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Sustaining Democracy in a Digital Age

A Blog from New America's Media Policy Initiative

North Carolina's municipal broadband battle demonstrates the need for clearer national policy

Published:  June 1, 2010

Update: On Wednesday, June 2, the N.C. Senate Finance committee passed a new version of S 1209. The bill would place a temporary moratorium on municipal broadband and direct a legislative subcommittee to study existing systems in the meantime. A formal report would be due March 1, 2011. Until then, existing systems would be grandfathered, and the moratorium exempts federal grant-funded projects (such as the broadband stimulus) and any local government Google may choose to partner with for its fiber infrastructure pilot. The bill will advance to the full N.C. Senate.

RALEIGH -- The latest skirmish in a long-running conflict over municipal broadband in North Carolina shows just how badly community Internet advocates need policy reinforcement at statehouses across the country.

The N.C. Senate Finance Committee is expected to debate the “No Nonvoted Debt for Competing System” bill, S 1209, on Wednesday. The bill would require local governments to fund any communications system through general obligation bonds financed by taxpayers, and to hold a public referendum vote on whether to do so. The bill would likely put an end to the development of municipal broadband services in the state and could hurt the four existing systems in the state even if they’re grandfathered in, since votes could be required to finance upgrades and repairs. There is also concern that the bill’s passage would ruin any chance that Google would choose a North Carolina community for its fiber infrastructure project, for which 45 communities applied.

The short summer session of the North Carolina General Assembly is supposed to be a time for getting the budget done and going home, but it's proving to be yet another season for a conflict that has been marked by robocalls, push-polls, and tweets from the legislative committee hearings. The bill's sponsor, N.C. Sen. David Hoyle (RD-Gastonia) argues that public investment in technological infrastructure is unwise, especially when it means government will compete against private industry 

You know, the technology’s changing daily. Five years, ten years from now wireless could replace most of fiber-optics and coaxial cable, or, or uh, copper even, might become, not totally obsolete, but their ability to fund the debt service from the hard assets they had to put in the ground....

That's one of the same lines a North Carolina think tank, The John Locke Foundation, is pushing

Hoyle is retiring this year, and as chairman of the Senate Rules Committee, with no concerns about reelection, he is expected to push hard for the bill in the Senate. 

The House may prove less accommodating. After the Senate Finance Committee bumped S 1209 from its agenda last week pending further discussion, rural Caswell County fired back with a bill to grant it permission to pursue its own municipal system. N.C. House Speaker Joe Hackney (D) represents Chatham County, a rural county at the edge of the high-tech Research Triangle, where many residents struggle even to get basic DSL service. Hackney went so far as to change the House Ways and Means Committee to the Ways and Means/Broadband Connectivity Committee. That committee's chairman, Rep. Bill Faison (D-Orange, Caswell) is the Caswell bill's sponsor. 

S 1209 is only the latest bill in a string of proposals in North Carolina, and elsewhere across the country, aimed at stopping municipal Internet systems. Earlier this year, Hoyle floated an all-out moratorium. Last year, Hoyle backed the Senate version of the "Level Playing Field" bill, which died in the House after its sponsor resigned under an ethics investigation. In 2007, there was the "Local Government Fair Competition Act." 

Each iteration has so far failed after opposition by online activists, the N. C. League of Municipalities and city and county leaders across the state. Google and Intel are among the businesses that have continually signed on to letters of opposition. Jay Ovittore, a Greensboro resident who advocates for municipal broadband, has doggedly reported on these developments at StoptheCap.com. Press coverage has included this story from Associated Press.

Yet the bills keep coming back. This bill is taking aim at the five communities in North Carolina that already have or are building municipal broadband systems: Compas in Morganton grew out of a city-owned cable franchise; MI-Connection, which Davidson and Mooresville built out of a bankrupt, damaged Adelphia system. But the ones that are truly targets of the law are brand new fiber-to-the-home systems in Wilson where Greenlight launched in 2008, and Salisbury, which will begin offering its Fibrant service this summer.

