preemption

The private sector is not going to expand broadband to everyone. Some places simply do not offer enough promise of profit.

This story out of Wisconsin, "Residents Beg for Broadband" not only reinforces this truth, it looks at what happens when people depend on the private sector to control essential infrastructure.

Some Berry residents may have to move if they can't get high-speed Internet access, according to town officials, because their employers require them to have the service for working from home.

"Parents have told us their children are at a disadvantage by not having high-speed connections," Town Chairman Anthony Varda wrote in a recent letter to TDS Telecommunications, the town's Madison-based telephone provider.

"It is critical to the success of rural students, people working from home, and residents serving on nonprofit boards, committees and local government," wrote Varda, an attorney with DeWitt, Ross & Stevens.

Their property values are going down because few people want to live someplace without fast and reliable access to the Internet.

To cap it off, Wisconsin is one of 18 states with laws to discourage communities from building their own networks. TDS puts on an act about how difficult it is to tell these people that they aren't getting broadband ... but if they were to build it themselves, I wonder if TDS would sue them like it did Monticello.

In asking the state PUC to require TDS to expand, the residents are taking a unique approach. I can't really see it working under the modern rules.

It long past time we realize the limits of the private sector: The private sector is simply not suited to solve all problems. Matters of infrastructure are best served by entities that put community needs before profits.

(Image: Liberty rotunda mosaic at Wisconsin State Capitol, Madison, Wisconsin, a Creative Commons Attribution Non-Commercial No-Derivative-Works (2.0) image from photophiend's photostream)

Once again, Senator Joe Sam Queen again led the effort to legislate on behalf of the people of North Carolina rather than a few companies headquartered out of state. On Monday night, the Senator offered an amendment to remove the temporary ban on community networks (currently set to be one year - though powerful lobbyists will undoubtedly push to extend it). Unfortunately, the Senate ultimately passed the bill with the ban.

The Salisbury Post had covered the legislative battle last week, revealing yet another horrendous quote from Senator Hoyle, who has pushed the ban on community broadband infrastructure.

We're not going to get broadband to everybody in the state anytime soon.

This was his response to a question noting the nature of private companies like Time Warner (who donate regularly to Hoyle) to ignore communities they deem unprofitable.

To reconstruct:

• No one expects the private sector to serve the entire state - no one disputes that companies like Time Warner will refuse to invest in small, isolated communities
• Senator Hoyle, the main proponent of protecting Time Warner monopolies where they exist, simply says that these people just won't get Internet
• The majority of Senators vote with Hoyle to deny people, who have no broadband option, from building it themselves

Unreal.

Now we wait to see when it will pop up in the House. Without a larger grassroots uprising, it will slowly work its way through Committees and toward the House Floor. Call your Reps. To follow this issue in real time, I recommend periodically searching twitter for ncbb.

Update: Thanks to Mark Turner (@mtdotnet) for tape-delayed tweets updating what happened. He has reported: "Senator Joe Sam Queen objects to third reading of S.1209! It remains on the calendar!" This can still be stopped in the Senate. End Update

Update 2: Thanks to Senator Queen for his crucial objection, delaying passage today. His motivation for opposing this bill so strongly? His communities have been ignored by the private sector:

"They’re just frustrated that it’s not getting done by the cable companies, the network companies, whoever’s doing it. They’re just cherrypicking and leaving off so many of our citizens, and that’s just unacceptable."

Both Senator Queen and Senator Purcell should be thanked for their opposition to this handout to cable and telephone companies.
End Update 2

Despite the efforts of so many folks in North Carolina, the bill to stop communities from building broadband networks (forcing them to rely on whatever the incumbent wants to deploy, if anything) has passed out of the Senate Finance Committee. The Direct Revenue Laws committee has to examine it, but it will soon make its way to the floor of the Senate for a full vote (it did, see updates above).

At this point, we still hope the session ends before this bill can be sent to the Governor. Before sending it to the Gov, it must pass the full Senate, several House Committees, and then the full House. So make sure all your representatives know your feelings on it, and encourage your local leaders to tell State leaders to defend the rights of communities to build their own infrastructure. Contact information is detailed on this post.

