Thursday’s Winston-Salem Journal featured an editorial calling on the North Carolina legislature to get out of the way as municipalities across the state take control of their broadband destinies.

The piece, Broadband Battle, echoes what Stop the Cap! has been writing for more than a year now:

• More than decade after the Internet became a household word, too many households in the state still don’t have broadband access to it;
• “High-speed,” as defined by many of the state’s providers, doesn’t meet today’s definition of multimedia-ready broadband that can support today’s high bandwidth applications;
• When private providers cannot or will not meet a community’s needs, they shouldn’t have to wait indefinitely for that to change.  If municipalities want to establish high-speed service at the behest of their residents, let them!

The Journal sees through a transparent effort by Senator David Hoyle and others to ensure protectionism for a marketplace duopoly.

Fifteen years after Internet use became common, the telecoms still do not provide high-speed service to much of North Carolina. They can’t expect people to wait any longer.

The telecommunications industry wants the legislature to make it more difficult for local governments to offer high-speed Internet service. The giant companies say they can’t compete with local governments in towns of a couple thousand people.

If the telecoms don’t want local governments to establish these Internet services, they should rush into these areas and establish service now.

The newspaper points out the yoga-like stretching Hoyle and his allies are doing to justify their obstacle course for municipal broadband, noting they are demanding a higher standard for financing municipal broadband than exists for most other government borrowing. And legislators would look hypocritical in passing such legislation because they’ve been borrowing without bond referenda for many years.

The newspaper takes a common sense attitude about such projects — if providers really want to stop them, they should rush into the areas where they are proposed and deliver the world-class 21st century broadband service consumers want and prices they can afford.  Instead, they divert subscriber’s monthly bill payments to high-priced lobbying efforts to kill potential competition.

The editorial’s advice to the General Assembly?  Ignore the telecoms on this issue.  Unfortunately, for some legislators, that means ignoring campaign contributions.  The best way to strengthen their resolve is to let them know they won’t get any more of those checks if they aren’t re-elected.

A retiring state senator wants to throw North Carolina consumers under the bus with new legislation that could cost residents millions in savings on their cable, telephone, and broadband bills.

Senator David Hoyle (D-Gaston), has introduced S1209 — what Hoyle calls “The Nonvoted Local Debt for Competing System Act.”  We call it “The Anti-Consumer Muni-Killer Act,” representing little more than a lavish parting gift to telecommunications companies that have supported Hoyle for years.

As we have been reporting here, here, here and here for the past few months, the telecom industry has pulled out all the stops looking for friends in the state legislature to do their bidding.  This year, the industry is following the game plan it has used successfully in other states to kill potential community-based competition for their broadband duopoly.

The state’s cable and phone companies (and their legislator lackeys) argue that taxpayers should not be on the hook for municipally-owned networks.  In the guise of “protecting consumers,” Hoyle and his bill’s co-sponsors would compel municipalities to fund municipal broadband projects with General Obligation B0nds — a regulatory minefield that includes referendums held at taxpayers’ expense and direct taxpayer involvement in the funding process.

As we’ve discussed earlier, Hoyle’s proposal would compel endless referendums for everything from system construction and financing to basic system upgrades and repairs.  The implications of such legislation:

• It makes municipal broadband projects untenable. What local government would consider a municipal project that would require endless referendums?  The only thing Hoyle didn’t include in his bill was a mandatory public referendum about where the engineers should order lunch.
• Someone has to pay for the referendum process — North Carolina taxpayers.  So much for protecting the taxpayer!
• The legislative minefield Hoyle lays for local communities is tailor-made for well-financed telecom industry opposition campaigns that are designed to demagogue municipal competition while tying the hands of communities to fight back.

The irony is, the current system already in place in North Carolina protects state taxpayers.

Both proposed and operational municipal broadband systems rely on Revenue Bonds that have to be approved by the North Carolina Local Government Commission.  These Revenue Bonds are not taxpayer-funded, and local residents are not on the hook should something go wrong.  The financing agreements with investors are designed to pay off the costs of such systems over time and they then become self-supporting.  But even from day one, municipal broadband represents an asset to a community’s efforts to attract digital economy jobs.

They also save you money.  Just ask the residents of Wilson, who didn’t face a rate increase outpacing inflation and finally had an alternative for “good enough for you” broadband from current providers.

Unfortunately, the current system is no good for Senator Hoyle because it doesn’t protect his friends in the phone, cable, and broadband industry, threatened with competition that would derail their duopoly gravy trains for good.

Hoyle should be willing to admit as such, considering his friends in the cable industry already have.  Marcus Trahen, a lobbyist for the North Carolina Cable Telecommunications Association told legislators at a Revenue Laws Study Committee meeting, “We don’t care if cities have internal systems; what we are worried about is competition.”

