North Carolina residents:  Rep. Avila’s H129, brought to you by Time Warner Cable, is being jammed through the state legislature tomorrow with no public input, no real review, and no thought for the ordinary voter in the state.

The House Public Utilities Committee will “discuss” the measure during Wednesday’s Public Utilities Committee meeting at 12 noon, in room 643 of the Legislative Office Building in Raleigh, quickly followed by a vote.  Bought and paid for by the state’s cable and phone companies, this bill will guarantee every resident in the state will face relentless rate increases, unchecked by competition.  Even worse, the state of the art broadband networks that finally deliver the kind of quality broadband the state deserves will be forced to shut down because of the ludicrous conditions the legislation requires for them to continue.

That means no more fiber broadband for your state — just the same old slow cable and DSL service that has left North Carolina far back in national broadband rankings.  Even worse, without community-owned networks, the chances of a competitor arriving to bring better service at lower prices are practically zero.

For rural North Carolina, H129 is nothing less than total devastation.  It will destroy any chance for rural communities to take care of the broadband needs of their citizens big cable and phone companies have ignored for years.  Make no mistake — H129 spells disaster for every North Carolina resident who isn’t an executive of a cable or phone company.

No citizens have asked for H129 to be introduced. It, like all of its predecessors, is a creature of Big Telecom — custom-written to do their bidding at your personal expense.  With a wined-and-dined Republican majority (some of whom were flown out to San Diego for a telecom-paid vacation seminar, complete with a BBQ bash), the only thing that stands in the way of this nightmare becoming law is you.

Every legislator knows there is a price to be paid for special interest legislation like this.  If it threatens to cost them enough votes to put their re-election at risk, they will bury the legislation or openly vote against it.  If they believe you are not paying attention, they’ll vote yes and gratefully accept the cable company’s next contribution check for a job well done.

You have less than 24 hours to make sure they know you are paying attention, and you will not support any legislator who votes against your best interests.

Tell them to vote NO on H129. Representative Steen is the Committee Chair and can be reached at [email protected] or 919-733-5881.

Here is a complete contact list for your convenience.  Click on the representative(s) to get their direct contact information.  Phone calls are most effective followed by e-mail.  Feel free to pursue both.

The House Public Utilities Committee

Chairman	Rep. Steen
1st Vice Chairman	Rep. Brubaker
2nd Vice Chairman	Rep. Cook
3rd Vice Chairman	Rep. Hager
Members	Rep. K. Alexander, Rep. Blackwell, Rep. Brawley, Rep. Brisson, Rep. Collins, Rep. Dockham, Rep. Earle, Rep. Gill, Rep. Harrison, Rep. Hastings, Rep. Hilton, Rep. Hollo, Rep. Howard, Rep. Jeffus, Rep. Johnson, Rep. LaRoque, Rep. Lucas, Rep. Luebke, Rep. McComas, Rep. McLawhorn, Rep. T. Moore, Rep. Owens, Rep. Pierce, Rep. Pridgen, Rep. Samuelson, Rep. Setzer, Rep. Tolson, Rep. E. Warren, Rep. H. Warren, Rep. West, Rep. Womble, Rep. Wray

QUESTIONS THAT NEED TO BE ASKED ABOUT REP AVILA’S ANTI-BUSINESS, ANTI-LOCAL BROADBAND BILL

Will the industry be subject to the “level playing field” requirements of H129/S87?

NO. The industry would cease providing broadband services if they were subject to the requirements of this bill, due to the onerous burdens it places on broadband providers.The federal government and North Carolina deregulated broadband and cable services years ago; this bill re-regulates those services only if they are provided by local communities. The purpose of this industry-sponsored bill is to slant the competitive playing field in the industry’s direction and prevent local communities from providing their residents the broadband they need.

Why does the industry want local governments subject to the requirements of H129/S87?

So local broadband networks don’t develop Industry spokesmen say if local governments want to enter the broadband business they must play by the same rules as the private sector. Cable and broadband services were deregulated years ago and community broadband systems are subject to the same broadband rules as the private companies. This bill is designed to remove business and consumer choice and access to broadband services.

