Time Warner Cable’s custom-written bill banning community-owned broadband networks in North Carolina this afternoon received a favorable vote in the Public Utilities Committee — the first to consider the bill.

Rep. Marilyn Avila (R-Time Warner Cable) decided that openly distorting the record of success community broadband has had would be a good way to proceed.  In comments before a jam-packed room this afternoon, Avila claimed fiber optic broadband systems have a long history of “failures,” which is ironic considering her promise to exempt these so-called failures from her bill’s anti-competitive regulatory regime.

Honestly, it was the first time we can recall a sitting legislator openly trashing her own state’s advanced broadband network successes.  (You can’t fault her for going all out for her friends at Time Warner Cable, but you can hold her accountable at the next election.)

Avila would never and could never admit the truth after wading this far in: these state of the art fiber networks are successful enough to have waiting lists from time to time just to get service installed.  Even those who don’t subscribe are benefiting. Just look at GreenLight, operated by the community of Wilson.  While GreenLight subscribers benefit from broadband far superior to what the cable company offers, those staying with Time Warner have seen an end to relentless annual rate increases.  Apparently Ms. Avila wants you to pay higher cable bills now and forever.

Republicans and Democrats from rural districts harshly criticized the proposed legislation for bringing no answers to the perennial problem of inadequate broadband in rural North Carolina communities, as well as the fact this bill contains customized exemptions to protect Time Warner and other Big Telecom companies from regulatory requirements dumped on community networks like a ton of bricks.

That’s favorable treatment for the cable company Ms. Avila seeks to protect at all costs.

Avila

Despite the important arguments raised by those objecting to the bill, the Committee Chair gaveled the debate to a sudden close, held a perfunctory voice vote and adjourned the session without a recorded vote.  That leaves citizens of the state with no idea how individual members voted.  Apparently they do not want to hear from unhappy constituents.

The Time Warner Cable Legislative Railroad next stops at the Finance Committee.

Although Rep. Julia Howard (R-Davie, Iredell), senior chair of that committee and Avila promise changes in the bill to protect existing community broadband operations, we are more than a little skeptical.

Last week, Avila called a meeting of city officials and several Big Telecom companies, including Time Warner and CenturyLink, partly to discuss exemption issues.  To give readers an idea of just how far Avila is in Time Warner’s corner, minutes into the meeting, she turned it over to the lobbyist from Time Warner Cable for the duration.

That’s a public-private partnership any voter in North Carolina should take a dim view about.  If Ms. Avila finds her work in the legislature too difficult to handle, perhaps she can find another line of work.  The only good thing about turning over your legislative responsibilities to the cable company is it cuts out the middleman.

Howard

The fact is, Time Warner has no interest in protecting -your- interests in North Carolina, much less those of the cutting edge fiber networks now up and running in the state.  They want them gone… or better yet, available for their acquisition at fire sale prices.  Yes, they even made sure of that in their bill, which guarantees a city can sell a fiber network hounded out of business to a Big Telecom company without a vote.

Exempting existing networks has turned out to be a highly subjective notion for Ms. Avila anyway.  She originally claimed to exempt them in her bill when it was introduced, but then subjected them to crushing regulation the cable companies do not face.  Any community contemplating starting a new network for their citizens can forget it either way.  Time Warner will not hear of it.

Although a growing number of Republicans and Democrats see Avila’s bill as a classic example of corporate overreach, without your voice demanding this bill be dropped, there still may be enough members of the state legislature willing to do the cable industry’s bidding.  If you make it clear that may cost them your support in the next election, they can be persuaded to do the right thing and vote NO.

But time is running out.  Your job is to begin melting down the phone lines of the Finance Committee members starting this afternoon.  Call and e-mail them and make it absolutely clear you expect them to vote NO on H129 and that you are closely watching this issue.  Ask each legislator for a commitment on how they plan to vote.

Finance Committee Members

While Time Warner Cable trumpets upgraded broadband services in many of the states it provides service, South Carolina and some other southeastern areas are the exception.

Stop the Cap! reader Brett writes Time Warner’s broadband experience in South Carolina is so four years ago.