Under the guise of “protecting” taxpayers, Hoyle only manages to guarantee fat profits for Time Warner Cable, AT&T, and CenturyLink (formerly Embarq) without better pricing and service for you.  Perhaps Hoyle forgot North Carolina is ranked 41st out of 50 states for its comparatively-mediocre broadband services, mostly provided by those three companies.

Hoyle also argues that publicly owned systems harm private industry, despite the fact many in private industry support municipal broadband.  Several letters of opposition to S1209 have been sent to legislators from companies like Google, Intel, Alcatel-Lucent, and five private provider trade associations.

Hoyle doesn’t plan to stick around and watch the damage his proposed bill would create for North Carolina’s economic and high tech future.  After he retires from public office, his bill would leave a legacy of tied hands among local communities from Asheville to Greenville, and all points in-between.  Doesn’t your community deserve a better option?  If you want a third option that could dramatically lower prices and offer better service, shouldn’t local officials have the right to offer it if current providers won’t?

The fact is, none of these municipal projects would even be proposed if the cable and phone companies delivered the service communities want at fair prices. Cable and phone companies don’t need to spend hundreds of thousands of dollars to defeat these projects — they could simply lower their prices and offer the kind of service consumers demand.

For Hoyle’s part, he’s shocked…  shocked to discover consumers are offended by his telecom-friendly attitudes.  He told Indy Weekly, “the lobbyists don’t influence me; I’m in the pocket of the people that provide jobs for this state, and Time Warner Cable employs 8,500 — I can’t imagine anyone that would want to compete with that.”

Senator Hoyle weighed the interests of Time Warner Cable against 9.4 million North Carolina consumers and sided with the cable company.

Let’s push the scale in the other direction.

What You Need to Know

The author of S1209 is  Sen. David Hoyle (D-Gaston).

The bill currently lists five co-sponsors:

• Sen. Peter S. Brunstetter (R-Forsyth)
• Sen. Clark Jenkins (D-Edgecombe/Martin/Pitt)
• Sen. Jerry W. Tillman (R-Montgomery/Randolph)
• Sen. Dan Blue (D-Wake)
• Sen. Fletcher Hartsell (R-Cabarrus/Iredell)

The latter two, Sens. Blue and Hartsell were formerly on our supporters list, and we’re reaching out for clarification as to why they are listed as co-sponsors on this bill.  We’ll update our readers about whether they will stand with North Carolina consumers or the telecom industry as soon as we hear back from their offices.

Your Action Alert

You must immediately contact legislators on the Senate Finance Committee, set to consider Hoyle’s bill this week, most likely on Wednesday.  But don’t wait until then.  You should be making contact today, just in case the bill gets voted on earlier, before opposition has a chance to build.

Tell the senators to oppose S1209 for the benefit of North Carolina’s economic future:

• Make it clear voting for this bill is just another way to stop municipal broadband from delivering the kind of broadband service North Carolina wants and needs to grow its economy.
• S1209 was custom-crafted to protect the interests of incumbent phone and cable companies, not North Carolina consumers.
• The current system already protects taxpayers because they are not paying for municipal broadband projects.  S1209 forces local governments to spend taxpayer funds on endless referendums.
• Explain you are already empowered to stop unwanted municipal projects through organized vocal opposition at town meetings as well as at the ballot box.  But your town would not be empowered to offer services private providers refuse if S1209 becomes law, because the legislation forces such projects into miles of red tape.
• Worst of all, S1209 gives phone and cable companies plenty of time to demagogue such projects, spending ratepayer funds in a hopelessly mismatched fight.
• Let them know you see through S1209’s anti-competitive intent, and you’re prepared to vote for those who stand up for North Carolina consumers and oppose these types of telecom industry-friendly bills.

Important! When writing, -DO NOT- simply carbon copy everyone on a single e-mail message.  Those mass mailings are discarded, unread.  For maximum effectiveness, send an individual e-mail to each legislator and another to their legislative assistant. Calling the legislator’s office can be even more effective and immediate.

Here is the list:

Real estate listings increasingly are promoting Verizon FiOS availability to would be buyers and renters

Real estate listings that prominently mention Verizon FiOS availability?

It’s true.  The much-coveted fiber-to-the-home service from Verizon has increasingly become important in residential home sales and rentals, according to realtors.  With the housing market still a shadow of its former self, just having broadband access is no longer good enough for many homebuyers and renters.  They want assurances that they can obtain fiber optic service, particularly as Verizon ceases expansion of its fiber deployments for the time being.

Despite claims from some providers that the type of broadband doesn’t really matter, real estate agents, such as those on www.hpw.com/, beg to differ.  The only thing worse than slow broadband is no broadband.  Those homes without broadband access of any kind can be a dead weight in an agent’s portfolio.  Practically nobody wants a home stuck with dial-up.  It’s like buying a home without electricity.