Is this bill actually good for the private sector?

NO. This bill will harm the private sector. The real private sector, local businesses, depend on access to reliable, advanced broadband infrastructure to sell goods and services.Yet large portions of our state remain unserved by the large telecoms or are served by unreliable, dated technology.  So local communities have stepped in to build the critical reliable infrastructure that will let their private sector flourish. This bill is only good for the large out-of-state telecom corporations whose monopolies benefit from being able to charge our local businesses higher rates due to lack of choice. North Carolina needs more broadband providers, not less.

Will this bill prevent public/private broadband partnerships, like Google Fiber?

YES. §160A-340.4 limits the funding, construction or improvement of any community broadband to general obligation bonds which impose severe limits on private sector investments in the system.  This bill will stop even public/private attempts to compensate for a lack of local broadband service.

Are the cable and telephone industry really interested in the welfare of taxpayers?

NO. The industry does not care about local taxpayers; they care about profit. If Time Warner Cable cared about taxpayer burdens,why have they raised cable rates on businesses and residential taxpayers every year? §160A-340.4 of the bill, actually shifts the financial risk of local systems directly to taxpayers by requiring that community systems are funded directly on the backs of taxpayers via general obligations bonds. §160A-340.1(b) also removes the requirement that the public vote before the sale of a community system occurs!

How do we ensure public accountability on public broadband projects without H129/H87?

The General Assembly has already established: (1) rules governing Public Enterprises (NCGS Chapter 160A, Article 16); (2) strict rules in the Budget and Fiscal Control Act governing all municipal budgets and expenditures, including hearing and disclosure requirements (NCGS Chapter 159, Article 3); and (3) strict oversight of municipal borrowing by the Local Government Commission (NCGS Chapter 159); and municipalities are subject to public document “Sunshine” laws, which Time Warner Cable has repeatedly used to obtain access to municipal financial and strategic planning decisions. In contrast, North Carolina’s telephone and cable companies are not required to publicly reveal any information about their systems.

Are portions of H129/S87 unconstitutional?

YES. The big telecoms want you to vote for a bill that is in contravention of NC’s state constitution. Their bill violates § 2(3) of Article v of North Carolina’s Constitution, which exempts all municipally-owned property from taxation by requiring municipalities to pay property taxes on broadband and other communication systems by renaming the property tax a “payment in lieu of taxes.

Will H129/S87harm public safety networks?

YES. Public Safety networks are typically regional communication networks of Counties, Cities, and Towns who pay fees and receive federal grants to cover operational costs. This bill would shut them down by limiting their service areas and imposing restrictive rate-setting and financial limitations;it will also make them ineligible for Homeland Security, ARRA and Farm grants.

Watching two governments — one in Ottawa, the other Washington — debate important broadband issues has been an illuminating experience for this American.  As Canada continues to deal with a firestorm of protests against broadband pricing ripoffs from usage-based billing, the debate over Net Neutrality achieved new levels of absurdity in Washington yesterday as a largely Republican crowd fought to overturn the FCC’s watered-down open Internet protection policies.

Watching and listening to a combined eight hours of hearings both north and south of the border this month has cast a striking contrast between our two governments.  After it was all over, I can forgive anyone who decides Congress is filled with a bunch of uninformed meat-heads who fight for the talking points attached to their fat contribution checks from the telecommunications industry.

It is unseemly watching Republicans fall all over themselves to impress AT&T, Verizon, and Comcast with their grasp of these companies’ arguments against an open and free Internet.  There are also some bad Democrats on AT&T and Verizon’s virtual payroll, but the hearings this week in the House of Representatives were over the top — a Republican Valentine’s Day present for Big Telecom, replete with clueless representatives who clearly don’t understand the concept of Net Neutrality beyond the 3×5 index cards handed to them by one of their respective staffers.  For the most reactionary members, handing out photoshopped-pictures of Leon Trotsky hugging Barack Obama in front of a spool of fiber optic cable would have been just as effective.

