We have the complete video of last week’s Revenue Laws Study Committee meeting which featured the introduction of a draft bill that would dramatically restrict any entrant into North Carolina’s broadband marketplace unless they were a private industry provider.  The de-facto municipal broadband ban legislation comes courtesy of retiring Senator David ‘Fiber is Obsolete’ Hoyle (D-Gaston), who sprung the proposed bill minutes before debate was to begin.  Despite the fact opponents (and consumers) were left unprepared to push back against Hoyle’s anti-consumer legislation, a few legislators and citizens rallied to the cause.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/NC Rev Laws Study Comm 5.5.10-1.mp4[/flv]

North Carolina Revenue Laws Study Committee Meeting (May 5, 2010 — 47 minutes)

A Viewer’s Guide

Senator Daniel G. Clodfelter (D-Mecklenburg) wants both sides to “turn the volume down,” apparently not appreciating the fact a retiring senator pushing through an anti-consumer telecommunications company dream-come-true draft bill would likely provoke a consumer backlash.

Rep. Weiss was the loudest opponent of the proposed legislation to stop municipal broadband

Clodfelter is surprised the debate has become so polarized.  It shouldn’t be, considering this debate is hardly a new one.  Consumer advocates have seen providers use the same road map to enact anti-consumer municipal broadband prohibitions in more than a dozen states.  The same talking points and arguments appear every time this issue comes up.  Consumers are fed up with the corporate protectionism these bills represent, and they become extremely angry when those elected to represent them instead represent the interests of big corporate telecom companies.

Clodfelter’s ultimate vote spoke louder than his pleas for civility — he voted for the draft that guarantees North Carolina consumers will continue to pay high prices for telecommunications services.

Senator David Hoyle’s eyes rarely left his carefully prepared talking points.  Perhaps that’s because he’s not as familiar with the issues as he claims to be.  When a legislator is forced to keep his eyes on his remarks, seeming to stumble through several important points, it suggests unfamiliarity with the issues.  That’s hardly a surprise when legislation is introduced by a telecom-friendly legislator who knows only as much as the accompanying information packet of talking points allows.

We saw that first hand last year with Ty Harrell, who introduced legislation that he so fundamentally didn’t understand, he was later forced to repudiate his own bill.  Watch Hoyle and ask yourself — is this a legislator who understands municipal broadband, or is this a senator carrying water for big telecom?

Hoyle’s testimony contained many interesting comments we’d like to rebut:

“The level playing field aspect is gone.”  He’s got that right.  His proposed draft bill mires municipal providers with terms and conditions no private provider ever endured.  Where is your referendum about whether or not you wanted to pay Time Warner Cable for dozens of channels you never asked for, and don’t want?  Where is your referendum about whether or not you want the incumbent cable and phone companies to continue providing service in your town?  Does the phone company need to hold a referendum to replace phone wiring on the poles?  No?  Then why does Hoyle’s bill demand referendums for municipal system repairs and upgrades?

Rep. Luebke characterized Hoyle's proposal as premature and urged his colleagues to support further study on this issue

Hoyle misrepresented the financing of municipal broadband projects, most of which are not financed at the expense of every local taxpayer.  His carefully crafted suggestion that citizens should vote for such projects is a nice concept, but remember incumbent providers can use unlimited amounts of money they’ve earned from overcharging you for years to bombard residents with misinformation.  Meanwhile, your local government cannot spend a penny to rebut them.  Is that a fair vote or one engineered to provide victory to incumbent providers?

Senator Hoyle suggested unnamed interests have said he has a vendetta against cities — that he doesn’t like cities.  That’s an example of a politician constructing a false straw-man argument to shoot down.  Of course his real “vendetta” is against North Carolina consumers.  With Hoyle not seeking re-election, he doesn’t have to answer to them.

Hoyle brought up the sale of bankrupt Adelphia Cable’s systems to the local governments of Mooresville and Davidson, and then demagogued it with cherry-picked talking points, conflating an old, outdated cable system with construction of state-of-the-art fiber systems as proposed in communities like Salisbury.

Adelphia Cable’s founders and chief corporate executives are sitting in a federal penitentiary.  A court found both John and Timothy Rigas guilty of more than a dozen counts of fraud and conspiracy in 2004, a decision largely upheld in 2008, and both continue to serve 12 and 17 year sentences respectively.

Every Adelphia Cable system put up for sale by the Bankruptcy Court was littered with problems.  In San Diego, inspectors found more than 3,000 improperly grounded cable connections in customer homes.  Company records were in chaos as well, and the result was major headaches for buyer Time Warner Cable.

The North Carolina Adelphia systems were not much different.  The communities had been victimized twice by providers who delivered broken promises, fewer channels at higher prices, and bad service.  When Time Warner Cable proposed to take control of the systems and wouldn’t meet the communities needs, Mooresville and Davidson decided to exercise right of first refusal and purchase the systems themselves.

What they found after closing the deal were the same kinds of problem Time Warner Cable and Comcast were dealing with in other former Adelphia communities.  The difference is the cable companies just raised customers’ rates to defray the costs of cleaning them up.  They also left many towns with cable systems built based on economy more than customer needs.  With limited competition, where could dissatisfied subscribers go?

