Municipalities Entering Telecommunications Business.

The beleaguered telecommunications industry is now facing competition from an unlikely source: city hall. Municipal governments across the country have built their own fiber-optic networks in response to the demand for improved cable television, Internet, and phone services. According to a Federal Communications Commission report, increased competition has forced private telecommunications companies to add new services, cut prices, and become more responsive to customers. Some companies contend that government-built systems have an unfair advantage because tax-exempt financing makes it less expensive for governments to provide these services. Industry lobbying in 10 states has resulted in legislation restricting or banning municipalities from entering the telecommunications market. In Nebraska, for example, a law bars municipalities from...