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North Carolina Update: Muni-Broadband Killer Bill Stalled — Keep the Pressure On!

Phillip Dampier May 27, 2010 Community Networks, Competition, Editorial & Site News, Public Policy & Gov't Comments Off on North Carolina Update: Muni-Broadband Killer Bill Stalled — Keep the Pressure On!

Bowman is the public affairs manager for Wilson, N.C.

Brian Bowman reports from Save North Carolina Broadband that S1209, Senator Hoyle’s municipal broadband killer bill, was yanked from yesterday’s meeting, apparently to “study the issue some more.”  Perhaps elected officials are studying the implications of passing this anti-consumer nightmare on their chances in the next election.  Let’s deliver the death blow to S1209 by getting on the phones and e-mail again today!

You need to keep the pressure on with calls and letters to all of these officials, reminding them you are watching this bill very closely and are waiting for them to cast their “no” vote, but will also at least accept a vote that yanks the bill from consideration for the rest of 2010.

Remind them this bill was quickly foisted on the Senate Finance Committee, and its wide-ranging implications are too important to North Carolina’s high tech future to let this bill rush into law.  Tell them the only real assault on your wallet comes from big telecom providers who will stop at nothing to make sure municipal competition never sees the light of day — municipal competition that is the only realistic way many North Carolina towns and cities can deliver 21st century broadband service that will help get them back on track for economic success.

Don’t sit back and think someone else will do the writing and calling for you.  We made a difference last year because everyone called and wrote.  We need that to happen again!

Here is the list:

County First Name Last Name Tel (919) Party Email Address Leg Asst email
Alamance Anthony E. Foriest 301-1446 Dem [email protected] [email protected]
Buncombe Martin L. Nesbitt 715-3001 Dem [email protected] [email protected]
Cabarrus Fletcher L. Hartsell 733-7223 Rep [email protected] [email protected]
Carteret Jean R. Preston 733-5706 Rep [email protected] [email protected]
Catawba Austin M. Allran 733-5876 Rep [email protected] [email protected]
Chatham Robert Atwater 715-3036 Dem [email protected] [email protected]
Cherokee John J. Snow 733-5875 Dem [email protected] [email protected]
Columbus R. C. Soles 733-5963 Dem [email protected] [email protected]
Cumberland Margaret H. Dickson 733-5776 Dem [email protected] [email protected]
Cumberland Larry Shaw 733-9349 Dem [email protected] [email protected]
Davie Andrew C. Brock 715-0690 Rep [email protected] [email protected]
Duplin Charles W. Albertson 733-5705 Dem [email protected] [email protected]
Durham Floyd B. McKissick 733-4599 Dem [email protected] [email protected]
Edgecombe S. Clark Jenkins 715-3040 Dem [email protected] [email protected]
Forsyth Linda Garrou 733-5620 Dem [email protected] [email protected]
Gaston David W. Hoyle 733-5734 Dem [email protected] [email protected]
Haywood Joe Sam Queen 733-3460 Dem [email protected] [email protected]
Henderson Tom M. Apodaca 733-5745 Rep [email protected] [email protected]
Johnston David Rouzer 733-5748 Rep [email protected] [email protected]
Mecklenburg Daniel G. Clodfelter 715-8331 Dem [email protected] [email protected]
Mecklenburg Charlie Smith Dannelly 733-5955 Dem [email protected] [email protected]
Mecklenburg Bob Rucho 733-5655 Rep [email protected] [email protected]
Moore Harris Blake 733-4809 Rep [email protected] [email protected]
Nash A. B. Swindell 715-3030 Dem [email protected] [email protected]
New Hanover Julia Boseman 715-2525 Dem [email protected] [email protected]
Onslow Harry Brown 715-3034 Rep [email protected] [email protected]
Orange Eleanor Kinnaird 733-5804 Dem [email protected] [email protected]
Randolph Jerry W. Tillman 733-5870 Rep [email protected] [email protected]
Robeson Michael P. Walters 733-5651 Dem [email protected] [email protected]
Rockingham Philip Edward Berger 733-5708 Rep [email protected] [email protected]
Scotland William R. Purcell 733-5953 Dem [email protected] [email protected]
Surry Don W. East 733-5743 Rep [email protected] [email protected]
Union W. Edward Goodall 733-7659 Rep [email protected] [email protected]
Wake Daniel T. Blue 733-5752 Dem [email protected] [email protected]
Wake Neal Hunt 733-5850 Rep [email protected] [email protected]
Wake Joshua H. Stein 715-6400 Dem [email protected] [email protected]
Wake Richard Y. Stevens 733-5653 Rep [email protected] [email protected]
Watauga Steve Goss 733-5742 Dem [email protected] [email protected]

Winston-Salem Journal: You Can’t Expect North Carolina to Wait For 21st Century Broadband Any Longer

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.

