Mayor may fight on for others in broadband effort

Published 12:00 am Friday, March 11, 2011

By Emily Ford
Mayor Susan Kluttz said she hasn’t decided if she will stop fighting a proposed law that would restrict the ability of cities to get into the broadband business.
House Bill 129, or “Level Playing Field/Local Government Competition,” is being rewritten to exempt Salisbury and a handful of other North Carolina cities that already run municipal broadband networks.
“Other legislators have asked if I will be quiet if we are exempt,” Kluttz said. “I have not made any promises.”
Salisbury launched Fibrant last year after borrowing $30 million. The city did not need voter approval, an option the proposed law would ban for other cities.
Kluttz said she received a draft of the rewritten bill late Monday night and sent the new language to Salisbury’s communications attorney in Washington, D.C., who was retained to advise the city on issues involving Fibrant.
“This is so critical to our city that we will have to be assured by our attorney that we will not be harmed, or we will not accept it,” she said.
Kluttz was re-elected this month as vice chairwoman for the N.C. Metropolitan Mayors Coalition, which named as a top priority preserving government’s ability to offer broadband services.
Sponsors of House Bill 129 have pledged to protect cities already in the business, including Salisbury and Wilson with fiber-to-the-home networks and Mooresville, Davidson, Morganton and Fayetteville with other types of broadband.
“It is our intent to carve out these cities and hold them harmless,” co-sponsor N.C. Rep. Julia Howard (R-Davie) said before the bill passed the Public Utilities Committee last week.
Howard serves as chairwoman of the Finance Committee, the bill’s next stop on Tuesday or Wednesday.
Salisbury officials have met with legislators repeatedly to defend Fibrant, which competes with Time Warner Cable and other companies to provide Internet, phone and cable TV service. A stakeholders meeting March 4 lasted most of the day.
“We came out extremely relieved that the area we serve will be protected,” Kluttz said. “As far as Salisbury and our surrounding area, we’re safe.”
Salisbury will be able to expand Fibrant beyond the city limits, she said.
This marks the fourth time the cable industry has backed a bill introducing new rules and regulations for municipal broadband. Three previous attempts have failed.
Cities that choose to compete against private business should be subject to the same rules, said Marcus Trathen, a lawyer for the N.C. Cable Telecommunications Association.
The legislation has 46 sponsors, including Republicans and Democratic leaders, Trathen said.
“There is broad, bipartisan support for this bill,” he said in an e-mail to the Post. “The bill is good, solid public policy, and I am certainly hopeful that it will pass this session.”
When cities compete against private businesses, the state needs to ensure the competition is fair and the city, which regulates private industry, doesn’t discriminate, Trathen said. North Carolina is out of step with 26 other states by not fixing this “gaping hole,” he said.
Trathen acknowledged sponsors “are very interested in ensuring that the bill does not harm the investment that Salisbury has made.”
Changing the rules now, after Salisbury borrowed $30 million, wouldn’t be fair, Kluttz said.
Vance Holloman, deputy treasurer for the State and Local Government Finance Division of the N.C. Department of State Treasurer, warned that as originally written, the bill would compromise the ability of cities to repay their debt.
“We recommend that the local units that have outstanding debt for cable TV systems be exempted from the entire bill,” Holloman wrote in an e-mail to a researcher for the General Assembly.
Private and public sectors get into broadband for different reasons, Kluttz said.
“Their bottom line is money, and that’s fine, that’s their purpose,” she said. “Our purpose is public service. Our purpose is to give our citizens a service that we think they deserve.”
Salisbury built Fibrant after cable companies refused to partner with the city or upgrade technology to provide high-speed Internet to everyone in the city, she said.
Salisbury needs broadband for education, economic development and public safety, she said.
If cities will compete with private companies, the state needs a standardized system of competition, said N.C. Rep. Marylin Avila (R-Wake), co-sponsor of the bill.
Residents should vote before a city incurs such a large financial responsibility, Avila said. In her study of municipal broadband systems, she said cities invariably must use general funds to support the network.
“When people give you their hard-earned tax dollars, I would prefer they had a say-so,” Avila said.
Financial problems with the MI-Connection Communications System, a broadband network owned by Mooresville and Davidson, are well-documented, Avila said.
“And I have questions about how successful Wilson’s program is, and Salisbury is too young to tell,” she said.
Nationwide, the country has a history of municipal broadband systems that end up hurting taxpayers, Avila said. Cities are in debt for so long, they sometimes must limit other municipal services like public safety or water and sewer, she said.
Christopher Mitchell disagrees.
The private sector has suffered far more bankruptcies and reorganizations than community networks, said Mitchell, director of the Telecommunications as Commons Initiative for the Institute for Local Self-Reliance.
Of the 60 to 70 municipal broadband networks in the country, only five have had problems, he said.
“And most of those were hobbled by state laws like this one,” Mitchell said.
While some argue that cities can’t keep up with private industry, Salisbury and Wilson have the most technologically advanced networks in the state, he said.
“Private sector companies are doing a poor job with technology,” he said.
N.C. Rep. Harry Warren (R-Rowan) said he hasn’t made up his mind yet about House Bill 129, which he voted against in the Public Utilities Committee. While he’s pleased that Salisbury will be exempted, part of the bill still bothers him, Warren said.
If cities and private companies are to compete fairly, the law should not limit the city’s jurisdictional boundaries, he said.
Rural areas of the state need access to high-speed broadband, but if it’s left up to the cable companies, Warren said, “broadband won’t reach all areas until it’s profitable for the private sector to take it there.”
Warren compared the need for broadband now to the need for electricity in the 1920s and ’30s, when local governments formed electric co-ops because private companies wouldn’t wire rural America.
Contact reporter Emily Ford at 704-797-4264.
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Rowan County
Rep. Fred Steen
Mailing address: NC House of Representatives, 300 N. Salisbury St., Room 305 Raleigh, NC 27603-5925
Rep. Harry Warren
Mailing address: NC House of Representatives, 300 N. Salisbury St., Room 533 Raleigh, NC 27603-5925
Sen. Andrew Brock
Mailing address: NC Senate, 300 N. Salisbury St, Room 623 Raleigh, NC 27603-5925
Cabarrus County
Rep. Jeff Barnhart
Mailing address: NC House of Representatives, 300 N. Salisbury St., Room 304 Raleigh, NC 27603-5925
Sen. Fletcher Hartsell
Mailing address: NC Senate, 300 N. Salisbury St., Room 300-C Raleigh, NC 27603-5925
Rep. Linda Johnson
Mailing address: NC House of Representatives, 300 N. Salisbury St., Room 301-D Raleigh, NC 27603-5925