The deservedly-undercovered Judiciary Committee hearings featured a single wireless ISP (WISP) owner who appears to spend most of his free time writing in the Comment sections of major American newspapers and social media sites.  His concern?  A technicality in the current Net Neutrality rules about customers running web servers.  ServerGate.  There’s a hot button issue if there ever was one.  Brett Glass’ customers are much more interested in watching online video, a concept that frightens a lot of WISP owners into placing usage caps on their service to discourage them from doing that.

Another witness at that hearing came straight from a telecom industry funded think tank.  Inviting AT&T to appear themselves would have effectively cut out the middleman and saved everyone a whole lot of time.

Gigi Sohn from Public Knowledge was left alone to stick up for Julius Genachowski’s cowardly-lion Net Neutrality rules, which in this author’s opinion are barely better than nothing, fatally flawed and one court decision away from oblivion.

Yesterday’s hearing featured FCC Commissioners on a partisan griddle as members of Congress asked softball questions of those they favored, and strafed the ones they don’t with long-winded lectures.

Republican members had no time for stories of Providers Gone Wild, particularly Comcast’s secret squeeze of its customers’ broadband speeds when running peer-to-peer software.  Such stories conflict with their talking point world view that broadband from the private sector should be run any damn way they please.  When some go to far, “they are isolated incidents” claimed Republican members, to the nodding affirmation of the two Republican commissioners.

Julius Genachowski was reduced to defending his homeopathic net regulations as a regulatory “light touch” — like a dew kissed raspberry on a summer morning.  But representing regulation as harmless didn’t do him any favors, because he forgot his audience.

No argument about moderated government regulation is ever going to fly in a room with members like Rep. Marsha Blackburn (R-Tenn.) who spent her five minutes of talk time scorching the FCC for holding up the Comcast-NBC merger with questions.  How. dare. they.

Congressional hearings used to be about fact finding and allowing members to educate themselves on the issues before casting their votes.  No more.  These days, hearings are an exchange of preconceived talking points as members switch between grilling or ignoring the witnesses they don’t like while fawning over those they do.

GigaOm called the entire affair “nauseating” and helpfully condensed the only three things you need to take from the hearings:

• FCC Chairman Genachowski said the Level 3 and Comcast debate over access to Comcast’s last mile subscribers is a business issue and not a net neutrality issue.
• FCC Commissioner Robert McDowell resurrected the ghost of unlicensed white spaces and set it up as a competitive threat to existing ISPs. He then used that threat of eventual competition to argue we no longer need net neutrality rules. I tend to agree that if we had robust broadband competition, we wouldn’t need network neutrality, but according to McDowell, white spaces aren’t dead. If they aren’t dead, that’s important.
• The FCC will keep the docket open on its effort to reclassify broadband, which would give the FCC the legal authority under existing laws regulate broadband as a transportation service (the so-called Title II authority). This is a good thing for network neutrality fans, as the existing net neutrality rules will likely be challenged in court, and keeping that docket open leaves a back door for the FCC to implement rules. However, the industry hates the idea of reclassification and will fight it tooth and nail. It also means more hearings, comments and arguments over the entire issue.

Contrast this with more than a week of hearings in Canada on usage-based billing.  The differences are nothing less than striking.  Members attending those hearings were well-informed about most of the issues surrounding the usage-based billing debate and aside from the occasional minor grandstanding and long-winded questions, got to the bottom of the issues at hand and were prepared to challenge assertions made in all sides of the debate.  They even pronounced everything correctly.  A 10 minute exchange over the pricing formulas for Bell’s wholesale Gateway Access Service (GAS) probably won’t get you a soundbite on the evening news, but it will enlighten a member of Parliament about just how unjustified these pricing schemes are.

Not so in Washington, where net policy nuance is a French word meaning “weakness” or “socialist takeover.”

Bell Canada must surely wish they lived in a country where the hired help in Congress can reflexively support whatever is on the company’s agenda… for the right price.  For the moment, they are stuck exchanging Valentines with their close friends at the Canadian Radio-television and Telecommunications Commission, most of whom came from the industry they now regulate.

Minutes after Washington’s hearings ended, several Republicans, with their minds already made up, introduced a Joint Resolution to override the FCC’s authority on Net Neutrality and sweep the free and open Internet into a dustbin.  There are new owners of the Internet in town and it’s past time you got used to it — they are AT&T, Verizon, and Comcast.  Your bill is in the mail.  You can thank us now or later.

The National Telecommunications and Information Administration unveiled America’s broadband map early this morning, showing broadband availability, speeds, and coverage areas across all 50 states.

“A state-of-the-art communications infrastructure is essential to America’s competitiveness in the global digital economy,” said Acting Commerce Deputy Secretary Rebecca Blank. “But as Congress recognized, we need better data on America’s broadband Internet capabilities in order to improve them. The National Broadband Map, along with today’s broadband Internet usage study, will inform efforts to enhance broadband Internet access and adoption — spurring greater innovation, economic opportunities, and advancements in health care, education, and public safety.”

The map, searchable by street address or zip code, delivers data largely volunteered by service providers themselves.  Some of the data, particularly for broadband speeds, represent best-case scenarios, not actual results.  Regardless, looking at the nation as a whole, there are some dramatic gaps in coverage.  Large areas west of the Mississippi are without broadband, which can be understandable in the sparsely populated region.  To the east, the biggest problem by far as in the Appalachians, especially in West Virginia, western Virginia, and the western Carolinas.  West Virginia in particular stands out as the state with the least amount of coverage in the east, perhaps only rivaled by Maine.  In the southern U.S., Alabama, Mississippi, Louisiana, and northern Florida are problem areas.  East Texas outside of major cities is as well.  In rural areas, the coverage map fills in the most when rural wireless mobile providers are introduced, but their broadband plans are hardly suitable as a replacement for wired, unlimited access service.

“The National Broadband Map shows there are still too many people and community institutions lacking the level of broadband service needed to fully participate in the Internet economy. We are pleased to see the increase in broadband adoption last year, particularly in light of the difficult economic environment, but a digital divide remains,” said Assistant Secretary for Communications and Information and NTIA Administrator Lawrence E. Strickling. “Through NTIA’s Broadband Technology Opportunities Program, digital literacy activities, and other initiatives, including the tools we are releasing today, the Obama Administration is working to address these challenges.”

Reviewing the map for Stop the Cap!‘s headquarters — Rochester, N.Y., shows a correct list of providers, but the data about their products is more fantasy than reality:

• Time Warner Cable does not deliver 25/1.5Mbps service to residential customers in Rochester at this time, but its PowerBoost temporary speed gimmick might, for around 30 seconds.  Currently, Time Warner Cable maxes out at 15/1Mbps in the Rochester area;
• Frontier’s claim of 10Mbps is a theoretical maximum.  Most DSL customers don’t come close.  In our area (Brighton, N.Y.) Frontier couldn’t deliver more than 3.1Mbps.
• Wireless carrier data is simply wrong.  Sprint-Nextel is beaten down to a maximum 1.5Mbps, despite the arrival of its 4G network, which can manage better than that.  Verizon’s 3-6Mbps service is in their dreams, considering this data came from last June — before the introduction of LTE service in Rochester.  Clearwire is also guilty of boasting speeds they will never deliver on their increasingly throttled network.

The NTIA touts their map will be verifiable using “crowdsourcing,” but we found visitors are only able to confirm if a provider serves an area, but not how well and at what speeds.

Price data is also missing.  Strickling blames that on fast-changing industry practices.  We blame it on the fact providers refused to disclose that information, along with more specific details about their broadband networks.  Large providers claimed releasing proprietary, confidential business information could harm them competitively.

Another glaring example of questionable accuracy is the compelled-to-report top and bottom 10 cities in the country for service.  According to the NTIA, America’s number one city for broadband availability at speeds greater than 3Mbps is… Cleveland, Ohio.

Cleveland?

The worst?  Terre Haute, Indiana.

Really?

You always know when a new year has arrived when another North Carolina legislator files a Big Telecom industry-written bill attacking community-owned broadband.

This year, the laughably-named “Act to Protect Jobs and Investment by Regulating Local Government Competition With Private Business” comes courtesy of Rep. Marilyn Avila (R-Wake County), a former manager of the conservative think tank John Locke Foundation.

H.129 is remarkable for its legislative micro-management, coming from someone who claims to oppose big government meddling.

Among its requirements:

• Demands a public accounting for every community broadband network;
• Limitations on service to strict city boundaries;
• Prohibits contractual agreements with apartment and condo building owners that mandate municipal service for individual residents;
• Bans advertising and “promotion” of community-owned broadband networks on Public, Education, and Government access channels;
• Shall not price any component of its service below cost;
• Requires payment of a special tax equal to the amount of local property taxes and/or fees normally exempted for local government enterprises;
• Requires permission through an extended hearing process to win permission before delivering service to any area deemed “unserved”;
• Demands a laundry list of pre-conditions before obtaining permission to shop for financing.

Avila doesn’t mind putting government all over the backs of community-owned networks if they happen to compete with her friends at AT&T, Time Warner, and CenturyLink.

Let’s review this exceptionally provider-friendly piece of protectionist legislation.

First, Avila’s demand for an open accounting of community broadband projects provides a treasure trove of business intelligence for any competitor.  They can demand to open the books and gain critical subscriber information — what residents pay for service, who gets the service, and how much it costs to provide.  That’s pure gold for targeted marketing campaigns to win back customers with special offers municipal providers are banned from offering.

We’re calling a foul ball because Avila’s “fair and level playing field” doesn’t have room for fair play.  Private providers get to keep the secrets community-owned network are forced to reveal.  That, by design, puts municipalities at a competitive disadvantage and could help drive them out of business.  Remember, these networks are financed by privately obtained bonds, not taxpayer dollars.  Shouldn’t any such provider have the right to keep its business strategies secret?

Second, if banning mandatory service for renters and condo owners is such a great idea, why does Avila only limit it to community-owned networks?  The record is clear — private providers are increasingly signing agreements with property owners mandating cable television fees for residents.  Apparently Avila’s concept of fairness doesn’t include the actual companies found guilty of raising the rent.

Third, Avila bends over backwards for her cable and phone friends by tying the hands of municipal providers who want their networks to be commercially successful.  Time Warner has no problem injecting endless promotions for its own services not just on a handful of channels, but on virtually every channel on the lineup, often during nearly every commercial break.  Can municipal networks ban advertising from AT&T and Time Warner?  Of course not.  And the definition of “promotion” specified in Avila’s ad ban is vague.  If a town government meeting talks up the success of a community-owned network, has Avila’s law been broken?  Apparently censorship by government mandate is a-OK as long as it doesn’t target her Big Telecom friends.

Avila’s ban on setting pricing below cost is another giveaway to Time Warner and AT&T, who routinely deliver retention and new customer promotions that could be temporarily priced below cost to secure or maintain a customer relationship for a limited period of time.  Of course, Avila doesn’t require either company to open their books to find out exactly what it costs companies to provide these special pricing packages.  No municipal provider seeks to price service at a rate that puts the project out of business.  Time Warner Cable has been accused of delivering below-cost retention pricing to departing customers in Wilson, where GreenLight has been poaching the cable company’s customers for more than a year.  Avila’s hand-tying provision allows some companies in the marketplace to keep pricing flexibility while the municipal provider is forced to price service according to a state-dictated formula.  John Locke would be turning over in his grave if he heard about this planned economy-pricing.

Rep. Avila can certainly no longer claim to be for low taxes, because her bill would effectively raise them for community-owned networks.  Again, since these projects are almost always funded from private bond markets, not public tax dollars, slapping complicated tax formulas on municipal providers while continuing to permit special tax break deals for private companies (such as “payment in lieu of taxes” or special tax breaks/grants for Time Warner in return for job creation) shouldn’t work for most small government conservatives.  Shouldn’t they support lower taxes for everyone?  Instead, Avila seeks to hamper community network business models by punitively sticking them with taxes she would otherwise oppose for commercial providers.

Avila’s support for smaller, less regulatory-minded government must also be called into question with this bill’s ridiculously complicated regulations for serving unserved areas of the state (which also grants a special window to private providers to protest, which they will certainly do in just about any area of the state even partially suitable for a future project).  Her bill even demands 60-day delays, custom-tailored to allow industry lobbyists to gin up opposition and demagogue projects.  Since a commission will be involved in the decision making process and has to take into account opposition from private providers, all of the benefits of Avila’s legislation flow to the cable and phone industry, none to community-owned networks or individual consumers that will ultimately benefit from better service at lower prices.

Avila destroys her own “level playing field” argument in language within her own bill:

“The city or joint agency making the application to the Commission shall bear the burden of persuasion.”

In other words, Avila offers a “level playing field” with an 11-foot electrified barbed wire fence surrounding it.  Unfortunately, municipalities won’t be the only ones shocked by Avila’s cable and phone company protectionism.

Ordinary consumers in communities like Wilson, exempted from the relentless annual rate hikes from Time Warner because of the presence of a municipal competitor won’t get to keep the savings if Avila has anything to say about it.  She wants you to pay full price for your cable service, and pay higher prices year after year.

Her claim that the legislation will somehow “protect jobs and investment” is specious at best.  Time Warner has not exited Wilson or Salisbury — two cities with a community-owned competitor.  In fact, Time Warner is on record welcoming competition.  In reality, these companies simply don’t welcome new choices from those providers that will actually deliver savings and better service to customers.

The cable industry’s flagellation against projects like GreenLight and Fibrant flips between calling them financial boondoggles not worth bothering about to unfair competition that will harm private investment.  AT&T’s protests, in particular, ring the most hollow.  This is the same company that wants deregulation to make it easier for new players like themselves to enter the marketplace.  Their U-verse service enjoys the benefits of statewide video franchising, which removes accountability to local governments.  Yet this same company lobbies for increased bureaucracy and regulation for some of their potential competitors.  Avila is only too happy to oblige.

As with every other piece of legislation we’ve seen on this subject from North Carolina, it’s yet another custom-written favor to big cable and phone companies and an attack on consumer interests across the state.  Generous campaign contributions from the telecom industry pay off only too well when state legislators allow these companies to write the bills designed to protect their turf.

For Time Warner Cable, the costs associated with sending selected legislators and their families to a recent delicious BBQ event in sunny San Diego to attend a sham “conference” sponsored by a corporate front group shows there are plenty of favors to be had all around, just as long as you support the company’s legislative agenda.

Fighting this year’s anti-consumer legislation will be tougher than ever.  For the first time in 112 years, the corporate friendly North Carolina Republican party won control of the General Assembly.  For many members, the free market can do no wrong and anything government touches is bad news.  Many will reflexively support Avila’s legislation.  But any underserved county in the state knows the truth about today’s broadband in rural North Carolina — if local communities can’t step up and deliver the service, nobody will.  For these representatives, Democrat or Republican, concern should run high that Avila’s bill assures these areas of years of high prices, poor or no service, and status quo protection designed to keep the market exactly as it is today.  Considering how poorly North Carolina stands in national broadband rankings, standing still should never be an option.

For the first time, a state has announced it is returning stimulus funding made available by the Obama Administration to improve broadband service.

Wisconsin governor Scott Walker said thanks, but no thanks to the U.S. Department of Congress, returning $23 million in broadband stimulus funds allocated to build a fiber-optic “middle mile” network to 380 Wisconsin communities — including 385 libraries. 82 schools, and numerous public safety offices in rural areas.

The decision to reject the money came in concert with a public relations push by Republicans in Washington this week calling on governors to curtail “wasteful spending” and reject stimulus projects.  Walker’s timing of the rejection has political watchers suspicious of an orchestrated campaign by state and national Republicans to call out the president’s economic programs.  Critics of the Walker administration are also accusing the governor of doing AT&T’s bidding in rejecting the public money.

AT&T has plenty of good friends in the state government, which has historically granted most of AT&T’s legislative checklist in the past ten years.  Wisconsin has taken a “hands-off” approach to cable and phone companies.  Statewide video franchising makes AT&T’s efforts to expand its U-verse IPTV system easy, without having to answer to local communities.  Rural commitments to landline phone service have also been eased for AT&T, thanks to a large lobbying effort.  Publicly-owned municipal broadband networks open to ordinary consumers are few and far between in the state, thanks to heavy opposition from the phone giant.

Walker’s track record of being extremely pro-business, and the fact he accepted more than $20,000 in campaign contributions from AT&T made it easy to claim Walker was delivering another favor to the state’s largest phone company.

But is Walker’s rejection of the state’s broadband stimulus money a help or a hindrance to AT&T?  Is Wisconsin’s governor correct when he says federal government bureaucracy was at fault?

Stop the Cap! decided to investigate.

BadgerNet: An Introduction

Wisconsin’s institutional broadband network, which delivers broadband connections to large educational facilities, public libraries, and government users, is named BadgerNet — which makes perfect sense for the Badger State.  State law limits who can utilize the service — ordinary residential customers cannot — so the network is not well known outside of the circle of groups authorized to access it.

Currently BadgerNet largely exists as an extension of AT&T’s network in Wisconsin.  That is a critical point.  Had BadgerNet initially been created as an independent entity, today’s stimulus rejection might never have happened.  Wisconsin, no doubt at the behest of AT&T, built its network with a leasing arrangement, signing five-year term contracts to rent space on AT&T’s fiber-copper wire facilities.  That kept initial construction costs down, and allows the state to theoretically “walk away” from part of the network if something better comes along — a highly unlikely proposition in a state like Wisconsin.  It’s not an economic leader and has large numbers of rural counties competitors would be unlikely to serve.

Wisconsin Republicans call this arrangement with AT&T a “public-private partnership.”  Democrats call it a giveaway to AT&T, and BadgerNet officials call it one big fat headache.

Obama’s Broadband Stimulus

When the Obama Administration unveiled its broadband stimulus program, it not only promised to deliver new broadband projects, but also the employment prospects for an army of consultants hired to navigate through the terms and conditions that always accompany money from Washington.

The control measures established by the Department of Commerce, which administers the money from the federal government, are designed to protect against waste, fraud, and abuse.  Unfortunately, they are often more impenetrable than software licensing agreements.  If you want the money, you must follow every requirement, or risk forfeiting it back to the government.

Wisconsin’s proposal to expand BadgerNet with broadband stimulus funding would mean discarding slower speed data connections for super-fast fiber optics.  Some 203 new miles of optical fiber were to be laid, serving 385 school districts, 74 libraries, and eight community colleges.

The federal government liked what it saw and awarded nearly $24 million in funds to launch the “middle-mile” project.  Along with the virtual check came pages of fine print — rules about how the money could and could not be spent.

As state officials and BadgerNet 2.0’s planners poured over the documents, they began reaching for the Tylenol.  AT&T’s ownership interests in the existing network turned out to be a major problem.

The ‘AT&T Problem’

“We, as a state, do not own our network. We purchase a managed service through the BadgerNet contract,” Diane Kohn, acting administrator for the Division of Enterprise Technology in the Department of Administration told the Milwaukee Journal Sentinel.

Most grant recipients either plan to build a new network from the ground up or build on an existing non-profit network.  Neither is the case in Wisconsin because of AT&T’s involvement.

“From a federal perspective, it was like we were some kind of unknown start-up firm with all of these risks attached to it,” said Robert Bocher, an information technology consultant for the Department of Public Instruction. “In fact, our network has been around since the mid-1990s.”

But it got even more difficult when BadgerNet discovered the federal government requires new fiber networks built with stimulus funds to be utilized for at least 20 years.  This important control measure protects taxpayers from fronting the costs to build state of the art fiber networks, only to be later sold off to private interests or discarded as a budget cutting move.

Wisconsin’s agreement with AT&T runs for five years, not 20.  Additionally, since AT&T largely administers the infrastructure, much of the $23 million could have ended up going straight to AT&T to cover construction costs.  BadgerNet lacks sufficient funding to completely sever ties with AT&T and build its own network, and Gov. Walker isn’t about the deliver the money required to start a new network from scratch.

BadgerNet learned a lesson most grant recipients discover after winning the money — spending it comes with plenty of wires attached, and none of them transport data.

