We've been watching the legal wrangling in Monticello, Minnesota for months now, since it represents in microcosm a larger struggle around the country between private ISPs and municipalities that want to begin offering high-speed Internet (often fiber) as a public utility. Today brought a reminder of just how drawn-out such disputes can become as TDS Telecom filed an appeal after its complaint against the city's new fiber network was tossed by a county judge in early October.

Drew Petersen, who heads up legislative and public relations for TDS, sees the issue as a basic encroachment of public entities into domains best served by private companies. "As a job-producing, tax-paying company with millions of dollars invested in the state of Minnesota and the community of Monticello, we see the negative consequences of the decision reaching far beyond this specific case," he said in a statement as the company filed an appeal with the Minnesota Court of Appeals.

“We also believe the decision endangers the appropriate relationship between municipalities and private enterprise. A city in competition with an existing business cannot fairly discharge its regulatory duties. The city of Monticello would have an inevitable conflict of interest with TDS," he added.

The company objects to Monticello's plan to build a fiber-to-the-home network that would reach every business and home in town, would have no long-term contracts, and would be community owned. The city would build the network using municipal bonds, which it has already sold (the funds wait in escrow until the legal maneuvering is over), then offer interconnects to different ISP networks from a central access point.

TDS says that such municipal bonds may be issued for a host of projects (sewers, stadia, playgrounds, and "homes for aged," among others), and they can more generally be used to fund "other public conveniences." But is Internet access a "public convenience"?

A judge said yes in early October, telling TDS that the point of Minnesota's municipal laws are to "make a city a better place for its citizens to live." The fact that a fee would be charged to access the new fiber network is irrelevant; such fees are also charged to use municipal swimming pools or subway systems or city-owned sports stadia and art galleries. If citizens believe that a fiber-optic network is a public good (and they do; 74 percent of votes in a recent election supported the idea), they are allowed to raise money and build it.



The city's FiberNet installation (courtesy MonticelloFiber.com)

After the city began the process of selling bonds and building the network, TDS decided to offer fiber connections of its own. The project is much further along than the city's effort, since Monticello's fiber work was delayed by the lawsuit. Both projects will continue, which means that this small outer suburb of the Twin Cities will soon be home to not one but two fiber-optic networks.

While it waits for the bond money to be released, the city has gone ahead with construction of the fiber backbone using, of all things, its "liquor store reserve funds" to fund the buildout.

As more municipalities around the country get interested in the long-term benefits of a fully fiber network, expect plenty of attention on these sorts of important precedent cases. As for this one, the fight's not over yet.