Wilson and Salisbury have learned the same lesson other cities and towns have learned: Even if local residents support a proposal to build a broadband infrastructure, local leaders can expect intense opposition at the statehouse and lawsuits that could tie up the projects for years. Lafayette, Louisiana spent $4 million fighting a lawsuit from BellSouth before it could launch its LUS Fiber system in 2009, five years after voters had approved it. (Terry Huval, the Director of Lafayette Utilities System in Louisiana, related the saga to the U.S. Senate Committee on Small Businesses Entrepreneurship in April.)

Salisbury Mayor Susan Kluttz pleaded with lawmakers at a recent hearing not to force cities to use referenda to build infrastructure, given that projects already face a stringent approval process by the Local Government Commission. Governments themselves are prohibited from doing any advertising or advocacy on behalf of a referendum, but campaign finance laws impose essentially no limit on the amount of money the industry could spend. “We have seen hundreds of thousands of dollars used in cities such as Longmont, Colorado and North St. Paul, Minnesota, by incumbents to defeat what the cities are trying to do," she said. "Please, do not put more restrictions on us. Please, for the citizens that I represent and the citizens that you represent that deserve this.” 

As the Baller-Herbst Law Group has documented, most of the 18 states that place restrictions on municipal broadband systems do so through de-facto bans that place onerous restrictions on public financing and other aspects, effectively sinking any chance of funding the infrastructure.

The FCC's broadband plan says little that addresses this trend. The plan highlights Bristol, Virginia as "a good example of the potential of community broadband in rural America," yet doesn't acknowledge that Virginia has a law in place that imposes serious public financing and service restrictions that mean no other city in the state can follow Bristol's model. The same is true in Louisiana—there will be no more projects like Lafayette's until federal or state law changes.

FCC Commissioner Mignon Clyburn made a strong statement when she addressed the SouthEast Asssocation of Telecommunications Officers and Advisors in Asheville, N.C. in April. She praised Wilson and Salisbury for investing in fiber infrastructure and spoke out against restrictions.

When cities and local governments are prohibited from investing directly in their own broadband networks, citizens may be denied the opportunity to connect with their nation and improve their lives. [...] Preventing governments from investing in broadband is counter-productive and may impede the nation from accomplishing the Plan’s goal of providing broadband access to every American and community anchor institution.  

Yet when the rubber meets the road, state lawmakers have a harder time getting active support from the FCC. N.C. Rep. Paul Luebke (D-Durham), who chairs the committee that originally heard S 1209, asked the FCC for more specific guidance on how North Carolina "could work in unison with federal broadband goals" -- in short, What should we do here? Blair Levin wrote back, restating the language in the NBP. Regarding municipal networks, the letter said only that "state laws that 'restrict or explicitly prohibit municipalities from offering broadband services' should be revisited, because those restrictions 'in some cases restricts the country's ability to close the broadband availability gap.'" (See section 8.4 of the National Broadband Plan.)

To find further support policy makers could look to a recent report by Christopher Mitchell at the Institute for Local Self-Reliance. "Breaking the Broadband Monopoly" that lays out the why and how of municipal systems and documents the various obstacles state governments, at the behest of lobbyists, and placing the path of local governments.

To give you a further sense of discourse over technology access, consider Hoyle's position that there is no "availability gap." Citing an industry-backed broadband availability map by Connected Nation he asked at a recent meeting of the Revenue Laws Study Committee.

“If somebody will tell me, I won’t say one job, but 10 or 15 jobs that we’ve lost in this state because a company left or wouldn’t come here because they couldn’t get broadband, I’ll jump off the top of the education building," Hoyle said at a recent meeting of the Revenue Laws Study Committee. “We know that’s just not true."

The challenge North Carolina faces as it tries to eliminate the broadband availability gap is significant and until it's acknowledged broadly by decision-makers - is unlikely to go away anytime soon. For state and local governments like North Carolina to effectively make policy now around the very issues the FCC is addressing and if those policies are to get us anywhere near the goals the National Broadband Plan sets out, the policymakers at the state level are going to need support to win the argument for municipal broadband.

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