Commercial providers and their pals in the legislature will go to any length — even lie — to protect their cozy duopoly, charging high rates for poor quality service.

That fact of life has been proven once again in the state of Tennessee, where an effort to expand EPB Fiber — a community owned fiber network — to nearby communities outside of Chattanooga, was killed thanks to a lobbying blitzkrieg by Big Telecom interests.

The “Broadband Infrastructure for Regional Economic Development Act of 2011,” supported by chief sponsor House Majority Leader Gerald McCormick, (R-Chattanooga), is dead after telecom industry lobbyists unleashed a full court press to stop the legislation from passing into Tennessee law.

The bill would have permitted EPB and five other municipal electric services that have or are developing broadband infrastructure to expand service up to 30 miles outside of their service area, where appropriate, to meet the needs of businesses or consumers.

With the legislation, EPB could bring its 1 gigabit fiber broadband service to Bradley County, home to a future Amazon.com distribution center.  Amazon already operates a huge warehouse in Hamilton County, where it was able to obtain EPB’s super-fast broadband service.  According to Harold DePriest, EPB President and CEO, Chattanooga’s fiber network is helping sell the city as a high-tech mecca for business, where broadband connectivity is never a problem.

DePriest says EPB’s network has been a proven job-creator, and Amazon.com’s ongoing expansion in the region is just one example.

Chattanooga residents and businesses now have the fastest broadband service in the southern United States, at prices often far less than what the competition charges.  Expanding EPB’s success to other parts of Tennessee represents a major threat to the likes of Comcast and AT&T, the state’s dominant telecom companies.

Lobbyists fought the bill off with some whopper tall tales about the “horrors” of community broadband.

Some Republican lawmakers friendly to Comcast and AT&T’s point of view have bent their philosophical positions on government and regulation into logic pretzels.  One has even called for EPB to be regulated by Tennessee’s Regulatory Authority, a body many state Republicans feel is about as helpful as a tax increase.

Despite that, there was Rep. Curry Todd (R-Collierville) at a recent hearing telling fellow lawmakers EPB and other community providers should be regulated by the TRA to protect ratepayers from the “loss of tremendous amounts of money coming out of taxpayers’ pockets.”

Does Todd think Comcast and AT&T should also be regulated?  Of course not.  Nobody should protect consumers from AT&T’s and Comcast’s relentless rate hikes.  Todd cannot even get his facts straight.

After 19 months, EPB has 25,500 customers — far ahead of its projections, and is well ahead of its financial plan, according to DePriest.  So much for being a “financial failure.”

On cue, the same cable industry that tried to sue EPB Fiber out of existence is now comparing the Chattanooga fiber network to Memphis Networx, a disastrous effort by that city to build a public-private wholesale fiber optic network only business and institutions could directly access.  It’s hard to earn critical revenue from consumers when you run a wholesale network.  Even harder when you build it just before the dot.com crash.

EPB sells its service directly to business and consumers, so it gets to keep the revenue it earns, paying back bondholders and delivering earning power.

Stop the Cap! reader John Lenoir notes some of the local tea party groups are also being encouraged to oppose EPB’s efforts to expand.

“Just as Americans for (Corporate) Prosperity is lying about North Carolina’s community broadband, these corporate front groups are also engaged in demagoguery over EPB in Tennessee,” Lenoir says.  “In addition to the usual claims EPB represents ‘socialism,’ the locals are also being told EPB wants to use their fiber network to run smart meters, which some of these people suspect are spying on them or will tell people when they can and can’t use their electric appliances.”

Lenoir in unimpressed with the telecom industry arguments.

“AT&T’s opposition is downright laughable, considering this company raised its rates on U-verse and will slap usage limits on every broadband customer in a few weeks,” Lenoir adds.  “We thank God EPB is here because it means we can tell AT&T to stick their usage limits and Comcast can take their overpriced (and usage limited) broadband somewhere else.”

Lenoir thinks EPB should embarrass both AT&T and Comcast, but since neither company feels any shame in his view, it’s more about business reality.

“Why do business with AT&T or Comcast and their gouging ways when you can sign up for something far better and support the local community,” Lenoir asks.

