With New Hope, North Carolina Broadband Struggle Continues

On Wednesday morning, March 22, the House Finance Committee will again consider H 129, a bill from Time Warner Cable to make it all but impossible for communities to build their own broadband networks. But now, as noted by Craig Settles, the momentum is shifting.

Last week, advocates had a big victory when Representatives Faison and Warren successfully amended the bill (each with his own amendment) to make it less deleterious to communities. Unlike the sham voice vote in the Public Utility Committee, Chairman Setzer of the Finance Committee had a recorded vote, allowing citizens to hold their representatives accountable.

After these amendments passed, the TWC lobbyist signaled for an aide. Shortly thereafter, the committee decided to table the matter until this week -- when TWC will undoubtedly try to remove or nullify those amendments.

In the meantime, AT&T has announced bandwidth caps, yet another reason the state is foolish to pin its broadband future on cable and DSL companies.

Compare AT&T's movement to less-broadband with Wilson Greenlight's recent dramatic price decreases in its ridiculously fast broadband network, causing at least one couple to move there! Greenlight is owned and operated by the public power company owned by the city.

Greenlight has signed up its first residential customers with the highest Internet speed available in Wilson.

Vince and Linda Worthington, former Johnston County residents, moved to Wilson after finding out that they could have access to 40 Megabits per second Internet speeds at a lower cost than what they were previously paying.

"We always wanted the 100Mbps service," she said. "When the price came down, we jumped on it." Greenlight, the city of Wilson's fiber-optic broadband network, has close to 5,600 cable, Internet and telephone subscribers. Greenlight sells its 100 Mbps symmetrical service, with the same upload and download speeds, starting at $149.95 per month as part of a package. Greenlight's 60 Mbps start at $99.95, 40 Mbps at $74.95, 20 Mbps at $54.95 and 10 Mbps at $34.95. Greenlight's 40 Mbps is becoming increasingly popular with customers, said Brian Bowman, Wilson's public affairs manager.

To recap, the publicly owned networks are investing in faster and lower-priced networks while private companies are simply trying to maximize their income from the old networks. Good deal if you can convince the Legislature to outlaw your competition....

TWC and its proxy in the Legislature, Representative Avila, wanted this bill to fly through as quickly as possible -- which is why the Public Utilities Committee cut off discussion with a sham voice vote long before most members were ready. But as the public has learned more, they are opposing TWC's power grab quite loudly. This from a Winston-Salem Journal editorial:

Internet-service providers can't have it both ways. They can't delay bringing high-speed service to North Carolina communities but then turn around and lobby the legislature to deny local governments the authority to establish municipal service if their residents want it.

….

Had the private companies tried to make their argument 15 years ago, they might have deserved some sympathy. But not in 2011. The Internet and high-speed access to it have now been available in North Carolina homes for well more than a decade.
They ignored a market, and local governments stepped in to provide a critical service. The legislature should kill this bill.

In an op-ed, Mark Turner recalls the crucial role of non-commercial coops electrifying the state when private companies saw no profit in it. An excellent read

Mark Turner dot Net

Citing the economics, private Internet providers have been slow to invest in the high-speed infrastructure that would connect these rural communities. That has a lot to do with why North Carolina ranks a paltry 41st in the nation for broadband access, according to Census Bureau statistics.
Having been snubbed by the private providers, some communities like Wilson and Salisbury have taken the same approach as they did 66 years ago: opting to build their own state-of-the-art systems when the commercial providers refused. Now the General Assembly, through a bill sponsored by Rep. Marilyn Avila, R-Raleigh, aims to throw substantial roadblocks in the way of communities seeking to serve themselves.

Columnist Scott Mooneyham also recognized the similarities to electrification:

In many ways, the issues involved aren’t very different from when investor-owned electricity providers were unwilling to bring service to small town and rural North Carolina early in the 20th century.

By the 1930s, the federal and state government were taking steps to encourage rural electrification and the formation of electric co-ops, including providing loans needed for the construction of the systems.

One of the first electric co-ops in the country was formed by Edgecombe County farmers.

Perhaps North Carolina legislators ought to contemplate what the state might look like today if their predecessors had quashed the aspirations of those farmers, rather than giving them tax breaks.

For a more substantive review of what folks in North Carolina are saying about this bill, Stop the Cap! has a great run-down.