The Davis-Bacon Act

A Depression-era law is also being blamed for supposedly creating major hurdles for broadband network construction.  The 1931 Davis-Bacon Act was enacted to require public works projects be built at local prevailing wages.  The Act became law after contractors began importing cheap labor (typically underpaid African-Americans from southern states) to work competitively bid public construction projects during the Roosevelt Administration.

Republicans currently suspect the Act of being little more than a union protection law, raising labor costs artificially and helping to bust budgets.  Wisconsin Republican senator Ron Johnson used complications in a Sauk County broadband project to bash the Act, accusing it of being responsible for wasting taxpayer dollars.

David Mikonowicz, the utility superintendent for Reedsburg, complained the Act would require him to pay more than double his anticipated labor costs for a fiber project in the community.  Mikonowicz claimed the Act didn’t provide a prevailing wage for fiber contractors, so he was forced to bid out the project at wages suitable for high voltage wiring projects — $40 an hour.

That false premise made it to the pages of the Journal Sentinel in an earlier piece — a bit of political theater to bash unions, the federal government, and play up local communities as the innocent victims of both.

Stop the Cap! had no problems finding a prevailing Davis-Bacon Act wage covering Sauk County fiber installers, so we are unsure why Mikonowicz could not:

Teledata System Installer/Technician $11.70-21.26/hr

Low voltage construction, installation, maintenance and removal of teledata facilities (voice, data, and video) including outside plant, telephone and data inside wire, interconnect, terminal equipment, central offices, PABX, fiber optic cable and equipment, micro waves, V-SAT, bypass, CATV, WAN (wide area networks), LAN (local area networks), and ISDN (integrated systems digital network)

The Loyal Opposition & Everyone Else

The loss of nearly two dozen million dollars in federal government money was catnip for the loyal opposition.

State Rep. Mark Pocan (D-Madison) said Walker’s broadband money giveback was hurting the state.

“Not only is he turning away construction jobs that would have come with the federal grant to expand broadband fiber to schools and libraries across Wisconsin, but he’s closing off potential to business growth that comes with bridging the digital divide,” Pocan said. “What’s worse, the root of his decision wasn’t what was in the best interest of Wisconsin, rather the best interest of his big telecommunications campaign donors.”

Gov. Walker used the occasion to blame the federal government for unnecessary bureaucracy. Mike Huebsch, appointed by the governor to serve as secretary of the state Department of Administration, issued a memo warning if they didn’t return the money, state taxpayers could be on the hook for the entire amount if the federal government found the state didn’t comply with grant requirements.

Ordinary Wisconsin residents would never see improved broadband in their homes from the middle mile project, so much of their reaction comes from a reflexive dislike of the governor, taxes and spending, AT&T, or a combination of all three.

AT&T has kept quiet through the entire affair, only stating it wasn’t interested in becoming a formal grant recipient stuck with the federal government’s rules.

Republicans and “tea party” members are thrilled Wisconsin is a leader in throwing federal money for broadband, railways, and other public works projects back to Washington, in hopes it will set an example for the federal government to follow.

What Happens Next

The state says it is negotiating an extension of the existing AT&T contract for another five years, and points to advances in copper wire-delivered bandwidth and the fact AT&T already provides fiber connectivity for certain parts of BadgerNet.

While AT&T has been labeled the ultimate culprit for the broadband stimulus debacle, it’s not as guilty as some might think for these reasons:

1. The initial failure of the state to own and operate its own network, instead of leasing access from AT&T;
2. AT&T gets the money whether Wisconsin leases another five years of service from AT&T, or stimulus funding gets diverted to AT&T to bolster BadgerNet’s existing network;
3. AT&T is sitting pretty whether it has a five year lease or a 20-year stimulus-mandated contract.  In fact, AT&T could set its rates at today’s relatively high prices for network connectivity that Wisconsin would still be paying two decades from now.

That doesn’t mean AT&T is a good actor in Wisconsin.  While the company has steered clear of this debate, its lobbyists continue to fight off any potential competition from community-owned networks that threaten to deliver service to residential and business customers.  Few Big Telecom providers complain about institutional networks like BadgerNet, because heavy lobbying on their part several years ago won state laws that forever prohibit ordinary consumers from ever buying service from them.