“Check out the paltry speeds that Time Warner Cable offers in Columbia. As far as I can tell we are the slowest region around.  The very best package they offer, with PowerBoost, is 10Mbps for downloads, 512kbps for uploads,” Brett writes.  “How sad.”

Most Columbia customers get less than that.  The standard Road Runner package has been stuck at 7Mbps down and 384kbps for some time.

While broadband speeds have not changed, the rates have.  Time Warner Cable announced rate increases throughout the Carolinas in December, boosting prices for many services.

Time Warner Cable spokeswoman Rose Dangerfield said needed upgrades were part of the reason for the rate increase.

“The company spent $380 million in the past year to upgrade equipment in South Carolina and North Carolina,” she said.

A review of Time Warner Cable’s speeds in the Carolinas and the states of Virginia and Alabama makes one wonder where the money went, because Brett shares company with other customers across most of the region.

Senator Hoyle turns his back on consumers and reads from his industry-provided talking points to stop municipal broadband

[Phillip Dampier co-authored this piece.]

North Carolina communities seeking to provide Internet access to their residents would have to wait a year while legislators argue over their terms of entry under a revised bill that swept through the Senate Finance Committee yesterday on a voice vote.

S1209, originally a poison pill bill that would effectively kill municipal broadband projects, was revised into a demand for further study, accompanied by a one-year moratorium for any city contemplating its own broadband project.

That concerns officials in several cities across the state, especially Greensboro, who wants to preserve the option of municipal broadband should Time Warner Cable revisit an Internet Overcharging experiment attempted in 2009 which would have drastically limited broadband usage for its customers.

The bill’s passage with a calling of the “yeas and nays” made it impossible for members of the public to know who voted for and who voted against the compromise measure.  But an accidentally open microphone allowed many to get a real sense of how much one member of the Committee disliked consumers fighting back against telecom special interests pulling all the strings.

Senator Daniel Clodfelter (D-Mecklenburg) nearly raised a toast to his fellow members during the session praising them for doing the “grown-up” thing and agreeing to his manufactured compromise that phone and cable companies are celebrating as a victory today:

“This is not, I would say to you, a peace treaty.  It is an armistice. And what the bill does is provide an armistice so that the shooting war stops and a conversation will occur among those people who’ve been meeting with each other in those conference rooms for the past week,” Clodfelter said. “Thank you all, because you did the grown-up thing, and I really appreciate it.”

Clodfelter’s seemingly-sincere comments might have gone off better had the audience not heard Clodfelter’s private remarks to Senator Dan Blue (D-Wake) a few minutes earlier, inadvertently captured by a live microphone:

“The — what I call the crazies that circulate around this issue are not gonna like this,” Clodfelter told Blue.

Observed WUNC reporter Laura Leslie: “I’m sure Clodfelter isn’t the first lawmaker to think so, but most of them cover the microphone before they say it out loud.”

The bill’s author, Senator David Hoyle (D-Gaston), who spent the day mangling the words “fiber optic,” condescendingly lectured his colleagues and communities about their opposition to his bill.  Mistakenly called a Republican in the pages of the Greensboro News-Record, Hoyle complained cities don’t belong in the broadband business.  He doesn’t want government competing with private industry, which might explain why the newspaper switched his party affiliation.  But considering the amount of telecom special interest money that has flowed into the retiring senator’s campaign coffers, there may be much more to this than a philosophical debate.

Hoyle has gone all out in the North Carolina media on behalf of his telecom industry benefactors.

Money makes legislators do strange things... like disrespect their constituents with obvious industry-backed protectionist legislation

Delivering a series of eyebrow-raising one-liners, Hoyle is hardly ingratiating himself with cities and towns across the state.  He inferred most city and town leaders were naive, telling ENC Today he expects all of the attention on municipal broadband will only cause more municipalities to get into the business.

“There are a whole lot of cities that can’t wait to jump on the bandwagon — monkey see, monkey do,” Hoyle said, using language that some have since called inappropriate.

Hoyle argues these systems are destined to fail.  Once again he called out the cities of Davidson and Mooresville completing required upgrades to an old Adelphia cable system the community acquired nearly three years ago.

“There’s a couple of cities in this business that they should sure wish the heck they were not into, and that’s Davidson and Mooresville,” Hoyle said.

