News: CJ Exclusives

Limits on Municipal Broadband Raise Hackles in City Halls

Bill would ban cross-subsidies, subject muni systems to greater competition

City governments are on edge as a bill that would place restrictions on municipal broadband systems is working its way through the General Assembly. Several city councils have passed resolutions opposing the bill, with discussion and debate getting a bit testy in one Triad city.

Though the title of House Bill 129 expresses the general goal to “protect jobs and investment by regulating local government competition with private business,” the focus is on municipal broadband, which has fueled controversy statewide for several years. A similar bill is working its way through the Senate.

The sources of controversy have been municipal broadband systems built by Wilson, Davidson, and Mooresville. A January 2009 John Locke Foundation report called Wilson’s Greenlight fiber optic system a “boondoggle,” while several media outlets — including Carolina Journalreported last year that Davidson-Mooresville’s broadband system would need a $6.4 million cash subsidy to remain viable.

Legislators have taken note of these problems. During the 2009-10 session, then-Sen. David Hoyle, D-Gaston, sponsored a bill that would prevent cities from building broadband systems without a public vote. That bill died in committee, but now Rep. Marilyn Avila, R-Wake, has given the issue new life with the current bill.

H.B. 129, which is now before the House Finance Committee, would not prevent cities from building their own systems, but would make them “comply with all local, state, and federal laws, regulations or other requirements that would apply to the communications service if provided by a private communications service provider.”

The bill also dictates that cities “(s)hall not subsidize the provision of communications service with funds from any other non-communications service, operation or other revenue source, including funds any funds or revenue generated from electric, gas, water, sewer or garbage services.”

Such cross-subsidies already have been a problem. The JLF report noted that Wilson used $4 million from the city’s electric utility fund to start the Greenlight system. The report also stated that if “Wilson fails to attract enough subscribers to Greenlight, it’s a strong possibility that city leaders would adopt such a cross-subsidy scheme.”

While other cities maintain they have no plans to build broadband systems, they also have made it known that they oppose the bill because they don’t want the General Assembly limiting or foreclosing that option.

Yes!Weekly, a liberal alternative publication based in the Triad, reported that the city of Winston-Salem “has gone on record” as opposing the bill, but Mayor Allen Joines wrote in an email that the City Council “has not taken a formal position on this bill,” though some council members “have expressed their opposition individually.”

Joines also wrote that he believes the bill “is not good for citizens in general, particularly in communities where cable companies are not willing to invest in providing broadband. … A community has to have this technology if it is to be competitive economically and as I said, some cities have had to move forward because the cable companies have not provided the service.”

The Greensboro City Council engaged in a particularly testy debate over a formal resolution introduced by council member Nancy Vaughan at the council’s March 15 meeting. The resolution passed by a 6-3 vote, with Mayor Bill Knight and council members Danny Thompson and Trudy Wade voting “no.”

Thompson and Wade protested that they had been given no prior warning that a resolution was going to be introduced and that they hadn’t had sufficient time to read the bill.

“I don’t know how in the world we would vote on two pieces of legislation that we haven’t read and we don’t have,” Thompson said.

“They’re awfully easy to look up,” Vaughan replied.

The council even took the unusual step of delaying the vote until later in the March 15 meeting so members could read the bill while citizens were speaking from the floor.

In a later phone interview, Thompson echoed his concern that the council didn’t perform its due diligence before passing the resolution.

“I’m disappointed we were asked to vote on something that we had not reviewed and had no heads up on,” he said. “We were asked to support one side without being able to look at both sides.”

Though Greensboro officials stress they have no plans for municipal broadband, some have worried that restricting the ability to do so would damage the city’s chances of attracting Google’s high-speed Internet project. In an email sent to the Greensboro News & Record, council member Zack Matheny wrote, “restricting cities from providing municipal broadband could limit our ability to entice companies like Google or others.”

The tech giant has invited midsize cities across the country to make a pitch for a lightning-fast fiber-optic telecommunications system it would offer to residents on a trial basis. The company’s goal is to run fiber in several communities, with at least 50,000 households in each location.

Greensboro was one of several cities to apply to become a test market for the project, which boosters say would be an advantage when recruiting business and industry.

Yet it’s unclear exactly how a municipal broadband system would fit into Google’s plans — should the tech giant choose Greensboro.

“I could see us offering some type of incentive that would help create a better infrastructure for our citizens,” Matheny told CJ.

Matheny also challenged Thompson’s claim that the resolution was a surprise addendum. “Danny was the person who told me I needed to review the bill,” Matheny said.

Meanwhile, Thompson steadfastly maintains government should not be involved in the broadband business. “If government needs to prevent monopolies, the answer is not to become a player itself,” Thompson said.

Sam A. Hieb is a contributor to Carolina Journal.