Mooresville and Davidson both faced:

A significant number of subscribers who stopped paying for service from Adelphia much earlier and faced no consequences or service suspension.  When MI-Connection, the municipal provider, began billing for services rendered, they canceled.  Of course, the sellers never disclosed the fact there were many non-paying customers getting service for free.  When the towns purchased the systems, it assumed subscriber numbers provided represented paying customers.  It turns out many weren’t.

Then there were more surprises:

Sen. Stein suggested legislation that could keep the United States behind in broadband adoption was of concern to him.

• Leamon Brice, Davidson town manager, told the Davidson News, “After the borrowing, but before the closing, Time-Warner, custodian of the system for one year, announced there were many more customers in the system than originally thought. As a result, the towns had to spend $12 million of the $80 million to buy those additional customers. This left less money for the upgrade of the system, so the towns borrowed an additional $12 million to complete the necessary improvements.”
• An economic crisis which is driving down subscriber rates for cable services nationwide.
• The early unavailability of a “triple play bundle” combining telephone, video, and broadband service on one bill.  Bundling is the economic driver of today’s telecommunications industry, and the two communities were late to get in on it.
• The high cost of system upgrades, especially with a system administered by Adelphia, which let most of its cable properties fall into disrepair long before bankruptcy.

Although Hoyle called out both communities for their losses, his numbers don’t add up.  He claimed the systems will lose $6.8 million dollars a year, based on one quarterly loss statement he chose to multiply by four.  In fact, the communities are seeking a one time $6.4 million allocation in the 2010-11 budget year, of which Davidson’s share is $2 million, to make up for the losses associated with all of the drama surrounding the Adelphia system purchase and upgrades.

Hoyle ignored the potential for MI-Connection, now that the upgrades are near completion and the company has introduced an aggressive triple-play package.  Revenues are up nearly 10 percent over the same period last year — an impressive result during an economic crisis.  Most of that growth came from newly launched broadband and telephone services.

The system needs only a few thousand additional customers to erase the losses.  Offering a compelling triple play bundled service package should help them achieve that goal.

Despite the difficulties associated with Adelphia’s legacy cable systems, most of the municipal broadband projects Hoyle seeks to stall are actually 100 percent fiber-based and are designed to service both residential and business customers with service far beyond what the local cable and phone companies are willing to provide.

The committee then heard input from speakers in the audience, with a two minute limit.  Unfortunately, that was too long for at least some committee members who chatted audibly as speakers tried to make their points.

One of those speaking in favor of the proposed draft was Octavia Rainey, once again seated with the lobbyists from Time Warner Cable and AT&T.  She arrived at the microphone with her practiced talking points.

After Rainey’s prior comments on this issue, we reached out to Ms. Rainey to get a better understanding of her point of view and establish a dialogue. When I attempted to speak with Rainey, she first hung up on me only to call back several minutes later to accuse me of being a “white supremacist,” even though I had revealed to her I also serve as a Human Relations Commissioner in Greensboro and fight against racial prejudice daily.

Such over-the-top accusations are not unheard of in this policy debate, particularly with some civil rights groups who attempt to shut down debate with accusations of bias when their public policy positions do not comport with the stated founding principles of that group. Usually, when this card is played, it comes when you’ve successfully called out the empty rhetoric and fact-challenged talking points most of these groups use to defend big telecom. Rainey is just another example of a well-meaning local community activist who has been duped by telecom astroturfing efforts, and AT&T’s financial involvement in causes helpful to her public profile don’t hurt either.

The litmus test for astroturf snowjob detection is simple:

• Will the constituents these individuals and groups claim to represent be well-served with a protected duopoly in broadband that prices service out of their reach?
• Has the group fully and publicly disclosed their financial contributions from telecommunications companies and the amounts given?
• Are there telecom company representatives serving on the board of the group?

Too often, following the money is all that’s required to understand the allegiance some groups and individuals have to adopting the telecom agenda.

At the end of the discussion, a vote was held and the draft bill passed.  There were only two audible “no” votes — from Representatives Jennifer Weiss (D-Wake County) and Paul Luebke (D-Durham).  I was told Senator Josh Stein (D-Wake County) also voted no, stating he did not “shout it out, but I definitely voted against the bill.”

The draft bill now goes to the House and Senate leadership to be assigned to committees.  If it survives the committee process, it moves to the full House and Senate.  I understand that leadership in both the House and Senate do not want anything controversial in the short session to follow, so let’s let them know nothing is more controversial than legislation that guarantees slow and expensive broadband from existing providers, indefinitely.

Make sure you let the North Carolina legislature know that now is not the time to ram through a provider-friendly municipal broadband bill from Senator Hoyle.  Tell Speaker Hackney and President Pro Tempore Basnight the issue requires further study, and the bill should be referred back to appropriate committees for further review:

Speaker of the House Joe Hackney (D-Chatham, Orange, Moore) 919-733-3451 [email protected]

President Pro Tempore Marc Basnight (D-8 Coastal Counties) 919-733-6854 [email protected]

Senator Hoyle's legislation lays the foundation for cable and phone companies to spend hundreds of thousands of subscriber dollars to mail smear campaign pieces like this one from Comcast.

