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South Carolina Legislature Puts AT&T Monopoly Above Own Infrastructure Needs

Last week, South Carolina's General Assembly passed H3508, the ALEC and AT&T bill we previously warned you about. AT&T, ALEC, and cable companies pushed this bill to limit broadband competition and revoke local authority to decide if public investments in broadband infrastructure are wise.

H3508 is one of the worst pieces of legislation we have seen. States usually incorporate language that "grandfathers in" existing projects as a way to avoid legal challenge and federal scrutiny of their anti-competition legislation. In South Carolina, however, crafty drafting puts one county BTOP project in the cross hairs while permitting two other projects to continue.

Below is a roundup of media coverage of the bill. We will soon release our analysis of the supposed "exemptions" to this bill but in the meantime, this coverage explains several of the problems with South Carolina's latest Monopoly Protection Act.

Ars Technica's Cyrus Farivar contacted Jim Baller, a preeminent telecom attorney and expert in broadband issues:

"States have different ways to achieve the same end—discourage, delay, or derail public broadband initiatives," wrote Jim Baller, a telecom lawyer based in Washington, DC, in an e-mail to Ars on Thursday. He noted that similar bills were introduced in Minnesota and Georgia this year, the former of which has led to a "study bill," while the latter did not make it out of committee.

"In some ways, the South Carolina bill is worst of all because it does not grandfather existing projects and would retroactively undermine federal stimulus grants that Orangeburg and Oconee Counties have received,"  he added.

Ars Technica Logo

Farivar also looked into the chief author and found:

Public records show that in 2011, AT&T, itself an ALEC member, contributed $1,000 to the coffers of Michael Gambrell, South Carolina assembly member and lead author on the bill. Other sponsors of the bill, including Bill Sandifer, Bobby Harrell, and many of its supporters, also received donations from AT&T as well.

Gerry Smith, of the Huffington Post, also noted a correlation between H3508 and political support:

In South Carolina, AT&T, CenturyLink, and Time Warner contributed more than $146,000 to state lawmakers since last January who supported the bill, according to an analysis by The New Republic.

Last year, North Carolina also passed a law restricting local governments from building publicly owned broadband networks. Lawmakers who voted in favor of the bill received on average 76 percent more in donations from major cable and telecom companies than those who voted against it, according to the National Institute on Money in State Politics.

Smith sought out the chief author, who offered the number one AT&T/ALEC talking point:

"What this law does is level the playing field,” Mike Gambrell, a state lawmaker who sponsored the legislation, said in an interview.

But critics say AT&T, the major telecom company in the state, does not serve broadband to many rural areas where local governments could provide their own networks. In addition, they say the law leaves rural communities with sluggish Internet speeds because it defines a "served" area as one that can access internet speeds of least 190 kilobits per second, which is slower than the FCC's definition of broadband.

We address "level playing field" arguments here.

Catharine Rice, President of the SouthEast Association of Telecommunications Officers and Adviors (SEATOA), contacted us with a practical application of the bill's "served" versus "unserved" application:

This bill limits their [municipal networks] service areas to surrounding rural areas, and effectively prohibits any other communities in SC (and there are many) from filling the broadband gap created by the large private carriers.

Unserved areas are defined by census blocks. So you'd have to cull together tens of thousands to make a network viable, and all of them would have to qualify as unserved. According to the bill, an unserved area is a census block where 90% of the homes in the census block don't have access to 768 Kbps service. So if 11% of the homes have 768Kbps (not enough speed to even download a Netflix video), that Census block is "served." 

Bad, bad, and more bad

Hartsville seal

While two current Broadband Technology Opportunities Program (BTOP) projects, Orangeburg and the City of Hartsville, appear to fall into H3508's exemption and will be able to proceed, Oconee County faces special problems with their project, F.O.C.U.S (Fiber Optics Creating Unified Solutions). Jim Baller's legal analysis for Oconee County concludes that :

By requiring the County to show that “the middle-mile services it offers are used to actually provide communications services to end users in unserved areas,” ... would ... render the exemption useless to the County. That is so because it is impossible for the County to comply with H.3508’s prohibitions on an end-user-by-end-user basis. As a result, if even a single Community Anchor Institution served even a single end user outside an unserved area, the County would be subject to the full panoply of H.3508’s onerous prohibitions.