Just closing a sale on property that can only obtain slow speed DSL service or is served by a lackluster cable operator can also be a nuisance if a better provider is available nearby.

Some real estate listings have even begun providing Verizon FiOS certification guaranteeing would-be buyers of renters that FiOS service is ready and available. Look at this listing of Myrtle Beach sc homes for sale to find your next investment property.

None of this escaped Verizon’s attention, of course.  The company has used demand for FiOS in its advertising and communications strategies, and even has a rewards program for real estate professionals who convince buyers they are missing out if they aren’t Verizon FiOS customers.

Verizon claims up to 65 percent of home buyers say fiber optic broadband, including Internet connectivity, TV and phone service is an important and growing part of their home buying decision.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/Verizon FiOS Real Estate.flv[/flv]

Verizon produced this video about how important their FiOS product is becoming to home buyers and renters.  (2 minutes)

[flv]http://www.phillipdampier.com/video/Verizon Agent Rewards Program benefits Real Estate with FIOS.flv[/flv]

Verizon has an Agent Rewards Program that rewards real estate professionals with $100 gift cards for signing up home buyers and renters for Verizon service.  (1 minute)

Time Warner Cable's DOCSIS 3 service is marketed as "wideband"

Time Warner Cable has made its DOCSIS 3 wideband broadband service its star at the 2010 Cable Show in Los Angeles.  Demonstrating up to 290Mbps service, company officials are suddenly excited about the prospect of delivering 21st century broadband speeds just one year after foot-dragging their way through upgrade plans for their cable systems nationwide.

Time Warner Cable has been among the slowest to deliver channel-bonded broadband service to its residential customers.  Currently marketed mostly in areas where Time Warner faces competition from Verizon FiOS or AT&T U-verse, DOCSIS 3 upgrades deliver faster speed tiers to its customers and reduce congestion.  At the top end, Time Warner residential customers can purchase 50/5Mbps service for just under $100 a month.  Because of its premium price tag, the company hasn’t had too many takers.  As of the fourth quarter of last year, just 2,000 customers signed up.  But the trends are clear — if the price comes down, adoption rates will increase.

For business customers, the price isn’t cheap either.  In Cincinnati, for example, Time Warner business customers face $350 a month for 50/5Mbps service.  Contrast that with Comcast in San Francisco, which charges businesses $189 a month for the same thing.

If Time Warner Cable is as enthusiastic about wideband as it suggested during this year’s Cable Show, it should be firing up its upgrade plans to deliver the service to all of its customers and attempt some new marketing that brings service at a more aggressive price.

In New York, Time Warner Cable’s DOCSIS 3 upgrades have so far skipped cities like Rochester, which faces only token competition from Frontier Communications’ DSL service.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/TWC 2010 Cable Show – Chief Marketing Officer Sam Howe.flv[/flv]

Time Warner Cable employees and chief marketing officer Sam Howe fall all over themselves, ecstatic with Time Warner Cable’s wideband broadband service, in this company-produced video taken at the 2010 Cable Show in Los Angeles.  (4 minutes)

Sen. David Hoyle (D-NC)

Retiring North Carolina state senator David Hoyle wants to save North Carolina cities from themselves.  Proclaiming that “cities are getting into the broadband business with little or no experience and competing with private enterprise who pay the taxes,” Hoyle continues his push to put a stop to municipal broadband projects in North Carolina.

A week after Hoyle and a few allies on the Revenue Laws Study Committee pushed forward a draft bill that would require public referendums that could be triggered even when making basic repairs to community-owned fiber networks, IndyWeek reports Hoyle doesn’t exactly come to the debate with clean hands.

Rebekah Cowell, in a piece called “Hoyle to municipal broadband: Drop Dead,” notes Time Warner Cable’s PAC contributed $6,000 to Hoyle’s final campaign in 2009.

Hoyle told Cowell he is not swayed by Time Warner Cable’s deep involvement in pushing the legislation forward, despite the generous contribution to his campaign coffers.

“The lobbyists don’t influence me,” he said. “I’m in the pocket of the people that provide jobs for this state, and Time Warner Cable employs 8,500 in this state, and I can’t imagine any one that would want to compete with that.”

Time Warner Cable told IndyWeek it doesn’t philosophically oppose municipal broadband projects, and claims Hoyle’s bill would only apply to a city that chooses to take taxpayer money to build a competing network as if it were a private provider. “We just believe that they should have to operate under the same rules as the private provider,” Melissa Buscher, director of media relations at Time Warner Cable told Cowell. “We do believe people in the community should have a say-so in how large amounts of public monies are spent.”