(This piece is written by Jay Ovittore and Phillip Dampier.)

The good news is that all the pushback on an all-out-moratorium on municipal broadband was successful and Senator David Hoyle (D-Gaston) withdrew the idea.  The bad news is he had an even worse idea to replace it.

Hoyle Wednesday unveiled a new draft bill that hopelessly ties up municipal broadband projects into knots of red tape that, if passed into law, will bury municipal broadband projects in North Carolina indefinitely.

Hoyle sprung his telecom-industry-friendly legislation on the public after getting plenty of input and encouragement from the state’s cable and phone companies who already knew what was in it because they helped craft it.

For a retiring state senator who doesn’t have to worry about the next election, what better parting gift can you give to your friends in the cable and phone industry than a bill that preserves the comfortable duopoly they’ve  enjoyed for years.

Hoyle and those supporting the legislation will argue their bill doesn’t ban municipal broadband — it simply places conditions on such projects before they can go forward.  But what are those conditions?

Section One of the draft bill requires local governments to get funding for “external communications services” (ie. municipal broadband) by way of a General Obligation Bond (a GO Bond).  In North Carolina, that requires a taxpayer-funded referendum to be held for public input at the next election.

On the surface, getting public approval for municipal broadband isn’t a bad idea — no local government official expecting to win re-election would ever proceed on such projects without voter support.  But this requirement also gives plenty of advance notice to incumbent providers that a new player could be invading their turf.

We know what that means.  A well-funded opposition campaign to demagogue the project.  Local cable companies can insert an unlimited number of free ads during every advertising break to slam the proposal.  Phone companies can release a blizzard of opposition mailers to convince consumers it’s as scary as Halloween — all tricks and no treats.

How can a local city or county government respond to the misinformation barrage?  They can’t.  Public officials can’t spend taxpayer dollars to promote such projects or refute industry propaganda.  They can’t even financially assist a citizen-run campaign.

That’s a fight with ground rules only Don King could love.

In the end, that leaves ordinary citizens of North Carolina facing down a multi-billion dollar statewide consortium of telecommunications interests hellbent on preserving and protecting the status qu0.

The earlier-discussed moratorium was a brick wall against municipal broadband.  Hoyle’s bill is the Great Wall of China with the logos of AT&T, Time Warner Cable, and CenturyLink plastered all over it.

But wait, there’s more.  To deal with municipal broadband projects that got an initial green light to dare to interfere with the phone and cable industries’ grand business plans, another provision provides a near endless supply additional referendums to get rid of the projects.  Hoyle’s bill actually demands more votes should existing systems need:

• refinancing to reduce the interest rate or restructure existing debt;
• to make repairs to the system’s “fixtures;” and/or
• to upgrade the system to meet subscribers’ needs.

Ponder the insanity:

• The legislation could be interpreted to demand a public referendum if your service goes out.  Can you wait until the next election to get back your cable service?
• If a municipal broadband fiber cable falls in your backyard, does it make a sound?  It won’t, but you will when you learn that cable might not be reattached to the pole until the whole town holds a referendum about it;
• Would you be upset if your local municipal provider could refinance its debt at a much lower interest rate, letting them cut their prices, but they can’t before the next election?
• While cable and phone companies refuse to upgrade their service to levels that would have made such municipal alternatives unnecessary, they also want to make certain the one provider that did meet your needs can’t upgrade… without a public vote.

These systems are not constructed with public tax dollars, but Senator Hoyle wants every citizen in a community, subscriber or not, to ponder the future of a local municipal broadband provider.  It’s like giving AT&T veto power over Time Warner Cable’s channel lineup.  Guess who has to pay for these constant referendums?  Taxpayers.  So while Senator Hoyle complains municipal broadband costs the state tax revenue, his legislation guarantees increased government spending on pointless referendums.  That’s logic only a politician working for the interests of big cable can appreciate.

For the cable and phone companies, and their good friends in the North Carolina legislature, this is their idea of a level playing field.  In reality it’s about as level as a downhill ski run.

Let’s extend that “fairness” out to incumbent cable and phone companies and consider whether you got a vote on:

• Whether or not the cable and phone companies got to put their wires on phone poles plunked down in front of your house;
• Whether or not you wanted either company to dig up your yard to bury their wiring;
• Whether you wanted that giant metal refrigerator-sized metal box installed on your street, in your yard, or on the phone pole you see from your window every day;
• Whether or not you want the cable company to repair Mrs. Jenkins’ problems with HBO up the street whenever it rains or replace the cable the squirrels chewed up;
• What channels and services you want to pay for, which ones you do not, and at what price you need to pay your local phone or cable company.
• What cable or phone company gets to provide service in your community.

Apparently the fairness concept only applies to potential new competitors, not the existing providers.

