Here we go again.

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

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's idea of a level-playing field.

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.

This anti consumer legislation brought to you by Time Warner Cable...

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.

...and AT&T

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.

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.

A new report proves what Stop the Cap! has advocated for more than two years now — communities seeking the fastest, most-modern, and most aggressively priced broadband can get all of that and more… if they do it themselves.

The concept of community self-reliance for broadband has been dismissed and derided for years among small government conservatives and corporately-backed dollar-a-holler groups who claim government can’t manage anything, but when it comes to broadband in the state of North Carolina, the evidence is in and it is irrefutable — Tar Heel state residents are getting the most bang for their broadband buck from well-managed and smartly-run community-owned broadband networks.

Christopher Mitchell from the New Rules Project — part of the Institute for Local Self-Reliance, gathered evidence from North Carolina’s different broadband providers and found the best broadband services come from local communities who decided to build their own fiber networks. instead of relying on a handful of cable and phone companies who have kept the state lower in broadband rankings than it deserves.

North Carolina is undergoing a transition from a manufacturing and agricultural-based economy that used to employ hundreds of thousands of workers in textile, tobacco, and furniture manufacturing businesses.  In the last quarter-century, the state has lost one in five jobs to Asian outsourcing and America kicking the tobacco habit.  Its future depends on meeting the challenges of transitioning to a new digital economy, and major cities like Charlotte, Raleigh, and Greensboro have risen as well-recognized leaders in engineering, biotech, and finance.

But for rural and suburban North Carolina, success has been hindered by a lack of necessary infrastructure — particularly broadband for small businesses and entrepreneurs.  It becomes impossible to attract high tech jobs to areas that are forced to rely entirely on low speed DSL service, if that is even available.

In communities like Wilson and Salisbury, long frustrated by area providers not delivering needed services, a decision was reached to build their own broadband infrastructure — modern fiber to the home networks worthy of the 21st century.

Mitchell’s report charts the benefits available to every resident, as communities with state-of-the-art fiber networks consistently deliver the most robust service at the lowest prices, all without risk to local taxpayers.  Better still, when the network construction costs are paid back to bondholders, future profits generated by the community-owned systems will be plowed back into local communities to reduce tax burdens and keep service state-of-the-art.

“Comparing the tiers of residential service from Wilson or Salisbury against the providers in the Raleigh area shows that the communities have invested in a network that offers far faster speeds for less money than any of the private providers,” Mitchell concludes.  “Whether communities in North Carolina are competing against other states or internationally for jobs and quality of life, they are smart to consider investing in a community fiber network.”

Mitchell’s report arrives just a few weeks after voters handed North Carolina’s General Assembly to GOP control for the first time in more than a century.  Both cable and phone companies in the state modestly suggest that is good news for their legislative agenda, which is an understatement equal in proportion to the historic handover of control of both the House (67-52) and the Senate (31-19).  The top items on the agenda of incoming members is a checklist of conservative activist favorites, including a war on unions, mandatory ID cards for voting, opting the state out of recently enacted health care reform, an eminent domain constitutional amendment, sweeping deregulation reform to favor business interests, and redistricting to “restore fairness” in future elections.

The state’s big cable and phone companies are convinced with a list like that, they can come along for the legislative ride and get their agenda passed as “pro-business reform.”  That means a much larger fight in 2011 for the inevitable return of corporate protection legislation banning exactly the kinds of municipal networks that are delivering North Carolina better, faster, and cheaper broadband.

Additional details about Time Warner Cable’s new TV Essentials package, which provides a more limited cable TV lineup to viewers are making their way to Stop the Cap!

So far, Wall Street appears generally unimpressed with Time Warner’s efforts to retain customers planning to depart the cable company over cost issues.  Richard Greenfield of BTIG says consumers have to give up too much to subscribe to a package that deletes many of America’s most popular basic cable networks and delivers no HD programming.

The package seems to alienate every age group.  Stop the Cap! confirmed Time Warner Cable made most of the decisions about the channel lineup themselves, and although some networks are insistent about not being excluded from such packages, many of the decisions about what channels to leave out were made by the cable company.  For example, younger viewers will miss Comedy Central despite the fact the network is hardly the most expensive basic cable channel around, and nothing prevented them from carrying it.  We’ve also learned the Essentials package deletes several more channels some consumers will consider deal-breakers to lose.  We’ve confirmed in Ohio, customers will have to give up Food Network and The Weather Channel.  No Ms. Palin’s Alaska either — TLC is also off the channel lineup.

We’ve learned from a few of our readers in Akron and Cleveland who inquired about the new package that Time Warner told them they cannot continue to get phone or Internet service with the Essentials package on their account.  We earlier heard customers were supposed to be excluded from promotional deals for these services, not banned from buying them at any price.  We’re trying to get a confirmation from Time Warner’s northeast Ohio division about this, and suspect there might be some mis-communication going on here.

Greenfield adds Time Warner is offering a lousy deal to budget-minded consumers.

“Cable subscribers looking to save money have already defected to Dish Network’s $40 package called America’s Top 120, which is better than TV Essentials,” he noted.

Meanwhile, residents in upstate New York — watch out.  Time Warner Cable is finalizing its decisions about 2011 rate increases which are likely to be announced in mailers sent just after the holidays.  A source tells Stop the Cap! the rate increases will echo the ones in North Carolina.  The biggest rate increases will hit customers only getting one or two services from the cable company.  Video customers can expect the largest increases.  Phone rates will likely remain unchanged for most.

Customers will be encouraged to avoid the rate increases by bundling services.  Time Warner Cable raised rates on western New York customers three times in 2010 for different services.  This rate increase, likely effective in February, will be similar in percentage to the one announced last winter.  The company will blame programming costs and also use the introduction of several new services, including Primetime on Demand, Look Back, and Remote DVR as  justification for the rate hikes.

We’ll have much more coverage on this in late December.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WFMY Greensboro TWC Rate Hike 11-22-10.flv[/flv]

You can preview the excuses for forthcoming rate hikes from Time Warner Cable by listening to a company representative in North Carolina deliver them to customers there, who will see their rates increase Dec. 3rd (from WFMY-TV Greensboro).  (2 minutes)

Time Warner Cable customers in North Carolina are getting rate hike letters from the cable company that foreshadows what other Time Warner Cable customers around the country can expect in the coming months.

For residents in Charlotte and the Triad region, Time Warner is boosting prices for unbundled customers an average of six percent, which will impact customers not on promotional plans or who are not locked into a “price protection agreement.”

The rate increases particularly target standalone service customers.  Those with the fewest services will pay the biggest increases.  Those who subscribe to cable, phone, and broadband service from the company will suffer the least.

A Time Warner Cable spokesman claimed the company is just passing on the cost of programming.

WXII-TV in Greensboro reported that for many customers already struggling with their bills, they don’t want to hear anything about a price hike.

“I think it’s ridiculous at this time with the economy — it’s hard to make it as it is,” one customer told the station.

“I wish there was a better option out there, but it’s about the only thing you can get,” said another viewer.

Time Warner has been developing pricing models that increasingly push customers towards bundled packages of services.  Standalone broadband service saw dramatic price increases in many areas in 2010, and the company’s most aggressive new customer promotions encourage customers to take all three of its services.

But broadband customers need not expose themselves to inflated broadband prices for standalone service.  Most Time Warner Cable franchises offer Earthlink broadband at comparable speeds at prices as low as $29.95 per month for the first six months.  When the promotion expires, customers can switch back to Road Runner at Time Warner’s promotional price.

Time Warner does face competition in some areas of North Carolina from AT&T U-verse, which offers attractive promotional pricing for new customers.  But the phone company’s broadband speeds come up short after Time Warner boosted speeds across much of the state.  The cable company now delivers Road Runner at speeds of up to 50/5Mbps.  AT&T tops out at 24Mbps, and not in every area.

When a competitor can’t deliver the fastest speeds, they inevitably claim consumers don’t want or care about super-fast broadband.

“We are focused on offering the broadband speeds that our customers need, at a price that they can afford,” said AT&T spokeswoman Gretchen Schultz.

Greenlight promotes its local connection to Wilson residents

Some North Carolina consumers are watching AT&T’s slower speeds and Time Warner’s price hikes from the sidelines, because they are signed up with municipal competitors.

Residents in Wilson with Greenlight service from the city don’t have to sign a contract to get the best prices and obtain service run and maintained by Wilson-area employees. The provider has embarked on a campaign to remind residents that money spent on the city-owned provider stays in the city.

In Salisbury, Fibrant is making headway against incumbent Time Warner as it works through a waiting list for customers anxious to cut Time Warner’s cable for good.  Fibrant customers are assured they’ll always get the fastest possible service in town on a network capable of delivering up to 1Gbps to businesses -and- residents.

MI-Connection, the rebuilt former Adelphia cable system now owned by a group of local municipalities is managing to keep up with Time Warner with its own top broadband speeds of 20/2Mbps.  The system is comparable to a traditional cable operator and does not provide fiber to the home service.  Its 15,000 customers in Mooresville, Cornelius and Davidson are likely to stay with the system, but it is vulnerable to Time Warner’s bragging rights made possible from DOCSIS 3 upgrades.  Since Time Warner does not provide service in most of MI-Connection’s service area, city officials don’t face an exodus of departing customers.

But that could eventually change.  Some MI-Connection customers have reported to Stop the Cap! they have begun to receive promotional literature from Time Warner Cable for the first time, and there are growing questions whether the cable company may plan to invade some of MI-Connection’s more affluent service areas.  Cable companies generally refuse to compete with each other, but all bets are off when that cable company is owned by a local municipality.

For most North Carolina residents, AT&T will likely be the first wired competitor, with its U-verse system.  To date, U-verse has drawn mixed reviews from North Carolina consumers.  Many appreciate AT&T’s broadband network is currently less congested than Road Runner, and speeds promised are closer to reality on U-verse compared with Road Runner during the early evening.  But some AT&T customers are not thrilled being nickle-and-dimed for HD channels Time Warner bundles with its digital cable service at no additional charge.  And for households with a lot of users, AT&T can run short on bandwidth.

“We have five kids — three now teenagers, and between my husband’s Internet usage and me recording a whole bunch of shows to watch later, we have run into messages on U-verse telling us we are trying to do too much and certain TV sets won’t work until we reduce our usage,” writes Angela.  “AT&T doesn’t tell you that you all share a preset amount of bandwidth which gets divided up and if you use it up, services stop working.”

Angela says when she called AT&T, the company gave her a $15 credit for her inconvenience, and the company claims it is working on ways to eliminate these limits in particularly active households.  For now, the family is sticking with U-verse because the broadband works better in the evenings and she loves the DVR which records more shows at once than Time Warner offers.  Their U-verse new customer promotional offer saves them $35 a month over Time Warner, at least until it expires.

“From reading about Fibrant and Greenlight on your site, my husband still wishes we lived in Salisbury or Wilson because nothing beats fiber, but at least what we have is better than what we used to have,” she adds.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WXII Greensboro TWC Raising Rates 11-16-10.flv[/flv]

WXII-TV in Greensboro reports of Time-Warner Cable’s rate hikes for the Piedmont Triad region of North Carolina.  (2 minutes)