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Should government be in Internet biz? YES

YES: N.C. lagging because of telecom’s influence on legislators

By Christopher Mitchell
Special to the Observer

If you think you’re being ripped off by the cable and telephone companies, you aren’t alone. These companies rank at the top of the most hated corporations in America, year after year. Given a recent report from the Federal Communications Commission, North Carolinians have more reasons to be angry than most Americans.

Released last month, the FCC’s annual Internet Access Services report shows North Carolina last in percentage of households subscribing to high-speed Internet connections as defined in the National Broadband Plan.

This news comes on the heels of state Rep. Robert Brawley alleging that House Speaker Thom Tillis told him he had a “business relationship” with Time Warner Cable after Brawley introduced legislation opposed by the cable giant. But one alleged relationship does not explain how North Carolina fell to last place in that FCC ranking.

The deeper problem is the power that Time Warner Cable, AT&T and CenturyLink have at the General Assembly. These companies successfully lobbied for two bills that increased prices, limited competition and generally hurt consumers.

In 2006, the General Assembly bowed to industry pressure and passed a bill for statewide video franchising. Local governments lost their right to oversee companies offering television services or require them to build out to everyone. North Carolina was promised a new age of cable competition and lower prices.

Prices continued to rise – a 2009 study from the University of Minnesota noted that North Carolina’s prices were among the fastest rising in the nation. But even now, most families still have the same limited options for cable and Internet service.

Fed up and recognizing that the cable and phone giants would never allow competition to prosper, the City of Wilson built its own next-generation fiber optic network. Completed by 2009, the network has been a success and Wilson is the first N.C. community to have universal access to a gigabit – about 100x faster than cable speeds.

Time Warner Cable, AT&T and CenturyLink lobbied against Wilson and engaged in a multi-year effort in Raleigh to revoke the authority of any local government to build a similar network. For five years, they worked with ALEC, the American Legislative Exchange Council, to push bills that would effectively ban local governments from building networks.

In 2011, Speaker Tillis ushered just such a bill through the House after receiving $37,000 from the telecom companies in the previous election cycle.

(Strictly speaking, the bill was not technically a ban. We call these “leprechaun-unicorn bills” because a local government effectively has to find a leprechaun riding a unicorn to meet the standard necessary to build a network.)

These two bills are essential to understanding why North Carolina has such poor access to the Internet and ever-increasing cable prices. Consumer protections typically come from the market (competition) or government (regulation). But these big companies are too powerful for other private companies to compete against and local governments have no regulatory power to protect consumers.

The Institute for Local Self-Reliance is tracking over 400 local governments that have invested in telecommunications networks and very few have regretted it. If even 10 percent of these networks actually were failures, cable lobbyists wouldn’t have to spend millions lobbying states to revoke local authority to build them.

The General Assembly should return authority to local communities and trust them to make decisions. But as long as big cable and phone companies maintain their “business relationship” with elected officials, you can expect to see more decisions made in Raleigh rather than at the local level.

Christopher Mitchell is with the Institute for Local Self-Reliance in Minneapolis and the editor of MuniNetworks.org. Email: christopher@newrules.org.
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