Let’s also consider the cable television industry didn’t just magically bloom into a multi-billion dollar business without government help.  In the early days of cable television, investors were assured that they were financing a monopoly provider, guaranteed through a franchise agreement process that gave newly built cable companies exclusivity to help repay construction costs.  Franchise wars broke out between 1978 and 1984 as competing companies promised the moon with state-of-the-art two-way cable systems with the capacity to offer 70 or more channels.  The players then included Time’s American Television and Communications Corporation, Warner’s Amex, and Telecommunications, Inc. (TCI).  ATC and Amex would later evolve into Time Warner Cable and TCI became AT&T Cable before being sold to Comcast.  Communities seeking cable television for their residents would later learn a lot of these promises made were promises broken – reneged on by large cable companies with few, if any consequences.

During the Reagan Administration, then-FCC Chairman Mark Fowler bestowed additional deregulation benefits on the cable industry.  The Museum of Broadcast Communications explains:

The Cable Communications Policy Act of 1984 addressed the two issues that still hindered cable television’s growth and profitability: rate regulation and the relative uncertainty surrounding franchise renewals. Largely the result of extensive negotiation and compromise between the cable industry’s national organization, the National Cable Television Association, and the League of Cities representing municipalities franchising cable systems, the act provided substantial comfort to the cable industry’s future.

Its major provisions created a standard procedure for renewing franchises that gave operators relatively certain renewal, and it deregulated rates so that operators could charge what they wanted for different service tiers as long as there was “effective competition” to the service. This was defined as the presence of three or more over-the-air signals, a very easy standard that over 90% of all cable markets could meet. The act also allowed cities to receive up to 5% of the operator’s revenues in an annual franchise fee and made some minor concessions in mandating “leased access” channels to be available to groups desiring to “speak” via cable television.

Additional reforms guaranteed pole attachment rights to the cable industry so they could wire and service their network unencumbered by utility company interference or high pole attachment fees.  Cable consolidation allowed formerly mom and pop cable systems to become part of a cable industry where just a handful of cable companies provide service to the majority of cable households.  Countless millions are spent each year by the industry to lobby state and federal governments to keep the party going without regulatory interference, suggesting competiti0n alone is the only regulation required.

Except when a new competitor enters the market, of course.  Fearing competition from municipal providers who will force cable and phone companies to charge reasonable rates and upgrade service, the best possible solution is to find a way to ban such projects.

Forcing regular referendums and the complexities and expenses associated with them guarantees no community in North Carolina would ever bother with the onerous requirements to launch municipal broadband projects.

That’s not just Jay and I saying that.  What Hoyle has proposed hardly breaks new ground.  It’s the same dog and pony show the industry has brought to other states to stop competition and keep prices high and service slow.

So let’s learn from the painful experiences of others:

First lobbying for legislation requiring referendums and then winning it, SBC (later AT&T) and Comcast used the opportunity to spend more than $300,000 of their subscribers’ money to launch a major misinformation campaign with misleading and inaccurate mailers that successfully fought off a proposition to deliver better and cheaper service through a municipal broadband project in Batavia, Geneva, and St. Charles, Illinois.  Fiber for Our Future documented the whole sordid affair from start to finish as a lesson to others confronting industry-backed referendum requirements.

[flv]http://www.phillipdampier.com/video/unproven.flv[/flv]

Want a preview of the distortion and misinformation-campaign cable and phone providers will bring to stop municipal broadband?  Watch this SBC (today AT&T) executive tell city officials in Illinois that fiber is “unproven,” that the phone company’s DSL speeds are comparable to Comcast Cable, and that consumers don’t need the 3Mbps speed the company was delivering back in 2004 when this video was taken.  “What are you going to do with 20 megabits.  I mean, it’s like having an Indy race car and you don’t have the race track to drive it on.”  (3 minutes)

Longmont, Colorado spent years suffering with bad broadband service from Comcast and Qwest and sought a better alternative with a municipally-run provider.  But then the cable and phone giants spent $200,000 to put a stop to that.  While local subscribers may have preferred that $200,000 be used to reduce their rates, for Comcast and Qwest it was an investment in maintaining future pricing only duopolies can achieve, all while delivering “good enough for you” broadband service to Longmont residents.  In 2006, the Baller Herbst Law Firm collected information on industry-backed barriers to municipal broadband, and the list went on for nine pages.  Many of them sound eerily familiar to what Hoyle proposes (after cable and phone companies whispered time tested, industry proven ideas into his ear).

The city of North St. Paul, Minnesota has advice for states like North Carolina after their own experience with a coordinated industry-backed smear campaign against municipal broadband enabled by legislation similar to what Hoyle proposes:

What should be of interest to all communities was the organized opposition.  It appears that the incumbent providers, industry associations and politically conservative think tanks teamed up to promote negative news stories, do polling and opposition phone calls, provide transportation for identified “no” voters and create web sites.

