Opposition is rising against a bill that would severely restrict cities from providing Internet and other communications services. The bill passed the House Public Utilities Committee last week.
House Bill 1587, "The Local Government Fair Competition Act," would create requirements and restrictions for any city or local government in North Carolina seeking to provide broadband Internet or other telecommunications service to its residents. The bill's backers are telecommunications and cable companies who say local governments have an unfair advantage because they are not required to pay taxes, and that the bill is necessary to level the playing field.
But a growing number of cities and consumer advocates say private industry is not required to meet the stringent requirements it wants imposed on local governments. Leaders in many rural communities say they have been unable to convince companies like Time Warner and AT&T to provide broadband Internet services because low density makes those services less lucrative, and that local governments deserve the opportunity to serve their own citizens.
Under the proposal, a city must: hold at least two public hearings and a special election before issuing bonds to pay for the service; refrain from using money from other parts of its budget to launch or subsidize the service; and calculate the cost of taxes and fees a city is not required to pay into the fee it charges citizens for the service.
Another controversial requirement—that the business must be profitable within four years—was rephrased in a new version presented last week to say "within a specified period of time after the communications service is first provided, such time to be consistent with commercial practices for similar projects." Legislative staff attorneys did not explain what that "specified period" would be, or how it would be determined.
Rep. Drew Saunders (D-Mecklenburg), the primary sponsor, is also chairman of the House Public Utilities Committee. He ceded control of the June 6 meeting to Vice Chairman Rep. Harold Brubaker (R-Randolph), also a sponsor. Saunders accepted $7,000 in industry campaign contributions last year; Brubaker, $5,900.
Brubaker did not allow public comment, though city officials had traveled from across the state to attend. Many were wearing stickers that said, "Don't shut the G.A.T.E. Greater Access to Technology for Everyone."
Wade Hargrove, a Raleigh attorney, was allowed to speak on behalf of the telecommunications industry. He talked about "the disaster of municipal communications networks" and lambasted critics of the bill who spoke at a previous meeting. "Our whole system of government, our whole economy, is premised upon the free enterprise system. Frankly, if you had closed your eyes at last week's meeting and did not know where you were, you might have thought you were in Moscow," Hargrove said. "It was as if only government could get this done."
Wilson Mayor Bruce Rose countered by framing the struggle as one between citizens and a powerful industry. "We all know who wrote this bill and who benefits from it," he said. He explained why his city launched its own fiber-optic broadband network last year. Internet service is an essential part of the infrastructure, like water, sewer and electricity, he said, and the city's customers include its biggest employers. Wilson has financed $18 million in debt to launch it.
He demonstrated how much faster download and upload speeds for this technology are compared to DSL and cable modem service. He also noted that cities are subject to public disclosure laws that allow private competitors to access their business plans and rate models.
"It has been interesting to watch this debate evolve," Rose said. "At first, the industry was suggesting that we didn't know what we were doing, that we could not possibly run a successful system, and that we would likely go bankrupt and be a burden on our citizens. Then, last week, in this room, I heard the industry that represents some of the largest corporations in our country say that they couldn't compete because we had an unfair advantage. This isn't just David versus Goliath; this is David versus Goliath and all of his cousins."
Rose was permitted to speak on behalf of the N.C. League of Municipalities, which opposes the bill along with groups such as the N.C. Justice Center and the N.C. Public Interest Research Group and several cities, including Durham, Chapel Hill, Cary, Greensboro.
There are still many questions about the bill's impact. According to legislative staff, it would not affect free Wi-Fi service, as it only applies to services provided for a fee. But it could affect public-private partnerships, or any service that "provides a financial benefit" to a local government.
Yet, questions such as these were not explored in the committee meeting, even after a request from Rep. Angela Bryant (D-Halifax, Nash). Committee members also rejected an amendment proposed by Rep. Pricey Harrison (D-Guilford) that would have exempted communities not currently served by a private company. Harrison's request to count the votes was denied. The bill passed on a voice vote.
But while its sponsors were eager to push the bill through, Rep. Paul Luebke, executive chairman of the House Finance Committee, said he does not anticipate it will be heard anytime soon.
When it is, Luebke expects the climate might be different. "This bill seems to have had a lot of support initially from proponents, but at this point, the cities seem to be organizing strongly against it," says Luebke, who accepted no contributions from the telecommunications industry last year. "So it may well be that there will be more of an even battle when the bill comes before House Finance."