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FCC Commissioner Mignon Clyburn   (Source:

North Carolina is considering a proposal that would allow a state panel to kill a voter-approved municipal internet service.  (Source: Reuters)
Clyburn is no fan of H.129

As Bill H.129 [PDF] continues to roll on to North Carolina's State Senate Judiciary Committee, having passed the house, controversy surrounding the measure is growing.  

Ostensibly the bill is designed to provide a "level playing field" between local government municipal service projects and local private sector.  However, the bill contains redundant language and sneaks in some provisions that could be the death of municipal services.  

Namely, it makes it much harder to fund such services.  And it hands complete control of whether to ban or approve new voter-ratified services to a state board -- at a time when reportedly state officials have been accepting campaign donations from local telecom monopolists.

The U.S. Federal Communications Commissioner Mignon Clyburn on Monday weighed in [PDF] to the debate, blasting the measure.  Similar to our analysis, she asserts that the bill's provisions first seem worthwhile/innocuous, but the actual language allows for disturbing possibilities.  She states, "This piece of legislation certainly sounds goal-worthy, an innocuous proposition, but do not let the title fool you."

She goes on to write:

This measure, if enacted, will not only fail to level the playing field; it will discourage municipal governments from addressing deployment in communities where the private sector has failed to meet broadband service needs. In other words, it will be a significant barrier to broadband deployment and may impede local efforts to promote economic development.

I remain concerned that 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. Local economies will suffer as a result, and the communities' ability to effectively address education, health, public safety, and other social issues will be severely hampered.

At this point, the FCC is still trying to scrounge up spectrum for an auction tentatively slotted for 2012.  That auction might allow for the creation of a national broadband offering.  However, even the FCC seemingly concedes that a national offering could be less efficient than a local-based one, backed by the community.

At the root of the issue is the lack of competition in the market.  High costs are certainly one barrier to entry.  And the tendency of state legislators/courts to cast a blind eye on anticompetitive tactics from their local telecom only worsens the matter.

Arkansas and South Carolina are reportedly considering measures similar to North Carolina's.

Some provisions of the NC bill certainly seem valid -- for example that the projects need to be approved by local voters in a special election and that town hall meetings must be held before hand.

However, other provisions are baffling.  For example, the services are banned from exercising the same pricing methodology as their corporate "competitors".  In that regard, if anything the bill creates an unlevel playing field.

Further, even if voters approve of it, cities are disallowed from using much of their funds to finance the project.  And there are restrictions on their ability to seek loans from the private sector.  To make matters worse, they have to pay themselves a tax on the service, which they cannot reinvest into improving the service.

And then there's the issue of the state panel created by NC's pending legislation.  That panel would be granted the power to override voters in a municipality and kill outright or otherwise stall to death broadband projects.  At a time when telecoms are pouring thousands in campaign donations to state senators and representatives in an effort to preserve their monopolies/duopolies, this certainly seems like a dangerous allowance.

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Alot of Gray Areas
By trooper11 on 4/5/2011 10:49:00 AM , Rating: 2
It looks like there are many provisions that could help or hurt depending on who is in charge at the time.

I dont see the problem with blocking the local government from using tax revenue to expand or improve the internet service for example. That sounds like an unfair advantage against private sector competitors. Again, i dont get why the people in these areas arent clamoring for fixing the issues with private options versus getting the government to take it over. i know id much rather see these local monopolies broken (monopolies that local and state governments help form) then making the government responsible for providing internet service.

Now if the local citizens voted to use the funds that way, i can see how that would be a problem. On the one hand, i think they should be allowed to make that choice via a vote, but then i would find it hard to believe that voters wouldnt have other needs for that tax revenue.

RE: Alot of Gray Areas
By HoosierEngineer5 on 4/5/2011 11:54:47 AM , Rating: 2
It's also not fair to allow companies to 'cherry pick' the most lucrative locations to provide service, and only provide service to others on thier whim. If they are allowed to dominate in a certain area, they need to accept the responsibility of providing uniform availability. Otherwise, competition will be stifled.

RE: Alot of Gray Areas
By ATTFdiggs on 4/5/2011 2:17:15 PM , Rating: 2
How is it not fair for a company to chose where it provides service? If I owned an ISP in Alaska, I don't see how I should be responsible for providing equal service to every location in the state. I would focus on the populated cities, and forcing me to provide service to outlying areas would force me to shut down due to the expense with little return on investment. As the cliche' goes, Location, location, location.....

RE: Alot of Gray Areas
By somedude1234 on 4/5/2011 4:36:25 PM , Rating: 2
Mandated coverage requirements are part of the mutually beneficial deal. The government entity (state, county, town) allows the company to use their rights of way, in exchange they require that the company agree to provide services to an agreed-upon portion of the population.

If a company wants complete control, they can go out and purchase access to every mile of land required to build out their network.

If they want free/cheap access to rights of way, they must be willing to accept compromises.

RE: Alot of Gray Areas
By HoosierEngineer5 on 4/5/2011 6:35:31 PM , Rating: 2
It's because the provider that comes first can effectively prevent competition from entering. It also gives them the opportunity to provide 'just enough' coverage to make it uneconomical for others to enter the market. It's kind of like opening all the potato chip bags, taking the best ones from each bag, and leaving the crumbs for the next person. The last bags will never be sold. It's like charging somebody who lives on the second floor another dollar a month because their cable is longer.

"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook

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