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 ...