That came as news to MI-Connection, the municipal provider providing service to the two communities, whose revenues for the quarter that ended March 31st were up 9.4 percent from a year earlier.

Davidson resident and MI-Connection board member John Venzon told the Davidson News he’s worried that the legislation could “unlevel the playing field” for MI-Connection and make it harder to compete.

MI-Connection General Manager Alan Hall also told the News the entire board has concerns about these kinds of bills.

Hoyle and his telecommunications industry friends may wish the communities weren’t in the business, but MI-Connection believes otherwise.

As Stop the Cap! has reported on several occasions, MI-Connection’s challenges have hardly been unique to Davidson and Mooresville.  Time Warner Cable ditched over 125 Adelphia systems it purchased, and the company is still coping with legacy equipment left in place at the former Adelphia system it now runs in Calabasas, California.  The cost of upgrades for the old Adelphia systems kept by both Time Warner Cable and Comcast ran well into the millions.

Another messy misstep for the state senator has been what one could charitably call “stretching the truth.”

Mayor Susan Kluttz, representing the people of Salisbury, N.C., was called a "gentleman" and "he" by an out of touch David Hoyle

“I got a call from a gentleman yesterday, Mayor Kluttz from Salisbury, and I mean he laid me out.  He called me dumb.  I had no idea,” Hoyle complained to other members on the Senate Finance Committee.

One person who was not amused by that story was Salisbury Mayor Susan Kluttz, who was seated directly in front of Hoyle.  She had no idea what Hoyle was talking about.  I later spoke with a representative of the city who told me no one from their staff called Hoyle.  With a mistake like that, maybe that phantom caller was onto something after all.  Listening to Hoyle, the self-appointed expert on municipal fiber projects, refer to them as “fiber opticals,” “fiber opt,” “fiber install and do all the things they’re going to do,” and “totally fiber project any city,” did not inspire confidence.

At the heart of Hoyle’s opposition is the idea that local municipalities should not be involved in the private sector… ever.  In his mind, broadband service is a luxury, and the private marketplace is best equipped to decide who gets it, and who does not.  Hoyle brings no answers to the table for communities bypassed by the duopoly of providers who are increasingly focusing their time, attention, and resources on larger cities where average revenue per customer can be higher than in rural areas.  If the local cable or phone company doesn’t provide the service, that’s just too bad.

Mirroring the attitude of the state’s telecommunications companies, Hoyle believes municipalities or even private providers that seek broadband stimulus money represent unfair competition, even in cases where existing providers refuse to offer service.

That is the ultimate dilemma.  If you believe broadband is not becoming an essential component of most American lives and is simply a nice thing to have, it’s not insane to agree with Hoyle.  But hundreds of thousands of North Carolina residents don’t believe that.  Parents of children in broadband-disadvantaged schools quickly learn their kids fall behind their peers in larger, wired communities.  Businesses will not locate in areas where inadequate broadband exists.  Digital economy entrepreneurs cannot start new businesses without good broadband either.  Even senior citizens, who are among the most resistant to broadband adoption, often complain about the inherent inequity of being forced to rely on dial-up service.

Senator Purcell

Some of the same arguments about disparity of access went on during the early 1900s in rural North Carolina, deprived of electricity and telephone service by private providers.  Once President Roosevelt effectively declared these types of services as essential utilities, where private providers didn’t go, municipalities and co-ops did.  In North Carolina, keeping the brakes on an expansion-minded state government came even before Roosevelt was president, with the passage of the 1929 Umstead Act — a law that prohibits the state from directly competing with private enterprise.

The Umstead Act has been seized on by the telecommunications industry, arguing municipal broadband violates the spirit of the law, even though it never applied to local municipalities.  Besides, the law has been amended since 1929 because, free market theory notwithstanding, free enterprise doesn’t have every answer and cannot meet every need.  Just ask BP.

Only Ayn Rand could appreciate that Hoyle and his allies support an entrenched duopoly that embraces its profitable urban customers while they fight for restraining orders like S1209, blocking efforts by others to deliver service the duopoly won’t provide.  We call that corporate welfare and protectionism.  But some in the state legislature can’t see that because of the blizzard of cash being dropped in front of them by that duopoly, just to leave things entirely in their hands.