What can we expect in the hearings tomorrow? Well, more lies from the cable industry, as recently quoted in an article about the bill:

"I am confident, at some point, that the state law will address this," said Marcus Trathen, an attorney with the [cable] association. "We have never said that cities should be prohibited. If they compete, they should be subject to the same rules as private companies."

We have already detailed (at the bottom of this post) the many ways this bill will introduce bigger barriers and unique regulation for public networks that do not apply to companies like TWC, but let's quickly refresh with two examples.

  1. If Trathen wants the same rules, then TWC will abide by the open meetings laws and publish budgets, business plans, etc., for the public to review. And communities get to vote on kicking TWC out of town.
  2. This bill must be redrafted not to prohibit communities from offering service outside town. NC law makes it very easy for TWC to offer state-wide service and communities should not have a barrier to do similar.

There you go, anyone reporting the lie that this is "level playing field" legislation should be confronted with the facts.

Things are looking way up in terms of preserving local authority to build these networks. Thanks to the rapid and enormous public outcry (making phone calls to state Reps can make a big difference!), the bill was slowed down so the public could get a better sense of exactly what TWC and Avila were conspiring.

Salisbury's Fibrant, realized this bill posed an existential threat to its future (despite the public lies of Rep Avila who claimed it did not target existing networks) because the bondholders need to be repaid regardless of whether TWC convinces the Legislature to shut Fibrant down. They hired a lobbyist. This came after their Mayor worked long and hard to get the Legislature to understand what it was messing with.

At $5,000/month, the cost is a pittance compared to the damage of allowing TWC's bill to shut down Fibrant (to clarify, the bill currently does not threaten Fibrant due to Rep Warren's amendment -- but TWC will do everything it can to remove that amendment).

We have long maintained that these issues have little to do with partisan politics and Salisbury's new lobbyist proves that point.

Council committed to use Fetzer, the outgoing N.C. Republican Party chairman and a former mayor of Raleigh, for one month and could retain him throughout the legislative session, which ends in July.

Preserving local authority cuts across Republican/Democratic Party lines. What often matters far more is how much cable and telephone companies have contributed to election funds for candidates.

And finally, another opportunity to promote the video we produced showing why community networks are so important in North Carolina.

Video: 
See video

Comments

Greenlight's funding?

Do you know how Greenlight gets its funding? Is it entirely driven off of the revenue that they get from selling their service, or do they get subsidies from the municipality, either in the form of lower tax rates or direct financial subsidies? Because if they receive subsidies, then Time Warner is right, that isn't a level playing field. Residents of Wilson who don't subscribe to greenlight are still paying for it in higher taxes, while TWC, AT&T or any other private ISP gets no such subsidy.

If Greenlight is funded entirely through the revenue they get from income from there service, then TWC is wrong. They're just being outcompeted.

I have been trying to find out how Greenlight is funded. Do you have any idea where I might find that information? Wikipedia suggests that greenlight is funded through a bond rather than taxes and points to a FAQ on the greenlight site. But that part of the site doesn't seem to exist any more.

re: Greenlight funding

Greenlight issued Certificates of Participation, I think to a bank out of Wilson.  This is basically a revenue bond to be paid off by the subscribers to the system.  Private providers have claimed there are issues of cross-subsidization but they have done that with a variety of other projects and investigations have found the claims to be groundless.

However, I would suggest to you that this goes beyond what is fair for Time Warner Cable.  Let's imagine a different community that was frustrated at its slow, unreliable, overpriced broadband options from the cable and phone company.  They decide to build a network paid for by taxes (there is yet to be any evidence that Americans would accept this, but it is a thought experiment).  Why should Time Warner Cable forever have the right to decide the terms on which broadband is offered in the community?  

Back to Wilson.  TWC offers lower prices for services in Wilson than in the surrounding towns, using the profits from those non-competitive areas to subsidize its offerings in Wilson.  Is this anti-competitive?  Yes.  Should it be stopped by the state?  TWC's anti-competitive resources, as an $18 billion national company are far larger than those of Wilson, which must justify its actions to the citizens.  Further, TWC pays far less for equipment and human resources due to its economies of scale -- again, this is an unlevel playing field, but it is seldom discussed.

There can never be a level playing field when dealing with incumbent companies like TWC, they always have the advantages and try to create additional ones by buying legislation.  Historically, it has proved a good strategy for them.