While we heard some advocates lamenting this high priced anti-municipal fiber effort, this response is something that community leaders must expect and be prepared for.  A strong community education and mobilization effort must be a part of any municipal telecommunications initiative.  A coalition of business owners and residents must be created and maintained that can counter the expected efforts of the incumbent providers.  The benefits of the community-owned network should be documented and promoted so that an overwhelming majority of voters will choose to vote yes.  We hope that, one way or the other, North St. Paul gets the “More, Better Broadband” that the MN Broadband Coalition supports.

Of course, when local communities are banned from spending a nickel on advocacy for their projects, it effectively hands a restraining order to broadband advocates who can’t even get on the playing field, level or otherwise.

Outraged yet?

It will only get worse if Hoyle’s bill ever becomes law.  Residents in communities like Salisbury endured a sampling of the kind of negative campaign this industry will launch wherever municipal broadband competition threatens to appear.  In 2009, residents were hassled with push-polling phone calls from industry-backed astroturf groups claiming to represent ordinary citizens, but were actually little more than sock puppets for big telecom.  Your mailbox will be filled with blizzards of misleading mailers that current cable and phone customers pay for.  If they need more money, they can always raise your rates to cover the difference.  In the end, with the help of elected officials who don’t care about North Carolina consumers, existing municipal projects can bleed themselves dry (later to be used by the industry as “failed examples” to claim such projects are too risky to try) and proposed ones will never see a spade plunged into the soil to bury the first strand of fiber optic cable.

But it’s not all bad news.  It doesn’t have to happen this way.  You can tell your state representative you are watching them like a hawk on this issue.  Any “yes” vote for legislation like that proposed by Senator Hoyle is a no vote for them at the next election.  Let them know you are well aware of the game plan here — it has been tried in other states with similar legislation that is little more than protectionism for big telecom. Tell your elected officials you already have the power to choose whether or not you want these projects simply by voting for or against the elected officials that propose them.  While the concept of a referendum sounds fair on the surface, it’s not when you consider the past experiences of other communities who faced well-funded opposition campaigns, helpless to correct the record or fairly argue their position on the matter.  Providers know that, which is why they advocate this type of legislation in the first place.  It effectively stops competition, stops better service, and stops North Carolina residents from enjoying lower priced cable, phone, and broadband service.

There are a few stand-up representatives of the people of North Carolina who do deserve our gratitude and thanks today.

Rep. Paul Luebke, (D-Durham County) (who co-chairs the Revenue Law Study Committee) [email protected] 919-733-7663 College Teacher

Rep. Jennifer Weiss, (D-Wake County) [email protected] 919-715-3010 Lawyer-Mom

They both will likely face fierce opposition from the incumbent providers and their fellow legislators. Please take the time to thank them for standing with consumers today and for trying to protect the future of North Carolina and its economy.

Stop the Cap! will have video of today’s remarks by both legislators soon.  We hope to follow with a complete video record of today’s events surrounding the anti-competition legislation proposed by Senator Hoyle.  It will serve as a testament to just how much work we have to do to remove legislators who have stopped representing the public interest, and renew our support for those who stand with consumers.

Meanwhile, check out these two delightful pieces paid for by the cable and phone industry, sent to homes where municipal broadband projects faced a referendum in 2003 and 2004.  More than a dozen different mailers were sent to every home in the communities of Batavia, Geneva, and St. Charles, Illinois from phone and cable companies.  Now imagine the repercussions when not one of those communities could respond with their own mailers correcting the record and giving their side of the argument.  There is a reason why special interests spend enormous sums of money to protect their turf, and the battle is over before it even begins when those interests demand the other side not have the opportunity to respond in kind.

What smears do providers in North Carolina have in store for you?

… Continue Reading

North Carolina faces a moratorium on municipal broadband deployment.  On Wednesday, Senators David Hoyle and Daniel Clodfelter will introduce a bill expected to stall community broadband projects across the state.  The bill, which has yet to be seen by the public, should appear in the Revenue Laws Study Committee, co-chaired by Clodfelter.  We have heard the bill faces mere minutes of consideration before a quick vote, in hopes of moving it forward before the public finds out what elected officials are doing on their behalf.

Proponents of the moratorium argue that municipal broadband harms private industry and reduces tax revenue the state earns from those businesses.  But their argument lacks something — merit.  Missing from the debate are the actual numbers from the state’s largest telecommunications companies.  How much tax revenue does Time Warner Cable, AT&T and CenturyLink (formerly EMBARQ) generate?  We don’t know and the two senators (and the companies involved) aren’t saying.

Municipal broadband projects bring numerous benefits to North Carolina communities:

• jobs (taxpayers);
• high tech businesses moving into the state (taxpayers);
• entrepreneurial innovation that creates new small businesses (taxpayers); and
• benefits to the education and health care sectors (future taxpayers and keeping current taxpayers alive and healthy).

Make no mistake — a moratorium is just a stall tactic to protect current provider profits and avoid competition, all while giving them more time to organize a push for a permanent ban on such projects.

Why are Hoyle and Clodfelter only concerned with protecting incumbent telecom companies?  What about the rest of us?

Please join us tomorrow at the Legislative Office Building in Raleigh, and perhaps we can ask them.

Action Alert — We Need Your Attendance!