Action Alert: Stop Sen. Hoyle’s Anti-Municipal Broadband Bill in North Carolina

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:

County First Name Last Name Tel (919) Party Email Address Leg Asst email
Alamance Anthony E. Foriest 301-1446 Dem [email protected] [email protected]
Buncombe Martin L. Nesbitt 715-3001 Dem [email protected] [email protected]
Cabarrus Fletcher L. Hartsell 733-7223 Rep [email protected] [email protected]
Carteret Jean R. Preston 733-5706 Rep [email protected] [email protected]
Catawba Austin M. Allran 733-5876 Rep [email protected] [email protected]
Chatham Robert Atwater 715-3036 Dem [email protected] [email protected]
Cherokee John J. Snow 733-5875 Dem [email protected] [email protected]
Columbus R. C. Soles 733-5963 Dem [email protected] [email protected]
Cumberland Margaret H. Dickson 733-5776 Dem [email protected] [email protected]
Cumberland Larry Shaw 733-9349 Dem [email protected] [email protected]
Davie Andrew C. Brock 715-0690 Rep [email protected] [email protected]
Duplin Charles W. Albertson 733-5705 Dem [email protected] [email protected]
Durham Floyd B. McKissick 733-4599 Dem [email protected] [email protected]
Edgecombe S. Clark Jenkins 715-3040 Dem [email protected] [email protected]
Forsyth Linda Garrou 733-5620 Dem [email protected] [email protected]
Gaston David W. Hoyle 733-5734 Dem [email protected] [email protected]
Haywood Joe Sam Queen 733-3460 Dem [email protected] [email protected]
Henderson Tom M. Apodaca 733-5745 Rep [email protected] [email protected]
Johnston David Rouzer 733-5748 Rep [email protected] [email protected]
Mecklenburg Daniel G. Clodfelter 715-8331 Dem [email protected] [email protected]
Mecklenburg Charlie Smith Dannelly 733-5955 Dem [email protected] [email protected]
Mecklenburg Bob Rucho 733-5655 Rep [email protected] [email protected]
Moore Harris Blake 733-4809 Rep [email protected] [email protected]
Nash A. B. Swindell 715-3030 Dem [email protected] [email protected]
New Hanover Julia Boseman 715-2525 Dem [email protected] [email protected]
Onslow Harry Brown 715-3034 Rep [email protected] [email protected]
Orange Eleanor Kinnaird 733-5804 Dem [email protected] [email protected]
Randolph Jerry W. Tillman 733-5870 Rep [email protected] [email protected]
Robeson Michael P. Walters 733-5651 Dem [email protected] [email protected]
Rockingham Philip Edward Berger 733-5708 Rep [email protected] [email protected]
Scotland William R. Purcell 733-5953 Dem [email protected] [email protected]
Surry Don W. East 733-5743 Rep [email protected] [email protected]
Union W. Edward Goodall 733-7659 Rep [email protected] [email protected]
Wake Daniel T. Blue 733-5752 Dem [email protected] [email protected]
Wake Neal Hunt 733-5850 Rep [email protected] [email protected]
Wake Joshua H. Stein 715-6400 Dem [email protected] [email protected]
Wake Richard Y. Stevens 733-5653 Rep [email protected] [email protected]
Watauga Steve Goss 733-5742 Dem [email protected] [email protected]

North Carolina Phone & Cable Companies Decry Municipal Broadband While Living Large on Public Tax Breaks Themselves

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.

Complete Video of North Carolina’s “Fiber is Obsolete” Revenue Laws Study Committee Meeting

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]

https://www.raleighnc.gov/publications/Planning/Comprehensive_Plan/CC-Minutes-20091007.pdf

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