules to ensure Internet service providers led by Comcast Corp. (CMCSA) and AT&T Inc. (T) andVerizon Communications Inc. (VZ) treat Web traffic equally.

Iowa is the last stop Obama is scheduled to make to introduce initiatives before his Jan. 20 State of the Union address. On Tuesday he promoted a cybersecurity plan at a Department of Homeland Security facility. Last week, he traveled to Detroit, Phoenix and Knoxville, Tennessee, to talk about the automobile industry recovery, housing and access to community college.

Cedar Fall’s community-owned service, formed after a referendum in 1994, aims to provide economical, high-capacity access to the Internet for the city of 40,000 people, according to the utility’s website. Rates are lower than those in nearby communities served by commercial providers, according to the website.

Iowa Access

Obama was shown lines capable of carrying fast Internet traffic. “It’s available to absolutely everybody in the city” and about 88 percent of households subscribe to Internet service, Betty Zeman, the utility’s marketing manager, said.

The utility charges $135 monthly for its fastest service offering 1 gigabit speed, or about 1,000 megabits per second. The most popular option chosen is $45.50 for 50 megabits per second, said Zeman. Each price includes a $12 discount applied when a home takes television service also.

U.S. regulators are considering increasing the definition of broadband to 25 megabits per second, up from the level of 4 megabits set more than four years ago.

“America is ill-served by anti-competitive state barriers that hinder broadband investment,” the Coalition for Local Internet Choice said in its filing. The group lists advisers including Vint Cerf, Google Inc. (GOOGL)’s chief Internet evangelist, and Christopher Libertelli, a vice president with Netflix Inc. (NFLX)

Municipal Access

Web search provider Google and Internet video service Netflix prosper as Web use increases.

The FCC doesn’t have power to preempt state rules limiting municipal broadband, according to a filing by US Telecom, a Washington-based trade group that includes the largest U.S. telephone companies, AT&T and Verizon.

The American Legislative Exchange Council, a group that lobbies for limited government and free markets, has said municipal broadband doesn’t belong in the same classification as water, sewer and roads.

“Such projects could erode consumer choice by making markets less attractive to competition because of the government’s expanded role,” the group said on its website.

Courtesy of Bloomberg.

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