Fiber-optic public internet: court rules Monticello, MN can fund it with city bonds.

The local telephone company in an 11,000-person Minnesota town objected when the town decided to lay its own fiber optic network. The telco filed a lawsuit, and then suddenly rolled out its own fiber network while the case was tied up in courts. Today, a state appeals court ruled in the city's favor (PDF); Internet access was certainly a "utility," the court said, and the city was well within its rights to finance the project as it did.

But is it too late to matter?

Fiber + bonds = lawsuit

Not satisfied with current DSL and cable offerings, the town of Monticello hatched an ambitious plan to wire up the entire community with fiber, build an interconnect station, and allow ISPs to link up to the site and offer Internet access over the city-maintained fiber links. After a vote on the measure passed in 2007, Monticello quickly moved to raise money and break ground—but was promptly sued by the local telephone provider, Bridgewater, a unit of TDS Telecom.

TDS had one main complaint: the project should not be financed with city bonds. Under Minnesota law, cities can only issue revenue bonds for certain specified reasons, including the building of "utilities." TDS charged that the project was not a utility and was instead an unfair use of government power to compete with private business. Critics charged that TDS just wanted to delay the project long enough to kill it.