Municipal broadband supporters are gearing up to change a law passed in 2011 that restricts how cities and towns in North Carolina can provide cable and internet services, even though the law recently was upheld by a federal appeals court.

The law limits the ability of municipalities to operate broadband service in direct competition with private providers. Its regulations include requirements that cities make payments in lieu of taxes that would be equal to the amount a private provider would have had to pay. It also forbids municipalities from subsidizing their broadband operations from general tax revenue or other sources and required the municipality to get the approval of voters via referendum before it could begin offering broadband service.

The Federal Communications Commission issued a rule last year that pre-empted the North Carolina law and a similar one in Tennessee, but the 6th U.S. Circuit Court of Appeals ruled in August that the FCC lacked the authority to issue the rule. Now, state lawmakers want to change the law and let municipalities in small towns and rural areas compete with private providers.

Rep. Susan Martin, R-Wilson, who says the law should be modified to allow rural areas to be more competitive, said the legislature’s focus would be two-pronged. The first would deal with the expansion of Wilson’s Greenlight service outside of Wilson County — a move that was invalidated by the federal court’s decision.

The second, broader change, would seek to bring private providers to the table with municipal providers and state officials to forge an agreement to provide high-speed broadband in areas lacking the service, Martin said.

“There are people who were immediately added to the network who are now, according to North Carolina law, required to be taken off the network,” Martin said. “We don’t want to disconnect people.”

The 2011 state law set geographic restrictions for the municipal broadband systems and made provisions for systems such as Wilson’s Greenlight to continue operating.

After the FCC adopted the rule pre-empting North Carolina’s law, Greenlight started service to nearby Pinetops in Edgecombe County and some other areas outside of Wilson County, violating the portion of the law that prohibits towns from offering broadband service outside their corporate limits.

The 6th Circuit’s ruling barred Greenlight from selling service outside of Wilson County. But it didn’t stop Wilson from offering the service to Pinetops residents at no charge, which it has.

“The city has worked on a short-term solution of not charging so they are in compliance with the law,” Martin said. “So when we get back in session we’ll try to do something that just addresses those impacted areas.”

Steve Brewer, a lobbyist for CenturyLink, which provides DSL service in the area, said his concern is having a level playing field.

“It’s difficult to face a competitor who does not have some of the same costs,” Brewer said. “One troubling thing about this particular Pinetops situation is we were already providing a service. Here, we’ve created a government provider for what the market was already providing.”

Brewer said that while Greenlight was offering some higher internet speeds, most people weren’t paying for the faster service.

“We are offering speeds that already exceed what the market is purchasing,” Brewer said.

The second prong of the plan will be to bring together affected parties — including telecom providers in the private sector and the public sector — and develop a state broadband plan, Martin said.

“We need to have the technology available all across our state for all our citizens in the most cost-effective way that we can,” Martin said.

Martin called broadband critical infrastructure.

“This type of broadband technology is becoming critical to the competiveness of rural communities to provide high-quality education and not have a disparity,” Martin said.

Brewer said private providers, such as CenturyLink, will continue to stress a level-playing field.

“The devil is in the details,” Brewer said, noting that a federal broadband program focusing on rural North Carolina is underway that will provide service to 75,000 to 80,000 households in areas with minimal or no service.