North Carolina Legislators Seek Relief from Manmade Disasters

Published May 20, 2011

Pummeled by tornadoes in April, North Carolina residents bravely soldiered forth to pick up the pieces, assist one another, and set the state aright. Not all disasters affecting Tar Heel citizens fall from the sky, however. Others are completely self-inflicted.

One such catastrophe plaguing this state and many others is municipal wi-fi and broadband boondoggles. Fortunately for North Carolinians, legislators in Raleigh are one step closer to lassoing the giant funnel cloud that has sucked millions of taxpayer dollars into these ill-advised and underperforming services.

On May 5 the state’s General Assembly showed its determination to remedy this disaster by passing House Bill 129, appropriately titled An Act to Protect Jobs and Investment by Regulating Government Competition with Private Business, by an 84-32 vote. Democrat Gov. Beverly Purdue has not indicated whether she will sign the bill or veto it.

Should it clear this last hurdle, the bill will mandate a public vote before cities can seek loans for municipal wi-fi or broadband cable systems that directly compete with private companies offering the same services. The bill also prohibits the use of utility funds to pay for community cable and wireless networks, a practice known as cross-subsidization.

Signing it should be a no-brainer, would require only a modicum of courage, would reveal a whole lot of heart, and would show that North Carolina isn’t in Oz anymore.

So far, five North Carolina municipalities have traveled down the Yellow Brick Road of public wi-fi and broadband programs with disastrous results. The cities of Mooresville and Davidson, for example, borrowed $92 million to purchase a bankrupt local cable operation, outbidding a private company willing to purchase and run the enterprise. This past year, despite reporting fewer customers than when the cities purchased the system, an additional $6.4 million was required to keep the cable company operational. In 2010, the enterprise lost $5.6 million, according to a legislative analysis.

In 2008 the city of Wilson launched Greenlight, a city-owned cable company that directly competes with the town’s private cable, phone, and broadband businesses. Greenlight lost a combined $2.5 million in 2009 and 2010 and required an additional $11 million in cross-subsidies from electric and gas funds. Those resulted in 50 percent higher electricity rates and 30 percent higher natural gas costs for services provided by local utilities Progress Energy and PSNC Energy.

All told, the state’s five municipally owned-and-operated fiber-optic systems provided Internet access to a paltry 43,000 North Carolina households while racking up a combined $148 million in public debt not approved by voters.

The North Carolina Constitution already required voter approval before cities can incur secured debt, but this requirement has been circumvented by city and county officials vowing to repay loans to the Local Government Commission–an entity empowered by the state to approve the debt without voter participation–rather than the banks actually lending the money.

HB 129 wouldn’t forbid cities from establishing public wi-fi or broadband cable systems that directly compete with private companies offering the same services. But it’s a major step in the right direction.

This year’s Federal Communications Commission National Broadband Plan reported that 290 million Americans–95 percent of the U.S. population–live in housing units with access to terrestrial, fixed broadband infrastructure capable of supporting download speeds of at least 4 Mbps. The nation’s fastest municipal wi-fi network, in Chattanooga, Tennessee, is a measly 1G system. That’s like unleashing Toto at a greyhound track.

North Carolina’s lawmakers got it right this past week, clicking the heels of their ruby slippers and moving the state even further over the rainbow away from bad public policy. Now it’s time for the governor to do the same.


Bruce Edward Walker ([email protected]) is managing editor of The Heartland Institute’s InfoTech & Telecom News.