Thursday, May 7, 2009

North Carolina Legislature Sends Two Anti-Municipal Network Bills to Study in Two Days: City-Industry Rhetoric Simmers 05/07/09 The North Carolina General Assembly has sent two bills, both of which sought to outlaw the deployment of broadband networks by cities and municipal utilities, to study committees over the past 2 days.

Time Warner Cable, the North Carolina cable trade association, and rural telecom carrier Embarq strongly supported both bills. A coalition of broadband advocates and municipal officials have fought both bills, mobilizing city spokesmen, bloggers, and social network-enabled activists. The legislative initiatives are being closely watched by broadband activists, industry trade groups, and regulators around the country.

This recent attention results largely from the new focus put on broadband as a result of the “broadband stimulus” provisions of the federal Recovery Act.

“I think the Legislature can see that while this was specifically about North Carolina,” said Brian Bowman, spokesman for the City of Wilson, NC “it fits into a bigger picture.” He suggested that in the face of emerging broadband applications like You Tube, Facebook, and Twitter that incumbent service providers “had just not kept up, but people understood that, especially the social networking folks” who rallied to the cause of the municipalities.

Legislative Details
Mr. Bowman spoke this afternoon with in a telephone interview from his office in Wilson. He had attended a Senate committee hearing this morning on SB1004, and the House committee proceeding yesterday that took action on HB1252. Both hearings were held at the state capitol in Raleigh.

The effort by two separate committees of the Legislature to send the bills to study committees, effectively tabling the legislation until next year, is seen by in-state broadband activists as a defeat of the lobbying efforts of Embarq (NYSE: EQ), the Time Warner Cable division of Time Warner, Inc. (NYSE: TWX), and the North Carolina Cable Telecommunications Association (NCCTA).

Industry spokespeople, especially NCCTA President Mr. Brad Phillips see the legislative maneuver positively, as an objective effort to study all of the relevant policy, business, and public revenue aspects of the legislation.
“We are pleased by the results of the actions in both the House and the Senate,” stated Mr. Phillips to StimulatingBroadband late this afternoon “because we think the legislation will be seriously studied.”

Phillips, is both the current president of the NCCTA and a corporate spokesperson employed by Time Warner Cable’s North Carolina operations. He further stated “as the bills were originally presented early on in this process, they were focused just on phone, high speed Internet and cable. I think by going into the Revenue Laws Study Committee, the look at the bills will not be limited to those issues. The door will be open to study any number of different issues."

The Revenue Laws Study Committee is a joint Committee of both the North Carolina House and Senate, with an equal number of members appointed by the presiding officer of each chamber. Mr. Bowman, who maintains the city sponsored blog Save NC, mentions that he received positive blog comments from “around the globe.”

The City of Wilson, with a population of 49,000, has been operating a fiber-to-the-home (FTTH) network since 2007 which delivers video programming, high speed Internet access, and voice telephony. The City of Salisbury, NC also has fought in the current session of the General Assembly against the bills. Salisbury has not begun network operations to date, but has locally committed to building a fiber-rich network similar to the system now serving Wilson.

Ebarq spokesman Tom Matthews stressed to his company's perspective of a "level playing field" for both government and industry. "Our position has always been," said Matthews "that as long as it is a level playing field, we are good with that. Competing with governments, is inherently not level. A lot of safeguards that many states have built into legislation over the years were to avoid private companies competing with government."

Simmering Rhetoric
Public officials in the City of Wilson see their $28 million FTTH city operated system as an economic developmental necessity. They refer to broadband as a public infrastructure needed for job growth and private investment in a region decimated by the loss of tobacco processing firms over the past decade.

"We didn't wake up one morning and just decide to get into the broadband business," said Bowman. He says that the City initially "reached out" to both Time Warner Cable and Embarq, attempting to engage in a public-private partnership to bring high capacity broadband to the City. Both providers were incumbent firms already operating franchised systems in Wilson.
Mr. Matthews of Embarq confirms that the carrier did have discussions with the City prior to the announcement of the FTTH plan. In his opinion however, the city did not at first look toward broadband Internet access as the driver of its planning. "Broadband was not the original impetus," stated Matthews "we had broadband deployed to 97% in the city, via DSL, before this began."

"The issues in Wilson were not at first about broadband", said Matthews "they were about entertainment." By "entertainment", the Embarq spokesperson confirmed that he was referencing the cable / video programming channels then offered by Time Warner.
While the City and Embarq agree that discussions aimed at a joint venture were held, little agreement exists between the City and Time Warner. City spokesperson Bowman stated that when Wilson first approached the cable operator about a high capacity FTTH plan, "Time Warner literally laughed at us".

In response, Time Warner's Phillips sees it differently, "I was the one who received the letter from the City Manager in Wilson, asking us to come discuss public private partnerships." When asked if any representative of the cable operator had ever 'laughed at the city' in discussions, Mr. Phillips stated, speaking on behalf of Time Warner, "That comment is absolutely untrue."

Jay Cuthrell based in both Montana and North Carolina, is a telecom consultant with years of experience working with rural operators. After attending both hearings in Raleigh, he urged us to see the inherent differences between the rural operators and the large national cablecos and telcos. "In my experience, said Cuthrell, "the smaller more rural players outperform the franchise large plays in their ability to serve their communities. The local guys, including municipalities and regional fiber networks, succeed because both their hearts and their wallets are in the right place."

Our Take:
The bloggers and municipal advocates won this round, using the very tools that are enabled by broadband services, especially social networks.

The cable industry is correct that the new study committee berth for the anti-muni net / level playing field bills will allow for detailed examination of the relevant facts.

In this way, perhaps the Tar Heel State will host a version of our needed national debate about the ability of private investment to deliver adequately on the societal benefits of broadband. If the North Carolina debate is a microcosm of the national policy questions we are working through, we need to remember this particular debate is about broadband in a rural state. Rural telecom has its own dynamics, including those local guys with the hearts and wallets, we can't overlook.

Photo Credits: Jay Cuthrell, via a Creative Commons license. Photos may be republished only with attribution to Mr. Jay

Web Analytics