Buscher

Yet the legislation proposed by Hoyle actually impacts projects that receive no public taxpayer dollars.  Under his proposal, any municipal project seeking private bondholders has to endure an endless series of referendums on everything from initial system approval, construction, refinancing debt, extending service, upgrading the network, and even when basic system repairs are needed.

Time Warner Cable’s concern for public tax dollars only seems to extend to their potential competitors.  The cable operator itself gratefully accepted public tax dollars from the state Department of Commerce, the city of Charlotte, and the county of Mecklenburg to construct a $29 million dollar headquarters building in Charlotte.  Even in smaller communities, the cable operator enjoyed benefits from taxpayers who didn’t have a “say-so in how public monies are spent.”  In December, Marble Cliff Village Council approved an economic development agreement with Time Warner Communications including a five-year tax abatement worth $100,000.

North Carolina’s phone companies also benefit from state taxpayers.  As IndyWeek reports:

A 2009 analysis by Democracy North Carolina [shows] two telecommunications companies, AT&T and Embarq, both benefited from tax breaks on the purchases of telephone equipment that costs the state an estimated $31 million annually in lost revenue. In 2008, political action committees for AT&T and Embarq contributed $140,500 and $151,250, respectively, to legislative candidates, statewide candidates and party committees.

Hoyle apparently has no problem with losing that tax revenue.

Hoyle’s claims that municipal broadband projects hurt North Carolina consumers are untrue in cities like Wilson, the only community in North Carolina that successfully avoided a Time Warner Cable rate increase this year.

Time Warner customers in Wilson are benefiting from Greenlight’s competition. According to a December 2009 presentation before the House Select Committee on High Speed Internet Access in Rural and Urban Areas, Time Warner raised its prices for basic service in the Triangle—as much as 52 percent in Cary—but did not impose any rate hike in Wilson. Nor did the company increase prices in Wilson for the digital sports and games tier, while Triangle customers paid 41 percent more.

Cable and broadband consultant Catharine Rice of Action Audits gave the presentation; she advocates for municipalities that want to build their own networks.

The bill could hurt Wilson’s Greenlight service, even though it’s been installed. “The way the legislation is worded, and how I interpret it,” says Ovittore, “is that if the city of Wilson … had a resident who was digging in their yard—let’s say putting a new mailbox in—and accidentally damaged a strand of fiber, before that strand could be repaired the city would have to go through a referendum and vote, spending endless taxpayer dollars.”

A public referendum could also be required if Wilson wanted to connect an additional household to their existing system, Ovittore said.

Hoyle says that of the $30 million to build the network, Wilson used $12 million of it from the utility account. “People there are raising hell about their electricity bill, and it’s just not right,” he said.

Brian Bowman, Wilson’s public affairs manager, said the city borrowed the $28 million on the private market. As for Hoyle’s $12 million figure, Bowman said, much less—only $3.6 million— had been set aside from the electric fund by City Council in 1989; it was re-designated in 1999. “It has always been part of our funding package,” he said. As for the electric bills, Bowman said they were higher earlier this year because of the particularly cold winter, not the cost of the network.

Wilson accomplished its municipal broadband system without spending a nickle of taxpayer money.  Other North Carolina communities considering similar projects would run into overwhelming problems overcoming Hoyle’s telecom-friendly legislation because of its referendum requirements.

Hoyle told IndyWeek he doesn’t see the need for such projects anyway, claiming fast broadband is already universally available across the state.

“I’ve heard that BS, and it’s just not true—period,” he said. “Anybody that needs service has got served in this state and will continue to get served.”

Hoyle’s words sound a lot like those of Time Warner Cable, which also contends broadband availability is not an issue. “Based on a map of the state done in 2009 by Connected Nation, more than 92 percent of homes in North Carolina have broadband available to them,” said Buscher. “A vast majority of those have two wireline providers, some have wireless providers, plus satellite offers broadband to literally every home in the state. This isn’t an availability issue. Anyone who wants Internet service can get it today.”

Those claims are dubious. Chatham County Commissioner Tom Vanderbeck has advocated for rural broadband access since 2006 in an area where pockets still have only dial-up and DSL. Vanderbeck was recently appointed by the General Assembly to serve on the e-NC Authority, which promotes statewide rural broadband. He calls Hoyle’s bill anti-competitive, one that would discriminate against local government.

[…]

“Requiring a vote, when you have deep pockets that can fight it and put up as much money as they want, while making the project sound like a waste of taxpayer dollars—that would be a tragedy,” she adds.

Anyone who proclaims satellite fraudband represents a credible broadband competing alternative should be forced to use it.

Connected Nation, which Buscher relies on for her numbers, has a board dominated by telecommunications company executives, particularly AT&T.  With their private provider-stacked leadership, they can draw the maps anyway they please, particularly in ways that suggest there isn’t a broadband problem in North Carolina… or anywhere else.  Not as long as they are running it.