NC bill would force local vote before city broadband that competes with phone, cable companies

Bill would limit NC cities starting broadband

RALEIGH, N.C. — Becky and Dale Carlson are relying on fast and cheap Internet access as they sell photos and online greeting cards in the home business they hope will carry them into retirement.

So Becky Carlson said she opposes a legislative proposal that would make it harder for cities and towns to build broadband Internet systems that compete with big telephone and cable companies and hold down rates.

“It’s really important to a lot of small business, but especially us because it’s only online,” said Becky Carlson of Apex, who runs Bluemoonistic Images. “Photography files are so huge. You can’t send large files if you don’t have fast Internet.”

The Senate Finance Committee on Wednesday postponed considering legislation that would force municipalities to get voter approval before borrowing money to build a competing broadband network.

The bill is the latest in a series of efforts by telecom corporations to keep local governments out of the broadband business.

“This is another iteration of the previous ones we have seen over the last three years that are designed to contain and cripple existing systems, and set the bar so high for new systems that it would be difficult for communities to move forward,” said Doug Paris, an assistant to Salisbury’s city manager. Salisbury has borrowed $30 million to build a fiber-optic network. It will begin testing the system in a few months.

The telecom companies are opposed by the politically influential North Carolina League of Municipalities and corporate giants Google and Intel. They argue that crimping municipal broadband could stifle economic growth in a wired age.

Cable and phone companies have been urging the General Assembly to restrict municipal broadband services since a 2005 state appeals court ruling upheld the right of towns and cities to offer their residents broadband. Companies argue that local governments have an unfair advantage because they don’t have to pay taxes and can subsidize their rates, undercutting the corporate competitors.

Sen. David Hoyle, D-Gaston, said tax-free government enterprises shouldn’t be competing with business, but a compromise with municipalities is being negotiated. The Senate bill’s sponsor said stopping local governments from adding broadband to the range of utility services may save municipalities from future losses.

“They’re going to own a cable system that may become obsolete and they’re going to say to us (legislators), ‘Please save us,’” Hoyle said.

He pointed to news earlier this month that residents of Davidson and Mooresville, north of Charlotte, face a projected $6.4 million revenue shortfall at the local cable system the cities bought in 2007. The two communities spent $92 million to buy and upgrade the lines for MI-Connection. The resulting service offers cable TV, telephone and Internet to about 15,000 customers, but it has struggled to hold on to them.

The North Carolina conflict is playing out amid a national push to extend broadband to corners of the country that private enterprise hasn’t reached.

Congress included $7.2 billion in last year’s stimulus bill to expand broadband to overlooked parts of the country. The new networks promise to offer speeds 20 to 2,000 times faster than the data lines now reaching into most American homes.

A North Carolina nonprofit in January received more than $28 million in federal stimulus funds to extend the state’s broadband Internet network by nearly 500 miles in 37 underserved southeastern and western counties. The state is seeking another $78 million to extend about 1,500 miles of broadband fiber in 67 counties lagging in high-speed Internet capability.