Fifth Round of Muni-Broadband Battle Starts in North Carolina; Tougher Fights Expected with GOP Majority
A fight over municipal broadband erupted for the fifth time in four years in the North Carolina Legislature. The “Level Playing Field” legislation, proposed by Rep. Marilyn Avila (R), seeking to put a ban on community fiber network efforts, violates the federal law, and could put state economic stimulus projects in jeopardy, said officials representing municipalities, in interviews. With a GOP-dominated General Assembly, fighting this year’s legislation could be tougher than ever, some said.
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The legislation has been the broadest anti-community network proposal so far, said Jay Ovittore, legislative representative with Southeast Association of Telecom Officers and Advisors (SEATOA). The bill applies to any communications service provided by a city to any sector of the public for a “fee,” prohibiting the provision of many communications services by municipalities, he said. The bill’s definition of communications service is broad, including wireline, wireless and services provided via lines or facilities leased from third-party private providers, he said. And the bill ignores provisions of federal law that limit the authority of states to regulate rates for communications services, he said. The bill also proposes a ban on promotion of community-owned broadband networks on Public, Education, and Government (PEG) access channels, another violation of federal law, he said. SEATOA is bringing the issue to the FCC, Ovittore said.
The legislation would impose new restrictions on financing options, denying cities’ access to standard financing tools for the purchase of assets relating to a city-provided communications network, said consultant on municipal broadband issues Craig Settles. The restrictions also apply to financing improvements or securing more favorable financial terms through refinancing, he said. If enacted, the financing restrictions would put the state’s stimulus project in danger, he said. The legislation would also risk operation of regional public safety networks by barring municipalities from using federal funds and 911 fees for public safety, Ovittore said. The bill also would require payment of a special tax equal to the amount of local property taxes and/or fees normally exempted for local government enterprises, he said.
Over the last four years, some of North Carolina’s major broadband providers have “advanced a variety of measures that were supposedly necessary to ensure fair competition and a level playing field in the state,” said attorney Jim Baller, who has represented municipalities. These measures would have worked in different ways, but they all had a common purpose -- “to thwart communities from taking matters into their own hands and developing far more robust broadband networks than the carriers were willing or able to provide,” he said. This year, with Republicans now in control of the North Carolina legislature, the carriers have resurrected the worst of the measures and are now trying to ram them through as quickly as possible, “hoping to deprive the new legislators of a meaningful opportunity to hear and think about the flaws and counterproductive effects of these measures,” he said. Telecom is normally a bipartisan issue at states but a GOP majority state legislature could be a concern, Settles said.
The North Carolina Cable Telecom Association claimed the bill prevents local governments that elect to provide commercial television, telephone, and Internet services from engaging in unfair and anticompetitive conduct. The bill stops cities from unfairly subsidizing their commercial video, telephone, and Internet activities with tax dollars, utility revenue or other “discriminatory, anti-competitive regulatory measures,” the group said in a statement. The bill also protects taxpayers by requiring that cities get voter approval before incurring debt for the purpose of competing against private industry, it said.
If local governments want to get into the broadband business, “we welcome the competition,” a spokeswoman with Time Warner Cable North Carolina said. The legislation does nothing but to establish a level playing field, she said. Everyone would obey the same rules and government shouldn’t have privileges when competing with the private industry, she said.
Meanwhile, Democrat Rep. Kelly Alexander proposed a pro-muni bill. The bill was passed on first reading. The bill would provide that counties have the same authority as cities to engage in public enterprises related to cable TV systems, according to the bill’s text.