backtop


Print 74 comment(s) - last by erple2.. on Apr 4 at 9:53 AM


NC House, big telecoms join forces in an effort to kill municipal broadband

North Carolina's Republican Congresswoman Julia Howard picked up more corporate sponsors than a NASCAR driver. Now she's repaying those that helped elect her and her fellow Republicans by passing a bill that threatens to kill municipal internet projects and North Carolina citizens' right to self-governance.  (Source: North Carolina Congress)

The bill contains language that would allow a state board to overall local citizens right to self-governance by giving them the discretion to prohibit services that passed a local vote.  (Source: Union County Public Schools)
Measure allows state officials to deny local citizens the right to self-governance

Telecom giants in North Carolina have been lobbying hard for several years now to try to stomp out municipal internet, phone, and cable television services that threatened their local monopolies or duopolies.  The effort looked at risk when they lost the support of Democrats this year, but thanks to some dedicated lobbying they managed to firmly convince the Republican majority to restrict local government's rights and enact a measure that presents a barrier to competitive municipal services.

North Carolina's State House has voted today to pass a critical bill, H.128 [PDF], by a margin of 81 to 37.  The bill, at face value, installs significant hurdles towards providing citizens municipal services.  

In that regard, many view it as a vote to preserve service providers’ monopolistic grip that allows them to charge NC residents exorbitant fees.

I. How Did We Get Here?

The bill was instigated by several towns/municipalities installing local government-backed services to offer citizens an alternative to local monopolies/duopolies.  Fed up with slow internet, limited cable channels, and high service costs, citizens banded together and pushed local officials to create municipal internet, cable TV, and phone services.

Places with such a service include Wilson, North Carolina (Greenlight, Inc.), Salisbury (Fibrant), Davidson (MI-Connection), and Morganton (CoMPAS Cable TV & Internet).

While the service was ratified by the municipal council/board, the projects were typically initiated on behalf of numerous complaints about local service providers' fees.  The municipal services' development spanned multiple years giving citizens time to vote politicians out of office if they didn't like the idea.  Further, many of the cities held town hall meetings gathering feedback.  Most citizens voiced enthusiastic support when the plan was clarified.

Under most of the current efforts, the city government first goes out and seeks loans in the private sector.  Typically these loans fall within the range of $25M-$45M USD.  

After obtaining loans, the local government then contracts private sector firms to install necessary infrastructure to create a competitive network to the local phone, cable television, or internet service.

Once installed the service is operated as an independent entity. 

The services so far have been a great asset to communities.  In Wilson, residents enjoy 10 Mbps internet from their municipality for $35/month, where they would have to pay $57/month to receive equivalent service from Time Warner, Inc. (TWX).  Further, businesses are offered a 1 Gbps line by the municipality -- something Time Warner claimed it's unable to offer at any price.

In short, the service seemed like a win for citizens.  The only clear loser seemed to be telecoms, which were forced to cut their prices and reduce their profits with the dissolution of their local monopolies.

II. Cracking Down on Municipal Internet

Politicians like Rep. Julia Howard (R-Davie, Iredell) contend that the municipal internet projects are unnecessary and worse yet can represent a malicious interest to business.  Rep. Marilyn Avila(R-Wake), who along with Rep. Howard co-sponsored the bill, says that legislation was needed to prevent "predatory" challenges to the private sector.

Indeed the bill's language is carefully worded to portray this side of the story.  It is entitled "Level Playing Field/Local Gov't Competition".  Its advocates claim that it will not ban municipal internet outright, but simply force them to "compete" with local telecoms.

As usual, there are always two sides of a story, however.

Critics point out that companies like Time Warner (cable internet), Embarq (DSL internet), AT&T (T) (cable TV), and CenturyLink, Inc. (CTL) (phone) have poured millions into lobbying the federal government to pass the initiative.

Many of the Republican congressmen sponsoring the bill reportedly received direct campaign donations from these companies.  For example bill co-sponsor Rep. Howard is accused of receiving $4,000 from CenturyLink, $750 from Time Warner, and $1,500 from AT&T.  

Critics say that even more money may be funneled through private donors.  They argue that the telecoms essentially paid for the Republican congressmen to be elected and now they're asking them to return the favor.

III. What's in the Bill?

Whether the telecom monopolists "bought" the NC Congress's vote or whether Congress really sought to create a "level playing field" with the most earnest of intentions, it's important to consider what's actually in the bill itself.

The bill begins by spelling out a set of provisions with which municipal service providers must comply.  Some of these provisions are redundant with existing federal laws but seem to serve as a vehicle to insert language inferring that municipal internet is somehow "discriminating" against telecoms.

For example, Provision 5 states that the municipal services:

Shall provide nondiscriminatory access to private communications service providers on a first-come, first-served basis to rights-of-way, poles, or conduits owned, leased, or operated by the city unless the facilities have insufficient capacity for the access and additional capacity cannot reasonably be added to the facilities. For purposes of this subdivision, the term "nondiscriminatory access" means that, at a minimum, access shall be granted on the same terms and conditions as that given to a city-owned communications service provider.