AT&T spokesman Chris Walker complains that the phone company is somehow faced with an unlevel playing field in Tennessee, despite the legislature’s repeated acquiescence to nearly every AT&T-sponsored deregulatory initiative brought before it.  The company wants a “level playing-field” statute like the very-provider-friendly (it should be — it was written by them) one currently before the North Carolina state Senate.

Comcast questions whether anyone needs 1 gigabit service, but the cable company’s Chattanooga vice president and general manager Jim Weigert told the Times Free Press it could deliver 1 gigabit service… to business customers… assuming any asked.

DePriest questions that, noting Comcast tops out its broadband service at 105Mbps, and only for downstream speeds.  Comcast upload speeds top out at 5Mbps.  EPB can deliver the same upstream and downstream speeds to customers and do it today.

Not a single Republican member of the North Carolina House of Representatives stood with consumers yesterday as the cable industry’s custom-written anti-community-broadband bill — H.129 — passed the House in a lopsided 81-37 vote. Fifteen Democrats joined them, some after it was apparent the bill would enjoy lockstep support from their Republican colleagues.  Only three dozen Democrats were willing to choose the interests of their constituents over the interests (and campaign contributions) from Time Warner Cable, AT&T, and CenturyLink.

Rep. Bill Faison (D-Orange) told WRAL-TV voters need to be aware H.129 was Time Warner’s custom-written bill imposing harsh terms and conditions on community broadband networks, while exempting big cable and phone companies.

“Where’s the bill to govern Time Warner?” Faison asked.

Faison predicted the bill will make it next to impossible for any future community broadband effort to deliver service, even in areas where nobody else has or will.

In the communities of Mooresville and Davidson, House Speaker Thom Tillis (R-Cornelius), who represents north Mecklenburg including Davidson and Rep. Grey Mills (R-Mooresville) both voted for the bill, throwing the local community-owned MI-Connection cable system under the bus.  That cable system, acquired from bankrupt Adelphia Cable and rebuilt to modern standards, faced unexpected financial hurdles from the decrepit state the infrastructure was left in when it was sold.  H.129 would limit the system’s ability to reach its entire natural service area in an effort to remain viable, likely banning service for unincorporated Mecklenburg and Iredell counties, and parts of the community of Corelius.

Avila’s statements defending her bill ranged from confusing to the downright absurd — particularly the assertion that high tech businesses will avoid North Carolina if her bill didn’t pass because companies would not want to do business in a state where the local government provided competing broadband service.  That’s a ludicrous notion for a business confronted with 1.5Mbps DSL from CenturyLink.  No high technology business will want to do business in a state that delivers some of the nation’s least adequate broadband service.  With Ms. Avila’s efforts, that fact of life could gain rubber stamp approval from many in the state legislature more interested in protecting the profits of New York-based Time Warner Cable than Wilson, N.C.-based GreenLight.

The bill is headed to the Senate next.  We’ll have a Call to Action up shortly regarding this.

If your member from the House of Representatives is not on the list below, they need to be held accountable for doing the wrong thing for North Carolina broadband.

NC House of Representatives Members Voting For Consumers By Opposing H.129

(Click the name of your member to obtain current contact information, and please send thanks for their vote yesterday.)

 

Party	District	Member	Counties Represented
Dem	58	Alma Adams	Guilford
Dem	107	Kelly M. Alexander, Jr.	Mecklenburg
Dem	106	Martha B. Alexander	Mecklenburg
Dem	21	Larry M. Bell	Sampson, Wayne
Dem	63	Alice L. Bordsen	Alamance
Dem	60	Marcus Brandon	Guilford
Dem	7	Angela R. Bryant	Halifax, Nash
Dem	100	Tricia Ann Cotham	Mecklenburg
Dem	50	Bill Faison	Caswell, Orange
Dem	24	Jean Farmer-Butterfield	Edgecombe, Wilson
Dem	114	Susan C. Fisher	Buncombe
Dem	43	Elmer Floyd	Cumberland
Dem	33	Rosa U. Gill	Wake
Dem	45	Rick Glazier	Cumberland
Dem	66	Ken Goodman	Montgomery, Richmond
Dem	54	Joe Hackney	Chatham, Moore, Orange
Dem	119	R. Phillip Haire	Haywood, Jackson, Macon, Swain
Dem	29	Larry D. Hall	Durham
Dem	57	Pricey Harrison	Guilford
Dem	56	Verla Insko	Orange
Dem	39	Darren G. Jackson	Wake
Dem	59	Maggie Jeffus	Guilford
Dem	115	Patsy Keever	Buncombe
Dem	42	Marvin W. Lucas	Cumberland
Dem	30	Paul Luebke	Durham
Dem	34	Grier Martin	Wake
Dem	69	Frank McGuirt [ Appointed 03/07/2011 ]	Anson, Union
Dem	9	Marian N. McLawhorn	Pitt
Dem	5	Annie W. Mobley	Bertie, Gates, Hertford, Perquimans
Dem	44	Diane Parfitt	Cumberland
Dem	72	Earline W. Parmon	Forsyth
Dem	118	Ray Rapp	Haywood, Madison, Yancey
Dem	38	Deborah K. Ross	Wake
Dem	23	Joe P. Tolson	Edgecombe, Wilson
Dem	35	Jennifer Weiss	Wake
Dem	55	W. A. (Winkie) Wilkins	Durham, Person
Dem	71	Larry Womble	Forsyth

