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Should government be in Internet biz? NO

NO: Cities take on unapproved debt and play by their own set of rules

By David Hoyle
Special to the Observer

Rep. Robert Brawley’s recent outburst aimed at House Speaker Thom Tillis brings to mind Mark Twain’s adage – don’t let the facts get in the way of a good story.

To recap, on May 22, Brawley penned a rambling letter to Tillis listing several supposed grievances. One of these related to the “Level Playing Field” law passed overwhelmingly in 2011 to regulate cities’ efforts to compete against private companies in the telephone, cable TV and broadband business. Brawley was angered by Tillis’s opposition to his bill that would have undermined the compromise struck in the Level Playing Field law exempting Mooresville’s and Davidson’s municipally owned cable service – called MI-Connection – from the protections of the law against unfair competition by cities.

While acknowledging MI-Connection’s failure as a business, Brawley’s bill, remarkably, would have allowed MI-Connection to expand its scope of operation without complying with the provisions of the law intended to protect taxpayers and fair competition. In other words, it violated the first rule of getting out of a hole: Stop digging.

I think it is especially important to note that Tillis’s support for the Level Playing Field law, and his opposition to the fool’s gold of city-owned telecommunications service, dates back to his days on the Cornelius Board of Commissioners.

I am intimately familiar with this issue, having served as the mayor of Dallas, as a state senator for 18 years, and as the secretary of the Department of Revenue. I have seen first-hand the problems created by irresponsible local government forays into the competitive marketplace.

The facts relating to the Level Playing Field law are straightforward:

• It was passed because cities were competing with private companies in providing telecommunications services without any input from taxpayers who were ultimately on the hook and without playing by the same rules that private companies play by.

• Cities do not pay taxes. Without subjecting cities to the same rules that private industry plays by, the lost revenue would directly impact state and local budgets.

• Cities regulate their competitors. Without laws in place, cities would have an incentive to unfairly target their competition by limiting access to rights of way, hiking inspection fees, or transferring general funds to the municipal provider so the provider can offer below-cost service. (This occurred in the City of Wilson.)

• MI-Connection took on $92 million in debt to purchase the local cable system out of bankruptcy, even though a private provider was willing to buy and operate the system. The result has been disastrous for taxpayers. Despite having been promised the system would “pay for itself,” taxpayers in these two cities have been left supporting MI-Connection out of city tax coffers.

• In Salisbury, the city-owned service is awash in red ink and missed business projections. The city has fired or eliminated some 50 employees since 2010, jobs which could have been saved if the city hadn’t been saddled with $30 million in debt incurred to build the cable system.

• In Wilson, the city-owned system incurred more than $30 million of debt without taxpayer approval. Wilson has shifted millions of dollars from its electric and gas ratepayers to subsidize its telecommunications business.

This is why I sponsored the original Level Playing Field law back in 2009 when I served in the Senate, and Tillis helped fight for the bill on the House side. The law does not “ban” cities from competing, but it does require them to seek voter approval and to compete fairly and transparently against private companies.

Brawley’s wild accusations in his recent letter to the speaker do a disservice to Tillis and the others in the legislature who overwhelmingly supported the Level Playing Field law as the right policy for N.C. taxpayers.

David Hoyle resides in Dallas, N.C.
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