The bill has changed once again, as summarized by IndyWeek:

The bill's language was revised this past week to include a moratorium. If the bill becomes law, the moratorium would extend through August 2011 when the legislature's long session ends, thus buying the telecommunications companies time to flex their political muscle.

The moratorium carefully exempts current broadband systems like those built in Wilson and Salisbury, but affects cities that did not launch their own broadband feasibility study, before yesterday, June 1. Provisions of the revised bill include informing the industry (i.e., AT&T, Embarq, Time Warner Cable, etc.) when a city or town is considering creating its own system.

Also, according to Fiona Morgan, the bill would allow stimulus and Google projects. For those unfamiliar, Fiona's work is always worth reading in full.

The Senator pushing this legislation (Hoyle) has demonstrated cluelessness on multiple occasions (suggesting wireless will soon surpass fiber-optics, among others). He came through again on an exchange in committee (reported by IndyWeek):

Sen. William Purcell, a Democrat representing Anson, Richmond, Scotland, and Stanly counties had one question Sen. Hoyle: "What insurance do we have that the big companies supplying cable won't overlook the small less profitable markets and cities in N.C.?"

Hoyle casually replied: "The same reason small cities shouldn't get into the broadband business to begin with."

You can read that again if you want, but it is incoherent. Senator Hoyle clearly only sees Time Warner's position on this: they don't want to deal with upstart cities that think they should have modern infrastructure.

Meanwhile, in the House, Representative Bill Faison has advanced a bill to allow Caswell County to build its own broadband network. Listening to Senator Hoyle, one would think everyone in North Carolina has access to great broadband. In discussing Faison's bill, Stop the Cap reveals Hoyle's ignorance:

For Caswell County residents, it means the potential to finally get quality broadband service after years of broken promises from incumbent providers. Comcast of Danville, Virginia provides limited service, mostly in parts of Yanceyville, the county seat. AT&T offers limited DSL service, but not to several areas of the county. Those unlucky enough to be bypassed still rely mostly on dial-up.

This is the exact same tactic we see around the country now. Buttressed by false maps provided by industry groups like Connected Nation, some politicians are regularly arguing that there is no reason to allow communities to build their own networks because the private sector is doing a great job.

Update: Apparently the bill was pulled from the Committee today. No word yet of what the next step is.

The Senate Finance Committee of the North Carolina Legislature will vote today on a bill to create more barriers for publicly owned networks, essentially preventing competition for communities throughout the state - a great boon to Time Warner and AT&T who are pushing the bill. The meeting is in Room 544 LOB and the vote will occur sometime after 1:00.

Stop the Cap! has a good list of people you can call about this bill as well as a discussion why it is poor policy.

Progressive States Action sent out an alert about the legislation with the following information that they have graciously allowed me to repost here:

Analysis of SB 1209: “No Nonvoted Local Debt for Competing System”

SB 1209, dubbed the "No Competing System" bill by broadband advocates, places North Carolina at a disadvantage compared to other states and global competitors by limiting municipalities’ ability to ensure that all North Carolinians have access to affordable, top-quality, and high-speed broadband. Universal access to high-speed broadband networks, combined with programs aimed at increasing broadband adoption, represents one of the best ways to reinvigorate a struggling economy. Broadband networks also provide state and local governments with a means to implement cost saving mechanisms, provide better access to needed services and stimulate job and business growth.

North Carolina communities have lost their tobacco, furniture and textile jobs to competition overseas. Currently, the unemployment rate in North Carolina is approximately 11.1%, representing the tenth highest unemployment rate in the nation. In some underserved areas without adequate access to broadband, the unemployment rates are even higher, reaching close to 17%. At a time when North Carolina needs more than ever to invest in 21st Century infrastructure such as broadband to build jobs for the future, SB 1209 impedes local governments from taking effective action. North Carolina’s largest cable provider raised rates 5-50% each year in 2007 and 2008 in all communities except those where municipalities were providing competitive cable service. By allowing municipalities to build their own network and allow independent service providers to compete fairly, a true market for broadband services can be reached.

SB 1209 is an industry-sponsored bill that will have the effect of prohibiting new municipal broadband deployments in the state, shutting down current municipal data networks, and preventing competition to the State's current incumbent providers. North Carolina law has long permitted local governments to operate public enterprises (such as gas and electric utilities), which raises the question why communications projects should be treated differently from other public enterprises that are essential for a sound economy.

The Truth About SB 1209

Myth: This bill only seeks public approval of municipal broadband before burdening the taxpayer.

• Fact: Actually, SB 1209 would place a new burden of financing municipal broadband deployment on taxpayers. Current municipal broadband systems in North Carolina are financed using Certificates of Participation (COPS) financing, where the debt is collaterized by the infrastructure, not by "the full faith and credit" of the local community (general obligation bonds). SB 1209 would shift all borrowing for municipal broadband financing to general obligation bonds, and would require that approval for financing any construction, repair or upgrade of a municipal broadband system to first go to a public referendum.
• Moreover, North Carolina municipalities are prevented by law from expending any funds or staff time advocating for local referendum.

Myth: Municipal broadband networks fail.

• Fact: Local broadband systems are not failing. In fact, North Carolina has built successful municipal networks in Wilson, North Carolina's Greenlight, and Salisbury's soon to be activated Fibrant FTTP project. These municipal networks provide the 100 Mbps service envisioned by the FCC's National Broadband Plan, making North Carolina a national leader in advanced broadband networks.
• Fact: Hundreds of local governments across the country have built successful telecommunications networks.

Myth: Local governments would not be held publicly accountable on public broadband projects without SB 1209.

• Fact: Local governments providing an enterprise service to its community are subject to numerous state and local laws requiring public accountability and scrutiny of infrastructure projects. The General Assembly has already established statutory provisions for Public Enterprises (NCGS Chapter 160A, Article 16); conservation finance provisions in the Budget and Fiscal Control Act (NCGS Chapter, 159 Article 3); and oversight by the Local Government Commission (NCGS Chapter, Article 2).
• Fact: For communities seeking to fund such networks with funds provided by the American Recovery and Reinvestment Act, that Act carries accountability requirements.

Myth: SB 1209 will not affect current municipal broadband operations in North Carolina.

• Fact: SB 1209 will likely shut down current municipal broadband operations in North Carolina, including regional public safety networks. SB 1209 limits financing for the construction, repair, or upgrading of all "external communications systems" (non- governmental communications systems) to general obligation bonds. Current municipal broadband operators who would need to finance new repairs or upgrades to their system would be shut down by having to wait for the results of a referendum to receive approval to borrow the funds to maintain their infrastructures, a pre-requisite for general obligation bond financing. Under Homeland Security law, North Carolina's regional public safety networks are required to connect with critical private sector establishments (e.g., energy companies, hospitals), making them "external communications systems" under SB 1209. This would limit the financing of their construction, repair or maintenance to general obligation bonds. Under SB 1209, public safety networks would lose current COPS financing and would shut down while waiting for a public referendum prior to repairing, modifying, or upgrading their networks. Public safety networks would be prohibited from financing their operations with Homeland Security or Department of Agriculture grants.

Myth: SB 1209 will only affect municipal broadband systems

• Fact: SB 1209's effects go well beyond municipal broadband systems that compete with incumbent operators. For example, it will affect municipal electric utilities and severely constrain their ability to upgrade energy equipment or deploy smart grid technologies. This is because section the list of entities that are considered to be "unit of local government" (in 160A-20(h)) does not exclude electric utilities, implying that an electric utility could not borrow funds for SCADA or smart grid systems without a full public referendum.

Myth: SB 1209 will not prevent North Carolina municipalities from receiving ARRA Broadband Grant funds.

• Fact: SB 1209 would require North Carolina communities who are awarded federal ARRA broadband grants to decline those funds because the bill limits all financing for construction, operation, repair and maintenance of municipal broadband systems from general obligation bonds.