 

Rep. Julia Howard (R-Davie, Iredell) threatened to get up and leave an interview with a Raleigh television reporter if the NBC station didn’t “switch the camera off” after she was questioned about her support of an anti-consumer, anti-broadband bill written by the same telecommunications companies that donated more than $7,200 to her political campaign.

Howard was being interviewed by WNCN-TV in Raleigh about her strong support for legislation that would likely end community-owned broadband in one of America’s least-wired states.  The reporter asked Howard to explain her support for H.129, the so-called “Level Playing Field” bill that has received a considerable push from the state’s largest telecommunications companies, including Time Warner Cable, AT&T, and CenturyLink.

At first, Howard tried to defend her support for the bill, despite claims from the watchdog group Democracy North Carolina that the legislation raises ethical questions about the influence of money in state politics.

“I don’t care what they say. That’s not who I am,” she said. “As long as I’m here, I’m going to do what I feel like is right for the people of the state.”

But moments after being confronted with the fact she has received considerable financial support from all three companies, Howard demanded the reporter turn the cameras off.

“I wish you’d turn the camera off now because I am going to get up and leave if you don’t,” Howard told the reporter.

Bob Hall, director of Democracy North Carolina called the bill a classic example of “pay to play” politics — where large companies pay to get legislation favoring their businesses before the state legislature.

“The relationships that are built because of money that’s given, that then warps the whole discussion,” Hall said.

Howard chairs the Finance Committee that will hear the bill tomorrow morning after a week’s delay.  Surprise amendments that would help hold existing networks exempt from the onerous provisions of the legislation and an easing of the bill’s requirements for unserved areas upset cable industry lobbyists.  In the interim, a growing number of media reports have called attention to the corporate contributions that seem to be helping drive the bill forward.

“There are a handful of politicians in the legislature that are either on the take or wear blinders when it comes to the real interests of voters like myself,” writes Raleigh resident Susan, who follows Stop the Cap! “Watching Julia Howard squirm in her chair when being asked pointed questions serves her right.”

Susan, who notified us of tonight’s news report, doesn’t believe for a moment Howard’s “feigned shock” over questions being asked by the reporter.

“Anyone pushing H.129 is a shill for Time Warner Cable, because there is not one single part of this bill that brings one new Internet connection, it just guarantees we will all pay higher rates so the cable company can donate more money to Howard’s campaign.”

Stop the Cap! continues to recommend North Carolina residents contact members of the Finance Committee and tell them to vote NO on H.129.  Tell Rep. Howard and others it is not too late to do the right thing and withdraw this bill from further consideration.  Explain to her that if her word is her bond, she can prove her honorable intentions by asking Rep. Avila to pull the bill because it is a mistake and won’t bring better broadband to anyone.  We want Rep. Howard to retain the goodwill of the people of North Carolina, but that becomes increasingly difficult if she can’t even defend what she is doing to a reporter asking if there is a connection between her support and the thousands of dollars of campaign contributions she has received from the industry that wrote the bill.

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WNCN-TV caught Rep. Julia Howard off guard when she was confronted with thousands of dollars in campaign contributions from large telecommunications companies and asked if this played a role in her support for their custom-written proposal to abolish community-owned networks in the state.  (2 minutes)

Finance Committee Members

(click each name for contact information)

Senior Chairman	Rep. Howard
Chairman	Rep. Folwell
Chairman	Rep. Setzer
Chairman	Rep. Starnes
Vice Chairman	Rep. Lewis
Vice Chairman	Rep. McComas
Vice Chairman	Rep. Wainwright
Members	Rep. K. Alexander, Rep. Brandon, Rep. Brawley, Rep. Carney, Rep. Collins, Rep. Cotham, Rep. Faison, Rep. Gibson, Rep. Hackney, Rep. Hall, Rep. Hill, Rep. Jordan, Rep. Luebke, Rep. McCormick, Rep. McGee, Rep. Moffitt, Rep. T. Moore, Rep. Rhyne, Rep. Ross, Rep. Samuelson, Rep. Stam, Rep. Stone, Rep. H. Warren, Rep. Weiss, Rep. Womble

Rep. Marilyn Avila (R-Time Warner Cable) is living up to her much-deserved reputation as a shill for North Carolina’s largest cable company as she continues her campaign to wreak havoc on community-owned broadband networks and services.

Well-placed sources tell Stop the Cap! either Avila has an evil twin running around impersonating her, or she is saying one thing to a public audience while doing something completely different in private.

In a closely coordinated effort with the state’s top cable lobbyists, Avila met last Friday to negotiate promised protections for existing community-owned broadband networks that would otherwise be destroyed by her bill, H129, written by the state’s Big Telecom companies.

Both Reps. Avila and Julia Howard told us their word was their bond.  “The last thing that we want to do as a state is to harm one of our cities after they entered into the business,” Avila said to members of the Public Utilities Committee.

Howard expanded on her own promise: “The objective is to protect the cities that have already gone into the business.  It is our intent to carve out these cities and hold them harmless.  My word is my bond, and I don’t hear anybody snickering.  But when I say it I mean it, as the senior chair of finance, that is my pledge.  Before it heads into finance there will be a PCS that is satisfactory to everybody.”

Apparently those bonds were issued by Lehman Brothers, because they have lost all of their value to the people of North Carolina.  Nobody feels like snickering over such a serious betrayal of trust, especially when Howard’s definition of “everybody” is limited to lobbyists for the telecommunications industry.  Your consumer needs are irrelevant.

Last Friday’s meeting was once again a stage play from Time Warner Cable and their sidekick, the much-smaller CenturyLink.  After the cable company laid down the law to a stunned audience of representatives from communities across the state, fooled into thinking they were there to discuss an honest compromise, things went from bad to worse.

“It literally got down to the point where the cable company was dictating terms about what cities can and cannot do with their networks, even discussing which streets the networks would be allowed to serve,” our source tells us.

Avila’s stubborn streak was on full display, as she rejected proposal after proposal.

What about public private partnerships with full exemptions for pre-existing networks?

Not on Big Telecom’s approved list, so rejected out of hand, even after offering that she agreed with the concept.  Her reasoning?  She wants to go with her original bill.

The result of the one-sided discussion was two pages of legislative word jumbling in the form of a substitute amendment.  The word salad delivers substantially no real change to Avila’s original bill.  It contains virtually all of the same onerous provisions guaranteed to destroy community broadband networks, taking the state’s reputation for being a good credit risk with it.  It also delivers red meat to an industry meme “community broadband networks are business failures.”  Now you know why.

We predict Avila will use the farcical affair to claim her substitute amendment was the product of a “hard-fought compromise” with cities and providers.

In fact, it represents nothing more than a shameful broken promise to the citizens of North Carolina.  Their interests are completely secondary to Avila and her legislative allies, willing to listen to a telecommunications industry prepared to hand out campaign contributions to enact their agenda.

The collateral damage of Avila’s struggle to eliminate better broadband and keep competition to a bare minimum cannot even be measured yet. Should Avila’s bill become law, the clear message sent to would-be entrepreneurs is that North Carolina values their cable and phone companies over the needs of entrepreneurs contemplating the next generation of digital economy businesses.  Ms. Avila’s message to them, and to residents who want better broadband: live with what you’re getting from my friends or go without.

Many will choose a third option — avoiding setting up shop in a state where a handful of providers maintain a comfortable duopoly delivering the least amount of service for the highest possible price.

 

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.