When it comes to high-speed Internet, rural North Carolinians are in the Stone Age. And a bill that passed the Senate this week, S 1209, will keep them there.
After a lengthy debate, the controversial—and rewritten—broadband bill passed the Senate Monday night 41-7. Democrat Bob Atwater was the only Triangle senator to oppose the bill. Atwater represents several rural areas in Chatham and Lee counties, where many residents remain stuck with dial-up Internet service.
The bill now proceeds to the House.
Sponsored by state Sen. David Hoyle, D-Gaston, the euphemistically titled "Study Competing Systems/ Interim Debt" places a 14-month moratorium on cities and towns that want to build their own high-speed broadband networks. While these municipalities could technically develop a plan for such a network, they could not apply for funding for the project until August 2011, after the next legislative session. Yet, without funding, it would be unlikely that the cities and towns could afford to work on a plan or feasibility study.
The bill establishes a 12-member task force composed of representatives from cities, telecommunications companies and the North Carolina League of Municipalities.
Five existing broadband systems (Wilson, Salisbury, Davidson, Mooresville and Morganton) are exempt from the moratorium.
"I don't believe that government at any level should unfairly or fairly compete with the free enterprise system," Hoyle said during the bill's second reading, June 3.
Sen. William Purcell, a Democrat from Laurinburg, which is in the southern part of the state, opposed the bill, saying "Another year will not serve any useful purpose."
The bill hurts many rural communities that the telecommunications companies have not served with high-speed Internet. It is expensive—and not profitable—for telecom companies to go into these rural areas, so cities and towns, frustrated with the wait, want to build these networks.
If a city or town chooses to request approval for financing—aware it couldn't be approved until at least August 2011—it still must hold a public hearing and give competitors (the telecom companies) 15 days' notice.
"Typically this is the alert the incumbents need to start crushing these projects, first with political pressure. We've seen how that works," said Rice.
Hours before Monday night's vote, the Chatham County Board of Commissioners voted to sign a broadband consulting agreement with Rice's group, Action Audits, for the development of a broadband infrastructure plan. Counties have no authority to build broadband networks, but they can request it from the Legislature. House Bill 2067, sponsored by state Rep. Bill Faison of Orange and Caswell counties, does precisely that: It would allow Caswell County to provide high-speed Internet to its residents. It has been referred to the House Ways and Means/ Broadband Connectivity Committee.
Atwater asked the General Assembly to consider an amendment that would extend the moratorium date to June 7 so that Chatham County could begin its study. S 1209 prohibits any funding—necessary for a study—as of June 1.
Sen. Daniel Clodfelter, D-Mecklenburg, hemmed and hawed over Atwater's request, then advised him to consult with the House. Atwater begrudgingly withdrew his amendment, adding that the moratorium would have a "chilling effect" on local economies.
Bill opponents and the senators representing rural counties expressed concerns that their constituents deserve access to what in the digital age is considered a basic service. However, Hoyle continued to claim that "anyone who wants Internet service in North Carolina can get it."
Not true, said state Sen. John Snow, who represents many mountain counties in western North Carolina. "Phone companies are not going to be getting involved down in Murphy and Wolf Creek because they can't make any money off of it," Snow said. "I have constituents who have access in the classroom, but when they go home, they have to go find someone who has a computer so they can get their homework done."
The battle over S 1209 began before the 2009 legislative session, says Kelli Kukura, director of government affairs at the North Carolina League of Municipalities. At that time, Kukura said Hoyle met with representatives from telecommunications companies to craft the bill.
Meanwhile, Hoyle also received $6,000 in campaign contributions in the 2009 election cycle from the political action committee of Time Warner, one of the bill's proponents. He received $500 from the Sprint/ Nextel PAC and $2,250 from the Parker, Poe, Adams and Bernstein PAC. The law firm lobbies and advises clients in a number of industries, including telecommunications. Hoyle has denied the contributions influenced the legislation.
Originally, the bill mandated cities and towns to hold a public vote on any broadband projects that were funded by general obligation bonds, while requiring the municipalities to use such bonds. Referenda would have been required, even if cities and towns wanted to upgrade systems, refinance or add customers.
These requirements threatened to wipe out all broadband projects and place a "devastating blow to municipal broadband," said Kukura.
After it became clear last month that the bill would fail if it contained that language, it was stripped out of the measure and replaced with requirements for a temporary moratorium and a task force.
The moratorium was inserted, said Sen. Clodfelter, so the task force would study the issue without "noise."
"The truth is, we are hoping for cooperation through this task force," said Kukura. "Up until now, the private providers have not been willing to help but have also not been willing to step out of the way."
The League of Municipalities is dissatisfied with S 1209, but Kukura says it could have been worse. "I would say that looking at the potential political outcomes, we felt we had little choice but to try to make a bad situation less bad."