Hoyle noted nobody, including himself, liked the final bill.  In Hoyle’s eyes, that adds up to a “good bill.”

Other members on the Committee had different views to share.

Senator William Purcell (D-Anson, Richmond, Scotland, Stanly) is the former mayor of Laurinburg — the same city from the 2005 court victory in BellSouth/AT&T v. Laurinburg, which paved the way for municipal broadband in the state.  He asked pointedly, “What assurances do we have that the private companies are going to provide [service] to smaller areas?”

Senator Queen

Hoyle answered by pulling out his talking points generously provided by the cable and phone companies and delivered a non-answer, finally stating, “we are not going to get broadband to everyone in the state.”  Perhaps Hoyle is foreshadowing his next job after he retires from the Senate — working for the same telecom companies he seems to represent now.

Senator Joe Sam Queen (D-Avery, Haywood, Madison, McDowell, Mitchell, Yancey) delivered the most passionate presentation of the day on behalf of his constituents, among the least likely to have broadband service available to them.  As Hoyle disrespectfully rolled his eyes and winked at the cable industry lobbyists in the audience, Queen blasted the industry’s record of performance in his district, which covers the High Country — the rural Appalachian mountain counties in the western half of the state.

“We don’t have last mile access in the mountains,” Queen told the Committee.  “[My constituents are] frustrated that it’s not getting done by the cable companies, the network companies, whoever’s doing it. They’re just cherry-picking and leaving off so many of our citizens, and that’s just unacceptable.”

Queen noted the private industry that refuses to serve many of his areas also refuses to allow others to provide that service.

“The private sector is not getting it done fast enough,” he added. “We have electricity to everybody, we have water to everybody. We should have Internet to everybody in the 21st century.  In my counties, we are still struggling to make that happen.  Our children don’t have the virtual broadband educational opportunities that they have in the urban areas. Our business owners don’t have the access to markets that our urban citizens have.”

Senator McKissick

One senator had a question about the year-long moratorium.  Senator Floyd B. McKissick, Jr. (D-Durham) asked if no action was taken by the end of the 2011 session, would the moratorium expire automatically?  Although provisions in S1209 do provide for a firm sunset date, Paul Myer from the North Carolina League of Municipalities told me nothing precludes the Senate from quietly extending the moratorium, or removing the sunset provision altogether, effectively making the ban permanent.

Meanwhile, communities contemplating such projects would have to give 15-days written notice to every private provider potentially impacted, providing more than two weeks for a fear-based opposition propaganda campaign.  And we know where they’ll get the money to pay for it, too.

The only good news out of all this:

• Cities already providing or constructing broadband projects may continue;
• A Google Fiber city in North Carolina gets a pass;
• Federal broadband grant recipients may proceed, although many of those grants are going to existing providers anyway;
• The bill is headed next to the House, where we have a new opportunity to derail it.

Recognizing the spirit of this entire proceeding which left consumer interests out in the cold, no public comments were heard and no recorded vote was taken.

Needless to say, the revised S1209 is only slightly less loathsome than the original, and must be opposed.  But more on that coming shortly.

We couldn’t close this piece without recognizing that when all the talk was over and vote was taken, it was rest and relaxation time for selected senators, brought to you by Electricities who picked up the tab for a fabulous spread of food and drink.  WUNC reporter Laura Leslie wrote about what she called an Irony Supplement.

The S1209 compromise also won the grudging support of Senator David “Business-Friendly” Hoyle (D-Gaston).

After telling Senate Finance that “Somebody, maybe a lot of bodies, needs to stand up for our free enterprise system,” Hoyle went on to knock the state’s biggest public utility co-op:  “If anybody thinks that the experiment with Electricities was a resounding success, I’d like for you to raise your hand.”

No one did.

But after session today, quite a few of the Hons found their way across the street for free food and drinks provided by – wait for it – Electricities.

As one House Republican told me tonight, “If you can’t bash them and then eat their hors d’oeurves, you’re in the wrong business.”

No, sir, I’m not.  But I’m thinking you might be.

Senate Finance Committee deliberations on a revised S1209, a bill to establish a one year moratorium on municipal broadband projects. (June 2, 2010) (34 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

<

p style=”text-align: center;”>

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:

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: