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NC Governor Bev Purdue

A comparison of broadband download speeds
Governor Bev Purdue says that she will neither sign nor veto H.129

It looks as though the big telecoms that provide internet service in North Carolina -- Time Warner Cable, AT&T, etc. -- will score a major victory in their assault on municipal internet. This victory has been made possible thanks to Governor Beverly Perdue's indecisiveness on the matter.

I. Governor Beverly Purdue Chooses Inaction over Ruffling Feathers

Purdue issued the following statement on Friday in regards to House Bill 129 (H.129):

I believe that every school, household and business in North Carolina – no matter where they are – should have access to efficient and affordable broadband services.

There is a need to establish rules to prevent cities and towns from having an unfair advantage over providers in the private sector.  My concern with House Bill 129 is that the restrictions the General Assembly has imposed on cities and towns who want to offer broadband services may have the effect of decreasing the number of choices available to their citizens.

For these reasons, I will neither sign nor veto this bill.  Instead, I call on the General Assembly to revisit this issue and adopt rules that not only promote fairness but also allow for the greatest number of high quality and affordable broadband options for consumers. 

Since Governor Purdue has chosen not to sign the bill, it will automatically become law in North Carolina. 

II. H.129: “No Soup for You!”

H.129 would put restrictions on cities that currently provide internet service to its citizens (Wilson, Salisbury, Morganton, Davidson, and Mooresville), and would significantly hinder any efforts by other cities to pursue their own municipal internet services.

H.129 ensures that companies like Time Warner Cable and AT&T will continue to be the dominant players in most N.C. markets, even with higher pricing and speeds that often lag far behind what cities themselves can provide for its residents.

Some of the provisions in H.129 state that cities: 

  • 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.

  • Shall not use city resources that are not allocated for cost accounting purposes to the city-owned communications service  to promote city-owned communications service in comparison to private services or, directly or indirectly, require city employees, officers, or contractors to purchase city services

  • 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.

  • Shall not price any communications service below the cost of providing the service, including any direct or indirect subsidies received by the city-owned communications service provider and allocation of costs associated with any shared use of buildings, equipment, vehicles, and personnel with other city departments.

Companies like Time Warner Cable say that they simply can't compete with the lower-priced offerings from municipal-based services. For example, 10Mbps Road Runner service will cost you $57 per month. A competing plan from Greenlight (run by the town of Wilson) only costs $35 per month.

III. Citizens Suffer, Lawmakers and Telecoms Reap the Benefits

This “non-action” by Governor Purdue represents a significant blow to N.C. residents who live in underserved communities when it comes to broadband access, or are simply looking for cheaper alternatives. The rise of municipal internet in N.C. was a direct result of the major telecoms dragging their feet when it came to providing services or boosting broadband speeds. Then, when the cities decided to take matters into their own hands, the telecoms stopped dragging their feet and started running to lawmakers for help

However, this outcome shouldn't be too surprising. Rep. Julia Howard (R-Davie, Iredell) proposed H.129 and sure enough, she received $6,250 total in campaign donations from Time Warner, CenturyLink, and AT&T. Likewise, Time Warner's political action committee (PAC) has provided over $214,000 to state lawmakers since 2008. As for Governor Purdue, she received $3,000 in her winning gubernatorial campaign in 2008 from Time Warner. Time Warner also gave $10,000 to the Democratic Governor's Association -- which Purdue hosted -- in April.

Reuters recently reported that the United States ranks ninth out of 29 countries when it comes to broadband adoption (63 percent penetration). In addition, download speeds lag behind other countries. New York City residents, for example, average download speeds of 11.7 Mbps. Residents in Seoul, South Korea, however, are enjoying average download speeds of 35.8 Mbps.

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RE: Did you guys even read her comments?
By farsawoos on 5/23/2011 11:30:53 AM , Rating: 2
A very apt post!

Certainly, after reviewing the bill itself ( it becomes clear that much of what the bill introduces is fairly reasonable and, as far as my very limited legal understanding goes, doesn't directly harm any otherwise competitive agreements into which municipalities would normally enter.

I do have a couple of questions for some of you legal hawks, though:

1. The bill seems to invoke reference to the Umstead Act ( ), which I find a bit puzzling. The Umstead Act basically says that the State, any office or division of the State, or any employees of stewards of the State cannot engage in the sale of goods and services otherwise rendered/offered by private enterprise with a list of exceptions. Fine ... except THE first exception in the list is "Counties and Municipalities." If that's the case, why invoke it in the text of H.129?

2. There's a section of H.129 that defines "payments in lieu of taxes." I say again that I'm not a legal type, so there's a lot of political and legal nuance that escapes me, but why does it seem to me that this document basically says "You don't pay taxes, but you pay what you WOULD pay in taxes as simply a fee." This includes a non-tax amount that equals local and State property taxes, income taxes, franchise taxes, etc. Why not simply say they pay taxes? What's the legal difference here between paying taxes and simply paying that same monetary amount in "fees"?

And just a comment to close... I found this little ditty towards the end of particular interest:

In considering the probable net revenues of the proposed communications 16 service project, the Commission shall consider and make written findings on 17 the reasonableness of the city or joint agency's revenue projections in light of 18 the current and projected competitive environment for the services to be 19 provided, taking into consideration the potential impact of technological 20 innovation and change on the proposed service offerings and the level of 21 demonstrated community support for the project. 22
(5) The city or joint agency making the application to the

I may not truly understand the real-world impact of this addition to the bill, but I find myself skeptical of any techniques brought to bear by either side to determine the "impact of technological innovation." :/

By farsawoos on 5/23/2011 11:31:36 AM , Rating: 2
Oops! That first link didn't work for some reason. Corrected below:

"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home

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