Economy

Community broadband debate centered in a North Carolina town

The city-owned, ultra-fast Internet service in Wilson, N.C., has some wind in its sails these days.

The Federal Communications Commission tossed out a state law that put up barriers to its expansion. President Barack Obama recently praised it as a model for community broadband. And it’s making money.

But that doesn’t mean that Wilson will quickly spread its fiber system over a wide area, or that other towns are expected to rush to build their own community broadband systems. Cost can be prohibitive, and the FCC’s decision is likely to be challenged.

Even so, many communities and companies are watching with interest to see what happens. The Internet has become such a key part of American business, civic discourse, education, health care and other basic parts of life that communities that don’t have high-end broadband fear they’ll be left behind.

“We would not suggest that every community do what we have done,” said Will Aycock, general manager of Wilson’s city-owned broadband service, called Greenlight. “But it gives more tools to communities in the state.”

Greenlight lost money in the early years, as expected of a startup, as it built its system. But it has made more than it has spent since 2011, has been growing by 20 percent a year and is on schedule to pay back the $29.7 million loan it took out to build in about nine years, Aycock said. It also has repaid a short-term loan of $4.75 million it needed because of the high demand of new installations, he said.

Opponents argue that community broadband blocks competition and leaves taxpayers on the hook if it fails.

The FCC in February approved Wilson’s petition to remove state restrictions, contained in a 2011 law, that limited its ability to expand Greenlight. The agency said that laws in North Carolina and Tennessee “effectively prevented the cities from expanding broadband service outside their current footprints despite numerous requests from neighboring unserved and underserved communities.”

But now that the law is essentially gone, Greenlight is taking it slowly.

“We’re expecting that ruling to be challenged or appealed, so we at this point in time are in a bit of a waiting period to see . . . what the next steps might be,” said City Manager Grant Goings.

North Carolina lawmakers have already weighed in.

U.S. Rep. Renee Ellmers, a Republican from Dunn, said that while Wilson “did a great job setting up their municipal broadband,” she disapproved of the FCC’s decision to preempt the state law.

“I believe it’s appropriate for states to put forward guidelines they think are necessary to meet,” Ellmers said.

She supports a House bill that mirrors one that Sen. Thom Tillis, R-N.C., introduced in the Senate. It would assert that the FCC doesn’t have the authority to prohibit states from implementing municipal broadband restrictions.

Google’s recent decision to build a fiber systems in Raleigh, Charlotte and other cities, including Kansas City, has made many communities that aren’t in line for Google fiber, including parts of Wake County, worry that they’ll be at a disadvantage, Goings said.

“We happened to be first with a fiber system in North Carolina, but we were really less concerned with being first and more concerned with not being left behind,” he said.

Wilson’s city council originally asked its TV and Internet companies to provide fiber, but was turned down. So it built its own. The system makes the Wilson Internet the fastest in the state. That speed is particularly important for companies or individuals who need to upload large files. BB&T Bank, based in Wilson, was an early supporter.

U.S. Rep. G.K. Butterfield, D-N.C., who’s from Wilson, about an hour east of Raleigh, said there’s still a digital divide in the district.

“You don’t realize how fortunate you are to live in an urban setting in my district until you go into a remote area and have no access to broadband or to cellular telephone,” he said.

Greenlight created competition and drove prices down, said Butterfield, who uses it in his district offices.

Jim Baller, an attorney for Wilson, said the FCC’s decision will let Wilson and other municipalities in the state offer communications services themselves or through public-private partnerships without having to comply with the restrictions in a 2011 state law that the FCC found were unlawful barriers to market entry.

“It is likely that some communities will take advantage of this opportunity, but I do not know how many,” Baller said.

Joanne Hovis, president of a broadband and communications network planning company, CTC Energy and Technology in suburban Washington, worked as a consultant for Holly Springs, southwest of Raleigh. She catalogued the town’s concerns about broadband in a filing to the FCC when it was deliberating what to do about the state law.

The document said that Holly Springs was prosperous, but worried that its small and medium businesses could relocate just up the road in Raleigh and get Google’s new fiber service at a fraction of what they’d pay for inferior service in Holly Springs.

“This is a massive economic disadvantage for this community. This is what’s motivating them. This is why I say it’s being followed very closely,” said Hovis, who also is CEO of the Coalition of Local Internet Choice, a group that includes major companies.

Its board of advisers includes Internet pioneer and Google vice president Vinton Cerf; Sharon Gillett, Microsoft’s principal strategist for technology policy; and Craig Newmark, the founder of Craigslist.

Hovis said she hears about interest in both municipal-owned and public-private broadband.

“It really depends on a community’s assessment of its own needs and whether public-private partnerships are even possible,” she said. “It’s much more challenging in a rural area just because even with public participation, private capital may still choose to go to markets that are more lucrative.”

Meanwhile, it’s unclear whether the state General Assembly will take action. The FCC ruling applied to the state’s restrictions, not an outright ban. It noted in its opinion that it may have ruled differently if there had been a ban on communities setting up their own broadband.

Bobby Hurst, a member of the Fayetteville City Council, wrote in a commentary on NCPoliticalNews.com that he would never support government-owned broadband in his city. He argued that municipal broadband keeps private companies out and that in some places they have lost money.

Keith Johnson, a Raleigh attorney who has represented municipalities on fiber networks, said there haven’t been many cities or towns interested in doing it themselves. However, in many cases cities invest in fiber for their own communication purposes and then have extra capacity that they could use to provide services.

It’s a debate that Obama has joined.

In January, speaking in Cedar Falls, Iowa, which also has ultrafast community broadband, he announced that the Department of Commerce was starting BroadbandUSA to offer technical assistance to communities for broadband planning, financing and operations under a variety of business models.

Vera Bergengruen of the Washington Bureau contributed.

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