This type of project, focused on providing upgraded connections for anchor institutions, and not focusing on last mile connectivity, is one type of project encouraged by the National Broadband Plan.

The Plan also calls for Congress to make it clear that all communities have the authority to build their own networks. Since H3508 doesn't adequately grandfather in existing projects, which most states do, the bill is open to legal challenge. It is contrary to the letter and the spirit of the National Broadband Plan.

Baller also notes a potential Constitutionality issue. The United States legal system takes great pains to limit and avoid retroactive laws. This bill prevents Oconee County from honoring commitments and contracts with the federal government and with the private sector. With no insurance against retroactivity in the law, the economic drivers in our country are loathe to commit and shy to invest.

This bill is bad for communities, bad for the private sector, bad for people who want a real choice in broadband providers. Google, Alcatel-Lucent, NATOA, SEATOA, and other groups in the telecom industry advocated against H3508. South Carolina is near the bottom of adoption rate in the U.S. and has a higher than national average of residents living below the poverty line. With laws like this, those statistics are unlikely to change.

State by State Campaign to Gut Consumer Telecom Protections

In most states, telephone companies are required to serve everyone and when there are problems with the service, the state can mandate that the company fix them. But AT&T and ALEC are leading the charge to let these massive companies decide for themselves who should have access to a telephone, taking state regulators out of the loop.

These big companies use several arguments we are well familiar with - that mobile wireless is already available (in many rural areas, it actually is not available) and there is plenty of competition. If only that were the case.

I was thrilled to see David Cay Johnston cover this in a column on Reuters:

AT&T and Verizon, the dominant telephone companies, want to end their 99-year-old universal service obligation known as "provider of last resort." They say universal landline service is a costly and unfair anachronism that is no longer justified because of a competitive market for voice services.

The new rules AT&T and Verizon drafted would enhance profits by letting them serve only the customers they want. Their focus, and that of smaller phone companies that have the same universal service obligation, is on well-populated areas where people can afford profitable packages that combine telephone, Internet and cable television.

What happens when the states hand over authority to these companies? David has an answer:

AT&T and Verizon also want to end state authority to resolve customer complaints, saying the market will punish bad behavior. Tell that to Stefanie Brand.

Brand is New Jersey's ratepayer advocate whose experience trying to get another kind of service - FiOS - demonstrates what happens when market forces are left to punish behavior, she said. Residents of her apartment building wanted to get wired for the fiber optic service (FiOS) in 2008. Residents said, "We want to see your plans before you start drilling holes, and Verizon said, 'We will drill where we want or else, so we're walking,' and they did," Brand told me.

Verizon confirmed that because of the disagreement Brand's building is not wired. And there's nothing Brand can do about it. Verizon reminded me the state Board of Public Utilities no longer has authority to resolve complaints over FiOS.

Better broadband is not just about technology. FiOS is an advanced fiber-optic network that crushes any cable or DSL network but Verizon still is not accountable to the community. This is exactly why communities are smarter to find ways to build networks that are democratically accountable rather than hoping a private company will make the necessary investment.

Progressive States Network

The Progessive States Network has been tracking these bills and recently alerted its readers to the threat from these bills:

A rash of backward thinking appears to be taking hold in a number of states that might be better spending their time considering how to create modern technology jobs and skills at home. Some states are considering how best to deploy modern high-speed Internet to ensure their local economies and residents are ready to compete in the global marketplace. But in other states, legislators are debating whether telephone service should be offered at all - leaving many observers wondering whether they would prefer to live in the 19th century, before Alexander Graham Bell's invention became ubiquitous.

Fortunately, consumers and advocates in many states can still stop this horrible legislation - as Kentucky did (with some assistance from the Rural Broadband Policy Group).

Under the bill, AT&T, Windstream and Cincinnati Bell would no longer have to provide basic landline services to all homes and businesses if a competitor were available to provide them. If there were no competitor, a company could provide cellphone service instead.

Opponents, including Tom FitzGerald, executive director of the Kentucky Resources Council, have argued that such a change would be a burden on the poor and the elderly who either can’t afford cellphones or are simply uncomfortable with them.

This came up recently in Mississippi:

A bill before the Legislature would wipe out the obligations of AT&T and some other phone companies to serve expensive customers and would limit the Public Service Commission's remaining authority over those firms.

Public Service Commissioners Brandon Presley, a Democrat, and Leonard Bentz, a Republican, are fighting the move, saying customers need regulators' intervention to get their problems fixed. Other phone companies are opposed to the bill, saying it could cut the connection fees collected by small rural telephone companies.

Minnesota has been considering a similar bill that has bipartisan support. Unfortunately, few in the state have realized just how bad this would be for rural and older residents.

Access Humboldt Logo

California is considering a bill RIGHT NOW.

"IP enabled communications services include not only broadband internet and online media services, but also the basic voice telephony services that we all use every day," said Sean McLaughlin, executive director of Access Humboldt and a Knight Media Policy Fellow with New America Foundation. "We are concerned that the Public Utilities Commission, along with Counties, Cities, Community Services, School and other special Districts will be hamstrung by SB 1161, prevented from protecting consumers, and hindered from developing community broadband projects that meet our local needs and interests."

Access Humboldt has echoed concerns of The Utility Reform Network (TURN), Mendocino County Board of Supervisors, Rural Broadband Policy Group, and the California Broadband Policy Network, in opposition to SB 1161. TURN is actively organizing statewide consumer opposition to the bill - joined by national organizations such as Free Press and the Rural Broadband Policy Group.

The LA Times has just noted the incredible power of AT&T's lobbyists in Sacramento.

At the 2010 event, AT&T's president and the state Assembly speaker toured Pebble Beach together in a golf cart, shaking hands with every lawmaker, lobbyist and other VIP in attendance.

The Speaker's Cup is the centerpiece of a corporate lobbying strategy so comprehensive and successful that it has rewritten the special-interest playbook in Sacramento. When it comes to state government, AT&T spends more money, in more places, than any other company.

Despite AT&T's massive power in California, there is still time to stop this backward-moving legislation.

Big Bucks: Why North Carolina Outlawed Community Networks

Less than a year after North Carolina became the 19th state to create barriers to community networks, effectively outlawing them, the non-partisan organization Follow the Money has crunched the numbers and found that private telecommunications interests donated quite heavily to lawmakers that pushed their bill through the Legislature:

According to a report by the National Institute on Money in State Politics, Dialing Up the Dollars: Telecommunication Interests Donated Heavily to NC Lawmakers, Republican lawmakers and those who held key leadership positions, sponsored the bill, and/or who voted in favor of the bill received considerably more campaign contributions from the telecommunication donors than did their colleagues. For example, lawmakers who voted in favor of HB 129 received on average 76 percent more than the average received by those who voted against the bill. The four primary sponsors of the bill received an average of $9,438 each, more than double the $3,658 given on average to lawmakers who did not sponsor the bill.

Recall that Time Warner Cable pushed this bill for years with some help from AT&T, CenturyLink, and others that stood to benefit by limiting broadband competition. But the Legislature wisely refused to enact it... until 2011.

Now we have a better sense of what may have shifted the balance. Consider this:

Thom Tillis

Thom Tillis, who became speaker of the house in 2011, received $37,000 in 2010–2011 (despite running unopposed in 2010), which is more than any other lawmaker and significantly more than the $4,250 he received 2006–2008 combined. AT&T, Time Warner Cable, and Verizon each gave Tillis $1,000 in early-mid January, just before he was sworn in as speaker on January 26. Tillis voted for the bill, and was in a key position to ensure it moved along the legislative pipeline.

Running unopposed for office, he collected more money from the cable and phone companies than any other Representative and almost 10 times as much as in the previous two cycle combined. As Speaker, he set the agenda and decided priorities. At a time when communities need as many broadband options as possible, he pushed a bill to limit competition.

It does not prove corruption, but in the immortal lyrics of C&C Music Factory, it "makes you go, hmmmm."

Senator Apodaca, one of the lead supporters of the bill in the Senate, received $21,000 from telecom political action committiees. Only one other Senator came close to that total -- Senate President Pro Tempore Phil Berger. Most Senators collected well under $10,000.

How did others in leadership positions do?

Senate President Pro Tempore Phil Berger received $19,500, also a bump from the $13,500 he received in 2008 and the $15,250 in 2006. He voted for the bill.

Senate Majority Leader Harry Brown received $9,000, significantly more than the $2,750 he received in 2006 and 2008 combined. Brown voted in favor of the bill.

Democratic Leader Martin Nesbitt, who voted for the bill, received $8,250 from telecommunication donors; Nesbitt had received no contributions from telecommunication donors in earlier elections.

Oppose HB 129

None of this data suggests quid pro quo corruption. We are not saying that these people only supported this bill because they got thousands upon thousands of dollars from those who wanted it passed.

Nonetheless, the Legislature decided to prioritize a bill to revoke local decision-making authority from communities to make them more dependent on a small number of cable and DSL companies that just happened to give tens of thousands of dollars to key lawmakers.

Hmmmmm.

No use crying about it now. The question is where we go from here. Time to hold their feet to the fire -- after the bill passed, CenturyLink claimed "Thanks to the passage of House Bill 129, CenturyLink has gained added confidence to invest in North Carolina and grow our business in the state."

Can anyone attest to CenturyLink increasing investment in North Carolina? Almost certainly not. AT&T has admitted it won't continue the U-Verse rollout it once promised state legislators.

Let's collect the stories of people denied fast, affordable, and reliable access to the Internet due to laws limiting local authority. Always feel free to share such stories with us.

Georgia Bill to Kill Community Broadband Reportedly Shelved

We are hearing that SB 313 in Georgia, AT&T's bill to overrule local authority, will be turned into a study bill. Despite the strong support of the Senate Majority Leader, the bill lost support after we and others exposed the frank admission of AT&T's CEO that they had no plans to expand broadband in rural areas.

Given the strength of AT&T's lobbying and the support of the Senate Majority Leader, this is a tremendous victory. Congratulations to the communities in Georgia that successfully organized and defended their authority to decide locally if a network is a wise choice for them.

We do not consider these issues resolved until the ink is dried, but it does look like AT&T lost this round -- which means thousands of local businesses and millions of people won. They can still hope for next-generation networks and a real choice in providers.

Note: the South Carolina bill remains in play and will be discussed on Wednesday by a Senate Judiciary Subcommittee.

We have been collecting some of the news coverage of this broadband debate in Georgia, but have neglected posting until now. Here is a run-down of some of the coverage.

In the beginning of February, the AP covered an SB 313 hearing featuring testimony from rural communities:

Leaders from cities including Elberton, Hogansville, Thomasville, Monroe and Toccoa lined up to tell senators that broadband is necessary infrastructure for the 21st century economic development they hope to attract — and that they are doing what they must to keep their communities competitive.

"We cannot wait for the private sector to ride to our rescue," said Tim Martin, executive director of the Toccoa-Stephens County Development Authority.

Thomasville Mayor Max Beverly said the city's broadband network supports major employers there.

"If we have to cut them off, there's no telling what that's going to do to our local economy," he warned.

The Augusta Chronicle devoted a lot of words to both sides and made the important disclosure that telecom companies had just staffed up on lobbyists:

The telecom companies have beefed up their lobbying forces this legislative session. Many lawmakers have received campaign contributions from them, including Rogers, who rejects any suggestion that they might have motivated him.

Stop the Cap!

Stop the Cap! has continued its in-depth coverage of these important issues. In January, Phillip revealed the sudden increase in telco/cableco contributions to the bill's pusher, most notably from AT&T. He also set the record straight on many of the supposed failures of muni networks in Georgia. For example:

As Multichannel News reported in 2002, “the Atlanta suburb of Acworth, Ga., isn’t selling because business is bad. Rather, officials said they’ve received so many requests for service from outside the city limits that they’ve decided to sell the operation to an independent company that may expand beyond Acworth’s borders.”

That is where the trouble started. The city contracted with United Telesystems Inc. of Savannah, Ga., a private company, first to lease and then eventually buy the cable system, maintaining and expanding it along the way. But in 2003, United Telesystems defaulted on its lease-sale agreement, forcing the city to foreclose on the system and ultimately sell it to a second company.

Acworth’s “failure” wasn’t actually the city’s, it was the private company that defaulted on its contract.

On February 1, Phillip discussed the Columbia County Broadband Network:

If Rogers’ bill passes, the county may have to go back to begging for access from the companies that have repeatedly said it wasn’t worth the investment or their time.

County officials have been more generous, offering all along to share access to the fiber network with the very providers who are seeking to destroy it. So far, that hasn’t changed any minds.

“If we don’t own it, that means we don’t want you to have it” is standard operating procedure for the state’s phone and cable operators, even in the service areas they routinely ignore, even if it means flushing millions of dollars already spent on new networks down the drain.

On February 7, Stop the Cap! covered more of the testimony from towns against the bill:

seal-newnan-ga.png

“We started our cable system not on a whim but on a demand from our citizens to provide a higher level of service for cable TV and Internet,” said Newnan Mayor Keith Brady. “We got into the cable business originally to provide fiber optics and broadband because Charter Communications would simply not invest in our community.”

...

Brady says their community-owned system not only provides broadband where Charter would not, the cable company also was forced to reduce their rates for consumers in nearby communities, saving taxpayers across the entire city and county millions.

In Elberton, the lack of broadband was so pervasive the 4,700 local residents demanded the city provide the service themselves. Commercial providers had stonewalled the county seat of Elbert County for years until the city broke ground on a broadband project in 2001.

...

Don Cope, president and CEO of Dalton Utilities, demonstrated that municipal broadband systems are not the financial risk large telecommunications companies always claim they represent. In fact, Dalton’s system has never received a penny of tax revenue and its accounting is open to public scrutiny to prove it.

Cope noted SB 313 imposes restrictions on community providers, but completely exempts those owned by the companies pushing the bill.

OptiLink Dalton

“I would ask that you look at the private providers in the state,” Cope said. “Look at their reports, and you would see how many dollars that are provided to them from the federal government. We are talking about in the billions of dollars. All the [private telecommunications entities] that I know about have some form of government support.”

CivSource also offered an opinion about the bill:

“The private sector is handling this exceptionally well,” Rogers said in an Associated Press account. “What they don’t need is for a governmental entity to come in and compete with them where these types of services already exist. We’re not outlawing a local government entity from doing this, but if they’re going to compete, they can play by the same rules and ask the voters if it’s okay before they go out and spend all these dollars.”

Rogers claims are dubious at best. According to the National Broadband Map, Georgia ranks 20th in the nation for broadband access. According to the forward of a report by Rich Calhoun, Program Director of the Georgia Technology Initiative, “As I traveled through the state to talk with leaders in municipalities, counties and community anchor institutions, I found that many places throughout Georgia indicated that they did not have access to affordable or sufficient broadband services. Telecommunications firms who have made significant investments in Georgia indicated that in some areas of the state the return on investment would not qualify for further investment at the present time.”

Colorado Broadband Bill Seeks Access Answers

For tourists and residents alike, much of Colorado is one amazing vista after the next. I nearly circumnavigated it on a recent trip and was re-blown away at how incrediblely beautiful it is (recommendation: stop by Great Sand Dunes National Park).

But those incredible mountains are a two-way street. The same ridges that make it great ski country make it awful wireless country. All those mountains make it hard to provide ubiquitous wireless access - leave the interstate or urban areas behind and you are lucky to see the old "1x" show up on your smartphone.

When I go on vacation, I like to remain connected to find weather reports, directions to my next destination, local cafes, etc. And like just about everyone, I really like to be connected where I live. The private telecom sector gets a failing grade for serving both residents and vacationers.

Don't forget that Colorado is one of the nineteen states that have barriers to publicly owned networks despite the refusal of cable and DSL companies to build next-generation networks. We've frequently written about Longmont's efforts to improve its broadband access despite that legislation.

Senate Bill 12-129 aims to identify areas of the state lacking sufficient acess to the Internet and seeking solutions. A local newspaper reported on testimony from local businesses suffering from the lack of investment:

Wendell Pryor, director of the Chaffee County Economic Development Corp., testified to the impacts of limited bandwidth on businesses in that area.

Princeton Hot Springs Resort, an economic driver that generates the second-highest amount of sales tax among businesses in Chaffee County, is unable to process credit cards electronically when bandwidth traffic is high.

"The broadband is simply not sufficient to allow them to do that, so it's done manually," Pryor said.

He said Monarch Ski Resort, which anchors the winter tourist season in Chaffee County, asks the staff to shut off their computers in order to have adequate broadband availability for skiers and customers.

Meanwhile, it appears that CenturyLink and other providers are trying to water down the bill. As we have seen elsewhere, the big DSL companies want to define broadband at ludicrously low speeds to hide the fact that they are crippling local businesses by refusing to provide modern services.

Government Technology offers a deeper explanation of the bill, along with my thought that this bill is better than what most states are doing because most states are either doing nothing or narrowing the options for communities by creating barriers to community networks.

An original goal of the bill was to identify both those areas lacking in broadband access as defined by the FCC and those areas lacking in competitive access to such broadband (probably the vast majority of the state). But the competition aspect was dropped in committee - probably a friendly gesture to CenturyLink and others who pretend broadband has a lot of competition but hasten to stop anyone from actually examining it.

Colorado Mountains, courtesy of Hogs555

If the bill passes in current form, it would also develop an inventory of state-owned broadband assets -- something every state should probably develop.

This bill does not address public ownership or community networks but the discussions around it are relevant. Even though big corporations like CenturyLink try to cast publicly owned networks as a public v. private affair, the article reminds us that this issue is really everyone v. a few very big cable and DSL companies:

Colorado Counties Inc. (CCI), which represents county interests in the state, supports SB 12-129. Andy Karsian, the organization’s legislative coordinator, said various rural counties have had opportunities to attract employers, but they couldn’t seal the deal -- primarily due to a lack of high-speed connectivity those potential businesses require.

If CenturyLink were meeting local needs and allowing local businesses to thrive, communities would not be examining their capacity to build their own networks.

My greatest fear with the Colorado bill is that we will get another Advisory Panel or Task Force or some official body that will get nothing done because representatives of CenturyLink or Comcast or other big companies that benefit from the status quo will deadlock it. As I told GovTech,

“Unfortunately these advisory panels often end up stacked with representatives from DSL and cable companies that prefer the status quo until they can devise a scheme for the public to funnel more subsidies their way,” Mitchell said. “I hope that will not be the case in Colorado.”

Photo of Colorado's incredible mountains used under creative commons license, courtesy of Hogs555.

AT&T Trying to Redefine Broadband in Georgia, South Carolina

The absurdity of AT&T's push to define broadband as 200kbps is so great, it boggles the imagination. We developed the graphic below to highlight just how slow 200kbps connections are.

200kbps is not good enough for communities

Feel free to spread it around. Higher quality pdf below.

South Carolina Cable Association Also Wants to Limit Competition

Many complain about gridlock in Washington, DC, but I sometimes subscribe to the cynical counter-reaction that gridlock is great. It is when the Democrats and Republicans agree that Americans should beware.

Though this may or may not be true about politics, it is certainly true when applied to two of the most hated industries in America: cable television companies and DSL companies like AT&T. When they come to agreement, you can bet that prices are going up for the rest of us.

In our coverage of AT&T's bid to limit broadband competition in South Carolina by revoking local authority to build networks for economic development, we have thus far ignored the position of the cable companies.

We took a tour through the newsletters of the South Carolina Cable Television Association over the course of 2011, which is when AT&T introduced its H.3508 bill.

Unsurprisingly, the cable companies are thrilled at the prospect of limiting competition in communities by cutting off the ability of a community to build a network when the private sector is failing to meet their needs. From the 1st Quarter newsletter [pdf]:

The SCCTA has been actively following the AT&T-backed legislation that would amend the Government-Owned Telecommunications Service Providers Act. House Bill 3508 would impose the same requirements on government-owned broadband operations that are currently imposed on telecommunications operations.

Of course, H.3508 goes far beyond applying the "same requirements." It enacts a host of requirements that only apply to public providers, which are already disadvantaged by being much smaller than companies like Time Warner Cable and AT&T. We have long ago debunked the myth of public sector advantages over the private sector.

The second quarter newsletter [pdf] identifies this bill as the highest priority of the cable association:

H3508, the AT&T backed legislation, has been our dominate piece of legislation in 2011.

Even after the bill was shelved for the year, it remained a high priority for the cable lobbyists (who, of course, need something to do while shmoozing at the capitol day in and day out) according to the 3rd quarter newsletter [pdf]:

The SC Cable Television Association will continue to work to move H3508...

And finally, in the 4th quarter [pdf], we get a sense that all that lobbying has been successful:

When session ended last year, the bill was in Senate Judiciary subcommittee (Sen. Luke Rankin – Chair, Sen. Brad Hutto & Sen. Paul Campbell). Our team of lobbyists have been working very hard meeting with members of the full Senate Judiciary Committee to move this important industry bill forward. As of writing this column, we expect new amendments dealing with Clemson’s Light Rail initiative and Orangeburg County. Our team has been assured the two counties who received the broadband stimulus funds, administered through the U.S. Department of Agriculture’s Rural Utilities Service, will NOT provide service in areas that is capable of receiving other broadband services. This bill is to be heard before full Senate Judiciary and will then head to the Senate floor.