The Clinton administration's Telecommunications Act of 1996 forces all implementers of U.S. telecommunications networks to interconnect their networks and allow for common use.  Thus it is unclear exactly why this language is necessary.  Again, this appears designed to paint a misleading picture, suggesting that there's some sort of phantom conspiracy against business where there is none.

Other provisions offer confusing limitations to the powers of local government.  For example one bans the use of city funds to finance the projects.  It states:

Shall not subsidize the provision of communications service with funds from any other noncommunications service, operation, or other revenue source, including any funds or revenue generated from electric, gas, water, sewer, or garbage services.

In other words, Republicans are arguing, even if local citizens want to band together and spend local government funds on municipal projects they are prohibited from doing so.  Thus the state government is essentially robbing the citizens of the right to self-governance, because they argue, the locals might make an "immoral" decision to threaten the local telecom's monopoly/duopoly.

Provision 9 offers a further restriction:

The city shall annually remit to the general fund of the city an amount equivalent to all taxes or fees a private communications service provider would be required to pay the city or county in which the city is located, including any applicable tax refunds received by the city-owned communications service provider because of its government status and a sum equal to the amount of property tax that would have been due if the city-owned communications service provider were a private communications service provider.

In other words, the city has to pay local taxes to itself.  The point is not just to inconvenience the projects, though.  Combined with the previous provision it means that the city has to yearly apply taxes to itself which cannot be returned to reinvest in the internet service.  This puts the service at a bafflingly disadvantageous web of self-taxation and denial of funding.

Provision 8 puts municipal services at an even greater disadvantage, stating, "[They] shall not price any communications service below the cost of providing the service."

Thus local governments are outlawed from offering the kinds of promotional rates that telecoms regularly provide.  So while the bill claims to be "fair" it clearly creates a situation that gives the monopolistic telecoms at advantages by granting them additional rights and privileges that the local government is forbidden access to.

The bill offers exemptions to existing services, but the exemptions do not cover the most damaging provisions (outlined above).  Thus existing services will be affected virtually the same as new services.

The legislation does contain an additional measure that may further block new services, though.

The bill states that all municipalities looking to implement new services must first go through a number of steps (hold two town hall meetings on the issue, collect bids, hold a special election on the topic of incurring private sector debt to finance the project, etc.).  All of these steps seem relatively reasonable, and are in fact in line with what occurred with many of the current projects.

But the "catch" as they say, is that the city then has to submit a proposal to a state Commission.  That Commission will have complete authority whether to accept or reject the proposal.  States the bill:

The city or joint agency making the application to the Commission shall bear the burden of persuasion with respect to subdivisions (1) through (4) of this section.

Thus while the bill does not ban new municipal internet projects, it hands the state government the legal power to do so.

IV. Conclusion -- A Business Sponsored Tool to Kill Municipal Services

The decision by state Republicans to allow state government to ban local citizens from self-governance at their discretion is a particularly surprising one given that the national Republican party has emphasized shrinking federal government and putting more power in the hands of local governments.  

The big winners here are clearly the politicians who obtained the finances they needed to get into office and the telecoms, who move a step closer to safeguarding their monopolies from pesky municipal projects.  

The biggest losers are local governments and the state's citizens.  For all their hard work in creating cash-positive municipal services that beat the quality and price of previous monopoly/duopoly offerings, they now must fear that their service may be slowly choked and shut off by the state government.



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

RE: America's Own System
By The Raven on 3/30/2011 11:08:44 PM , Rating: 5
This is not proof of anything wrong with the free market.
You have to take into account the fact that it seems most people these days do not value their freedom, and so they are easily denied it.

If people invested their time into governing themselves instead of following the Kardashians' twitter feeds they would be active participants in the free market as free citizens. But when they set their gov't on auto pilot and then check out... they will be governed in an unsatisfactory manner. And as that happens, the free market gets less and less free.

So basically I contend it is not a truly free market because of "vegetative citizens." If they were active in their gov't (as they need to be to protect their freedom) this move by the telecoms wouldn't stand a chance.


RE: America's Own System
By The Raven on 3/30/2011 11:11:44 PM , Rating: 2
quote:
This is not proof of anything wrong with the free market.
Sorry, I meant a free market; as in a free-market economy. Obviously, there is something wrong with the "free market" of the US (as I explained).


RE: America's Own System
By Zshazz on 3/31/2011 2:08:24 AM , Rating: 5
Furthermore, this has nothing to do with a/the free market. Time Warner has been given a legal monopoly. This is exactly the opposite of free market principles.

If anything, this shows that going against a/the free market is a bad idea. Even when you initially think "oh, the cost savings of not having a bunch of providers trying to compete on providing cable/broadband service will result in lower prices", things like this show that you're wrong.