• Where: Legislative Office Building, Raleigh
• When: Wednesday May 5th at 9:30am, Room 544
• Why: Just having consumers in the room make elected officials nervous, especially when they are about to introduce a bill the public has never seen five minutes before a vote to move it forward in the short legislative session starting May 12th.

GOOGLE AND SEVEN INDUSTRY GROUPS OPPOSE NC MUNICIPAL BROADBAND MORATORIUM

Raleigh, NC – May 4, 2010   Google, Intel and six other private sector groups announced strong opposition today to a North Carolina municipal broadband moratorium being considered by the General Assembly’s Revenue Laws Study Committee, calling it “a step in the wrong direction,” “counterproductive” and “conspicuously in opposition to national broadband policy.” Legislation to prohibit municipal broadband deployments in the state is expected to be introduced and voted on tomorrow May 5. At least 45 individual communities in North Carolina, including Raleigh, Cary, Chapel Hill, Carrboro, Greensboro, Asheville and Wilmington, recently applied to partner with Google on its announced plans to build ultra-high speed fiber to the home systems.

In a strongly-worded letter to North Carolina’s House and Senate leadership, Google, Intel, Alcatel-Lucent, the Fiber to the Home Council (FTTC), American Public Power Association (APPA), Atlantic Engineering, Telecommunications Industry Association (TIA), and the United Telecom Council (UTC) stated that such a bill would harm both the public and private sectors. “It would thwart public broadband initiatives, stifle economic growth, prevent the creation or retention of thousands of jobs, and diminish quality of life in North Carolina. In particular, it would hurt the private sector in several ways: by undermining public-private partnerships; hamstringing the private sector’s ability to sell its goods and services; interfering with workforce development; and stifling creativity and innovation.”

“Enactment of a counterproductive municipal broadband moratorium would put North Carolina conspicuously in opposition to national broadband policy,” the letter states, and continues: “The Federal Communications Commission’s National Broadband Plan also admonishes states not to interfere with community broadband efforts where local officials do not believe that the private sector is acting quickly enough to meet community broadband needs.  Consistent with these expressions of national policy, communities across America are doing their share to contribute to the rapid deployment of broadband to all Americans.”

Those words echo a similar statement by FCC Commissioner Mignon Clyburn just last week in Asheville, NC. Commissioner Clyburn equated such a moratorium to denying citizens “the opportunity to connect with their nation and improve their lives” and called such a move “counterproductive,” one which could ” impede the nation from accomplishing the [National Broadband] Plan’s goal of providing broadband access to every American and every community anchor institution.”

A bill supported by Time Warner Cable and AT&T, the municipal broadband moratorium is being pushed by Senators Hoyle (D-Gaston) and Clodfelter (D-Charlotte Mecklenburg) for the alleged purpose of protecting the private sector and associated state tax revenues. But opponents to the bill argue the bill would hurt the private sector and even these representatives’ local constituents. Such a moratorium would terminate the City of Charlotte’s recent plans to build a multi-million dollar municipal network to provide broadband service to its public safety, educational, government institutions and the unemployed through the use of federal ARRA broadband funds. The bill also has the potential to make both Gaston and Gaston County less attractive to Google with whom they submitted an application to partner for a fiber to the home network.

“North Carolina should be lowering barriers to public broadband initiatives rather than establishing new ones, so that we and other high technology companies can spread and prosper across this beautiful state,” the letter states. At least 45 individual communities in North Carolina, including Raleigh, Cary, Chapel Hill, Carrboro, Greensboro, Asheville and Wilmington, recently applied to be partners with Google on its announced plans to bring  fiber to the home to between 50,000 to 500,000 households in an effort to unleash advanced scientific, educational, medical and environmental applications through these ultra-high speed networks, now being deployed throughout the world and in China. North Carolina already has two municipalities, Wilson and Salisbury, deploying these fiber systems to their residents.

Jay Ovittore, co-Director at Communities United for Broadband says, “A moratorium or any other barriers to “real” next generation broadband deployment would be a leap in the wrong direction for North Carolina’s citizens and for North Carolina’s economy.”  Communities United for Broadband is a citizen run advocacy group that promotes the exchange of ideas between communities, both rural and urban, to find the best solutions for their broadband needs.  You can find Communities United for Broadband on Facebook at http://bit.ly/aW6skP and on Twitter at http://twitter.com/CUFB

For more information:

www.broadband4everyonenc.com

http://groups.google.com/group/nc-public-broadband

http://stopthecap.com/2010/04/28/fcc-commissioner-mignon-clyburn-speaks-in-favor-of-municipal-broadband-projects-at-seatoa-conference/

http://www.muninetworks.org/

The Fiber to the Home Council also sent a separate letter to North Carolina Governor Bev Perdue.

You can continue to write the legislators who are pushing this industry written legislation.  Trust me they are hearing you. Be nice, but let them know you do not want a moratorium on muni-broadband, it will hurt economic development in our state and you want what the rest of the world enjoys for broadband access.

• Sen. Daniel Gray Clodfelter (Co-Chair) Mecklenberg [email protected] (919) 715-8331 Democrat (704) 331-1041 Attorney
• Sen. Peter Samuel Brunstetter Forsyth [email protected] (919) 733-7850 Republican (336) 747-6604 Attorney
• Sen. David W. Hoyle Gaston [email protected] (919) 733-5734 Democrat (704) 867-0822 Real Estate Developer/Investor
• Sen. Samuel Clark Jenkins Edgecomb, Martin, Pitt [email protected] (919) 715-3040 Democrat (252) 823-7029 W.S. Clark Farms
• Sen. Jerry W. Tillman Montgomery, Randolph [email protected] (919) 733-5870 Republican (336) 431-5325 Ret’d school teacher
• Rep. Harold J. Brubaker Randolph [email protected] 919-715-4946 Republican 336-629-5128 Real Estate Appraiser
• Rep. Becky Carney Mecklenberg [email protected] 919-733-5827 Democrat 919-733-5827 Homemaker
• Rep. Pryor Allan Gibson, III Anson, Union [email protected] 919-715-3007 Democrat 704-694-5957 Builder/TWC contractor
• Rep. Dewey Lewis Hill Brunswick, Columbus [email protected] 919-733-5830 Democrat 910-642-6044 Business Exec (Navy)
• Rep. Julia Craven Howard Davie, Iredell [email protected] 919-733-5904 Republican 336-751-3538 Appraiser, Realtor
• Rep. Daniel Francis McComas New Hanover [email protected] 919-733-5786 Republican 910-343-8372 Business Executive
• Rep. William C. McGee Forsyth [email protected] 919-733-5747 Republican 336-766-4481 Retired (Army)
• Rep. William L. Wainwright Craven, Lenoir [email protected] 919-733-5995 Democrat 252-447-7379 Presiding Elder

Don’t forget to thank those we have identified as on our side of the issue, for being forward thinking and truly representing the people:

• Sen. Daniel T. Blue, Jr. Wake [email protected] (919) 733-5752 Democrat (919) 833-1931 Attorney
• Sen. Fletcher Lee Hartsell, Jr. Cabarrus, Iredell [email protected] (919) 733-7223 Republican (704) 786-5161 Attorney
• Sen. Josh Stein Wake [email protected] (919)715-6400 Democrat (919)715-6400 Lawyer
• Rep. Paul Luebke (Co-Chair) Durham [email protected] 919-733-7663 Democrat 919-286-0269 College Teacher
• Rep. Jennifer Weiss Wake [email protected] 919-715-3010 Democrat 919-715-3010 Lawyer-Mom

I had the pleasure of attending the SouthEast Association of Telecommunications Officers and Advisors (SEATOA) conference this past weekend in beautiful Asheville, North Carolina.  I was surrounded by some of the leading visionaries in the fields of next-generation broadband deployment, broadband policy and important Public, Educational, and Government (PEG) access networks.

Among those in attendance:

• Kyle Hollifield, representing Bristol Virginia Utilities/BVU OptiNet, a municipally-owned fiber optic broadband provider in Bristol, Virginia;
• Colman Keane, from municipal utility EPB Telecom in Chattanooga, Tennessee;
• Tommy Jacobson from MCNC;
• Ken Fellman from the National Association of Telecommunications Officers and Advisors (NATOA);
• Hunter Goosman from ERC Broadband, which operates a regional fiber optic network in the western Carolinas;
• Brian Bowman, Public Affairs & Marketing Manager of Wilson, North Carolina, home of municipal fiber network Greenlight, and
• Michael Crowell, Broadband Services Director of Salisbury, North Carolina’s forthcoming fiber to the home network Fibrant.

The conference included several informational sessions for those working on broadband projects.

Tom Power, chief of staff for the National Telecommunications and Information Administration (NTIA) and Jessica Zufolo from the Rural Utilities Service at the U.S. Department of Agriculture discussed rounds one and two of the broadband stimulus grant program and lessons learned along the way.

Thomas Koutsky, representing the FCC Broadband Opportunities Initiative, the legendary Jim Baller and FCC Commissioner Mignon Clyburn also spoke about the importance of developing better broadband networks across the country.

FCC Commissioner Mignon Clyburn delivered the keynote address at the SEATOA conference held in Asheville, N.C.

Thomas Koutsky, speaking about the National Broadband Plan said, “The National Broadband Plan is just a plan.  It doesn’t do anything by itself, it requires action.”  I couldn’t agree more.  The National Broadband Plan could culminate in a giant missed opportunity if we do not reach out and demand that our representatives in Washington get on board with a definitive plan to deliver better broadband across the country.  Washington is full of studies and recommendations that are little more than words on paper, sitting on a shelf because Americans didn’t demand action to implement them.

I could go on all day about Jim Baller and his inspiration that drives us all to fight for better broadband in America, but I will highlight this quote: “It is a disgrace that every American does not have affordable access.”  Baller rallied the crowd with a video clip from Al Pacino’s speech in Any Given Sunday.  It’s not difficult to carry Pacino’s message about football to our fight in the broadband arena, and the enthusiasm Baller brings can only be a positive.

Perhaps the most newsworthy event from the conference was a speech from the newest FCC Commissioner, Mignon Clyburn.  She gets it.  In an amazing 20-minute speech, Clyburn succinctly delivered a message we wish some of our state lawmakers would understand and support:

“Thus, the Plan recommends that Congress clarify that state and local governments should not be restricted from building their own broadband networks. I firmly believe that we need to leverage every resource at our disposal to deploy broadband to all Americans. If local officials have decided that a publicly-owned broadband network is the best way to meet their citizens’ needs, then my view is to help make that happen.

When cities and local governments are prohibited from investing directly in their own broadband networks, citizens may be denied the opportunity to connect with their nation and improve their lives. As a result, local economies likely will suffer. But broadband is not simply about dollars and cents, it is about the educational, health, and social welfare of our communities. Preventing governments from investing in broadband, is counterproductive, and may impede the nation from accomplishing the Plan’s goal of providing broadband access to every American and every community anchor institution.”

Clyburn’s speech clearly illustrates she’s an advocate for consumers and is interested in knocking down barriers that block Americans from enjoying world class broadband service.  Clyburn considers the National Broadband Plan a group effort developed by and for the American people, not just a policy document from the FCC.  It was truly an uplifting speech that gave me hope positive change in broadband and broadband policies are possible with her presence on the Commission.

[flv width=”540″ height=”380″]http://www.phillipdampier.com/video/CommClyburn.mp4[/flv]

FCC Commissioner Mignon Clyburn delivers the keynote speech at the SEATOA conference.  Clyburn goes on record advocating municipally-run broadband projects where communities deem them appropriate.  This clip comes courtesy of Communities United For Broadband and you saw it first here on Stop the Cap! (April 27, 2010 — 20 minutes)

(This video is large in size.  If playback stops, please pause the video to allow more of the clip to load into the player’s buffer to reduce the chance of stalled playback.  If you still experience problems, please Contact Us.)

Back in May of 2009, I started a series called Follow the Money to illustrate the large amounts of money the telecommunications companies spend on legislators to push their agendas for them.  You can always tell how most legislators will vote if you simply follow the money.

Through the wonders of public records searches at the North Carolina State Board of Elections, I am able to see the PAC contributions that legislators have received.  I can also cross reference this information with the dates the legislators are in session and the Secretary of State’s online lobbyist database.  In North Carolina you can take PAC money from a PAC who has a registered lobbyist so long as the General Assembly is not in session. If you take the contribution while in session, the state’s General Statute says it must be forfeited to the state’s General Forfeiture fund.

In this Moratorium Watch 2010 edition I want to focus on two North Carolina legislators leading the charge to ban or restrict municipal broadband projects — Sen. Daniel Clodfelter (D-Mecklenburg) and Sen. David Hoyle (D-Gaston).

Clodfelter is the co-chair of the Revenue Laws Study Committee.  In just 24 months, he took in a total of $16,000 in PAC contributions from big telecom companies and their friends:

• $1500 from North Carolina Cable PAC
• $1000 from Sprint/Nextel
• $1500 from Embarq
• $500 from the NC Association of Broadcasters
• $5500 from Time Warner Cable
• $5000 from AT&T
• $1000 from North Carolina Broadcast PAC

Senator “Obsolete Fiber” Hoyle dwarfed Clodfelter over the past 24 months:

• $3500 from Sprint/Nextel
• $4500 from Embarq
• $8250 from Time Warner Cable
• $4000 from AT&T
• $2000 from Electricities (Drew Saunders is a lobbyist with Electricities and was a primary sponsor on the Level Playing Field bill for big telco a few years back)
• $1500 from North Carolina Broadcast PAC
• $1500 from North Carolina Cable PAC

That’s $25,250 for Hoyle from companies with an active interest in the telecommunications debate in this state.

When you consider more than $40,000 was spent to boost the campaign coffers of just two state legislators, it’s not hard to see big money is involved statewide.  It doesn’t even have to arrive in the form of a PAC contribution.  Clodfelter just had a $29 million Time Warner Cable headquarters building placed in Mecklenburg County.  Hoyle helped procure the Apple Data Center, located 22.5 miles north of his district in Maiden, NC.

When cross-referencing Hoyle’s PAC contributions with the state lobbyist database, I found several possible conflicts that warrant investigation, and I will bring my concerns to the North Carolina State Board of Elections.  If my complaint is upheld, perhaps Hoyle’s concerns about the need for additional state revenue could be eased knowing some potentially improper contributions made to his campaign were turned over to the General Forfeiture fund.  Hoyle has already announced he is not running for re-election so he doesn’t need the money anyway.

Once you count that money, it’s easy to discover why some of our state legislators are actively working against our own best interests here in North Carolina.  The corporate campaign contribution, which can be likened to legalized bribery, makes it difficult to convince legislators to always vote with their constituents’ best interests at heart.  Whenever legislators are willing to cash corporate contributions and vote against consumer interests, we’ll be here to call them on it.  Until this country gets corporate money out of government, it’s all we’ve got.