Democracy in action! We know that the private sector will not create competition by itself. In fact, the future will be less competitive as cable systems generally provide faster connections than DSL and wireless, which will compete for those who don't mind slowly surfing.

South Carolina's businesses that want to thrive in the digital economy might consider looking at the nearby job-creator-friendly broadband networks in Brisol, Virginia; Danville, Virginia; Chattanooga, Tennessee; Salisbury, North Carolina; and Wilson, North Carolina. Those communities have the fastest connections in the US at the most affordable prices.

Washington Legislation to Spur Rural Broadband Killed in Committee

Lobbyists for major cable and DSL companies (Comcast, Frontier, and others) already earned their pay in Washington state this year by killing a bill that would have allowed some public utility districts to offer retail services on broadband networks in rural areas that were unserved.

Unfortunately, the powerful incumbent cable and DSL companies have been able to kill bills like this in committee year after year even as they refuse to build the necessary networks throughout the state. Comcast is not about to start offering broadband in these low-density areas, but it also does not want to allow public utilities to embarrass them by offering faster connections at lower prices than Comcast offers in Seattle (where it faces no real competition).

Public Utility Districts can currently only offer wholesale services -- meaning that they can only offer services by using private service providers in an open access arrangements. We are strong supporters of this approach where it works. However, in high-cost rural areas, the "middle man" kills the economics. There is not enough revenue to pay for the network.

Some of the public utility districts want the authority to offer retail services in order to bring high-speed connections to these rural areas and encourage economic development. Big companies like Frontier and CenturyLink serve some of the people in some of these areas -- often with significant state and federal subsidies. We could phase out such subsidies by encouraging approaches that are not as massively inefficient as Frontier and CenturyLink -- two of the worst DSL providers in the nation. Unfortunately, what they lack in capacity to invest in modern broadband, they make up for in lobbying prowess.

An article in the Omak-Okanogan County Chronicle offers some more background:

Erik Poulsen, government relations director at Washington Public Utility District Association, said PUDs have used the wholesale authority they were granted in 2000, building 4,500 miles of fiber-optic cable, investing $300 million in infrastructure and joining with 150 retail providers. He said such wholesaling isn’t possible in certain parts of the state.

“The idea was that PUDs would build critical infrastructure and private companies would come in and provide direct service,” Poulsen said. “This wholesale arrangement serves many of our PUDs well. Others believe they need expanded authority to overcome some of the barriers that still exist.”

Because the bill was not voted out of Committee by Jan 31, it is effectively dead. Way to go Comcast and other big companies, you have yet again delayed the expansion of broadband in rural areas to benefit your shareholders.

In fairness to those lobbying against expanding broadband to rural communities, it was not solely the big incumbents. Some of the smaller ISPs that operate on the existing PUD networks were also opposed to allowing greater local authority in determining the best business model for building networks because they feared for their own livelihood.

Until rural communities actually begin paying attention to these state-by-state broadband battles, the narrow interests of a few will win every battle because they show up and they make campaign contributions. We could at least start showing up...

Pay Attention to the Man Behind the Curtain: Listen to AT&T's CEO, not Lobbyists

AT&T lobbyists in Georgia and South Carolina are arguing that local governments should not be allowed to build the networks that communities need, suggesting that the private sector is primed to make the necessary connections. But AT&T's CEO had a different message for investors a few weeks ago, in an earnings call on January 26:

The other is rural access lines; we have been apprehensive on moving, doing anything on rural access lines because the issue here is, do you have a broadband product for rural America?

We’ve all been trying to find a broadband solution that was economically viable to get out to rural America, and we’re not finding one to be quite candid. The best opportunity we have is LTE.

Whoa! LTE is what you more commonly hear called 4G in mobile phone commercials. The best they can do is eventually build a wireless network that allows a user to transfer just 2GB/month. That is fine for hand-held devices but it does nothing to encourage economic development or allow residents to take advantage of remote education opportunities.

But even the CEO admits they are not bullish on LTE as the solution:

[W]e’re looking at rural America and asking, what’s the broadband solution? We don’t have one right now.

Some may be wondering about "U-Verse" -- AT&T's super DSL that competes with cable in the wealthy neighborhoods of bigger cities. U-Verse cannot match the capacity or quality of modern cable networks but is better than older DSL technologies. But U-Verse is not coming to a rural community near you.

For those who missed the fanfare last year, AT&T's U-Verse build is done. AT&T's lobbyists have probably forgotten to tell Georgia and South Carolina Legislators that the over 20 million AT&T customers without access to U-Verse are not going to get it. But CEO Stephenson made sure investors weren't worried about AT&T continuing to invest in its wireline infrastructure:

In wireline, our U-verse build is now largely complete, so we have in place an IP video and broadband platform that reaches 30 million customer locations, which gives us significant headroom now to drive penetration.

Translation: AT&T will now focus on upselling customers in markets with U-Verse. If it doesn't run through your neighborhood already, you aren't getting it.

The rest are stuck on dial-up or DSL that AT&T's CEO has previously called obsolete (correctly). While AT&T's CEO has been honest about its inability to solve real broadband deployment gaps, AT&T's lobbyists have tried to advance a bill with the ludicrously low broadband definition of 200kbps and even more absurdly, the even slower definition of 190kbps.

The business model of AT&T and other big cable and DSL companies simply does not work in much of rural America. The question is why any state would foreclose the possibility of communities being self-reliant when major companies like AT&T candidly admit they have no solution and the best they can do is deliver an obsolete product.

State legislators need to pay more attention to what AT&T's CEO says and less what AT&T's lobbyists say.

Fast, affordable, and reliable access to the Internet is essential for communities to thrive in the digital age. Not every community wants to build a community networks and most undoubtdly won't. But that is decision they should make locally. Pending legislation in Georgia and South Carolina would take this decision out of the hands of these communities by enacting a host of new regulations on public networks that do not apply to the private sector. As in North Carolina, these bills effectively revoke local decision-making authority by creating impossible hurdles for communities that are already disadvantaged in the modern economy.

Rural Wisconsin Residents Struggle to Connect to the Internet

A group of rural residents living east of Madison, Wisconsin, gathered near Portage of Columbia County to discuss their lack of affordable high speed access to the Internet. These are people for whom slow, overpriced DSL would be an improvement.

Lack of access to the Internet is a drain on rural economies -- their real estate market suffer and they are unable to telecommute, when they would benefit more from it than most who do have the option. They lack access to long-distance education opportunities in a time when the cost of gas makes driving to school prohibitively expensive.

Andy Lewis, who has been working with the Building Community Capacity through Broadband Project with U-W Extension, was on hand to discuss some of the lessons learned through their work, which is largely funded by a broadband stimulus award.

The incumbent providers encouraged residents without access to aggregate their demand and create petitions to demonstrate the available demand. Of course they did. And if CenturyLink decides it can get a sufficient return on its slow and unreliable DSL, they will build it out to some of those unserved areas. This is a "damned if you do, damned if you don't" scenario for rural residents. DSL was starting to be obsolete years ago.

The better solution is finding nearby cooperatives and munis that will extend next-generation networks that can provide fast, affordable, and reliable access to the Internet. Getting a DSL to a town will do very little to attract residents and nothing to attract businesses. It is a 20th century technology in a rapidly evolving 21st century world.

The Beaver Dam Daily Citizen covered the meeting, which eventually turned away from how to beg for broadband to how they can build it themselves:

But several attendees asked why the government can't play a role in making high-speed service available everywhere, in the same way that the government helped bring about rural electrification and telephone service.

This is a very good question. They may decide not to follow that path, but given the importance of access to the Internet, they should look at options for building a network that puts community needs first. North of Madison, Reedsburg has built an impressive FTTH network and we have been tracking progress of the Fiber-to-the-Farm effort in Minnesota's Sibley County.

Unfortunately, AT&T's incredible influence in the state capital has made it more difficult for communities to build the networks they need -- even in places like Columbia County where AT&T is not and will not connect rural residents. Such is the price of living under governments that make policy based on the interests of powerful special interests.

There was a time when the ideology of self-reliance was considered American and even conservative. But now the idea of self-reliance is largely abandoned as communities first seek to beg distant corporations (with a history of royally ripping them off) to connect them and only consider solving their own problems with local investments as a last-ditch effort, which could be too controversial.

Update: This meeting was hosted by the Public Service Commission as part of a larger effort to create a state broadband plan. Such processes are typically dominated by interests of incumbent providers -- a model that was emphatically rejected by the FDR Administration when developing its plan for electrification. Electrification was wildly successful; expanding broadband by begging incumbents has been a dismal failure.