RE: America's Own System
By Samus on 3/31/2011 10:50:45 AM , Rating: 1
Unfortunately I agree. Many people subliminally don't want freedom and want to be told what to do. Union workers, low-ranking military, city workers, etc, all enjoy the vegetative lifestyle because all they care about is the 9-5, lack of responsibility and watching the "game."

You know the New York Times did a random poll a few weeks ago and around HALF the people they talked too didn't even know who our Vice President was? 96% of people didn't even know how many members of the house there are!

How can you live in a truely free country if you don't even know the most basic elements of your governing body?


RE: America's Own System
By The Raven on 4/1/2011 12:06:01 AM , Rating: 2
quote:
You know the New York Times did a random poll a few weeks ago and around HALF the people they talked too didn't even know who our Vice President was? 96% of people didn't even know how many members of the house there are!
I know who the veep is but I wish I didn't! I wish I could've saved that part of my brain for something useful ;-)

As for the members of the house... I'd let them off on that one, but if they don't know how many senators there are... they shouldn't be allowed to vote (or make large purchases lol).


RE: America's Own System
By Lerianis on 4/2/2011 3:25:15 AM , Rating: 1
Right in one. Too many companies today have been giving a government approved monopoly and we need to stop that. Hell, a lot of these multi-national companies need to be broken up in my opinion as Ma Bell was in the past.

Sure, she glued herself back together after awhile, but only because the feds allowed her to do that.


RE: America's Own System
By superPC on 3/31/2011 9:24:50 AM , Rating: 2
free market? is there such thing now? with corporation trying to gain as much control and power over the market with any means necessary (and as big as they are today that could really mean anything, from bribing and coercing your biggest buyer to abandon your competition ala intel, to price fixing ala the airline company a few years back) and the government mucking around with regulation and try to “free” the market, its anything but free right now. true capitalism and free market is what big corporation really fear and that's why we don't see it except in a few specific cases.


RE: America's Own System
By Conficio on 3/31/2011 9:13:20 PM , Rating: 2
I agree with the things you say. But I'd like you to consider the modern state of advertising on a mass scale as being impossible to not inform your judgement.

It is hard to say if anybody has any "free will" left, if everybody is under a constant barrage of advertisement (for goods and ideas or ideology) it is close to impossible to keep a free mind.

I'd like you to consider the unequal nature of todays advertising realities:
* On the one side there is the professional seducer, called marketer. There are scores of smart people that use any bit of research and knowledge about the human behavior to influence anybody in their favor. And this goes far beyond goods to consume but includes ideas and politcal opinions and groupings. On top of that they have the ability to influence masses through mass media in a few hours or days (TV, viral advertisement, ...)
* On the other side is the individual who can't stay clear of such advertisment that induces consumer demand in every one of us (or when did you last time sample the available spagetti brands at your super market and made an informed decision based on taste and cookability alone [not to mention back ground research on the sutainability]) way beyond any needs. It also does influence the political opinion of any voter.
* And it apparently works quite well. Otherwise companies would not spend 40%+ of the end consumer price in advertising on various levels (store, brand, whole sale, advertising of the incredience to the manufacturer, adviertising of machines, even advertising of governments to attract businesses to locate there).
* And it works quite well on the politcal level too. Why else would the lobbying industry be a multi billion industry? Why else would the candidates for office only be considered a serious contender if they were independently wealthy or awash with campaign donations from large interest groups?
* In advertisement, the challenge is not to influence the target subject, YOU, but to influence you more, better, faster, earlier in life, for longer lasting impact, etc. then the competition. YOU are like a wax candle in the sun. It is just a question which side is melting you first.

So you think people can have a free will?


RE: America's Own System
By The Raven on 3/31/2011 11:56:49 PM , Rating: 2
quote:
So you think people can have a free will?
YES!!!
That is my point. It is much easier to just listen to the advertisers and the gov't and wear the clothes the Kardashians are wearing and listening to the music that the radio DJs play. If you want to contribute to society, and more importantly to protecting/appreciating your freedom, then you would shake off those beggars and make informed decisions that benefit yourself and the society around you.

The can have free will but they chose the easy path to hell. Not me. I am ever vigilant that our freedoms are under constant threat just because someone wants to make life easier by taking away others' freedoms.

It seems the big problem is our constant craving for more more more. You can't make well informed decisions when you have so many things to decide. We only have 24 hrs in a day. It is hard to say "no" to the latest car or phone or whatever but the manufacturers and gov't make it so easy to say "yes."


RE: America's Own System
By Lerianis on 4/2/2011 3:28:50 AM , Rating: 1
The Raven, we have had 'so many things to decide' for years. That isn't the problem. The problem is that people are having to work 60+ hours to survive in America today, so they have very little time left to make decisions on a wide range of things.


"This week I got an iPhone. This weekend I got four chargers so I can keep it charged everywhere I go and a land line so I can actually make phone calls." -- Facebook CEO Mark Zuckerberg














botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki