Protection from city-run broadband

May 17, 2011

RALEIGH — Everywhere taxpayers turn they find a sea of red ink: in Washington, D.C., in Raleigh and in local governments throughout the state.

House Bill 129, sponsored by Rep. Marilyn Avila, R-Wake County, has passed both the state House and Senate by large bi-partisan majorities. The new law puts certain requirements on local governments endeavoring to invest taxpayer funds in publicly owned communications networks. These networks often duplicate services that are already provided by private sector communications companies, without abiding by the same regulations and taxes.

At its heart, this is a taxpayer protection bill.

While some cities are concerned that it is taking some time for private cable and Internet companies to provide excellent high speed Internet service to all parts of the state, there is little proof that in the long run city government can provide these services better than the private sector.

The first aim of this bill is to keep competition fair by making sure publicly owned networks pay the same fees and taxes and operate under the same rules that privately owned networks do. If publicly owned communications networks don’t have to play by the same rules, private investors will stay away – and keep the jobs and tax revenues they’d bring with them away too. This is not only bad for taxpayers; it’s bad for the local economy.

Second, this bill asks local governments to check a few additional boxes before beginning a costly plan to build a public network, including requiring cities to hold public hearings on any such project.

Public networks are not only often duplicative (making them a total waste of taxpayer dollars), but they also generally cost taxpayers much more than anticipated.

For example, MI-Connection is a government-owned broadband and cable system in Mooresville and Davidson. In 2007 city officials said it would be a low-risk investment sure to bring big profits. Officials based their prediction on an 8 percent annual subscriber growth rate. Unfortunately, MI-Connection’s subscriber growth rate has been flat, which means the system will need about $17 million from taxpayers over the next two years to cover its debt, according to their own financial projections.

Perhaps these fiscal tragedies could have been avoided if state lawmakers had required cities to produce written findings on the reasonableness of the revenue and cost estimates for their networks. HB 129 would do exactly that.

Finally whatever you think of your local telephone, Internet or cable company, they cannot take your house. Under municipal broadband a city can raise taxes to subsidize cable and Internet services. If someone is unable to pay their taxes, (even if they do not subscribe to the city-run cable/Internet service) the city can foreclose and take their house.

HB 129 will protect taxpayers and help refocus our cities on core service such as police, fire and trash collection. Gov. Beverly Perdue should sign this important piece of legislation.

Dallas Woodhouse is state director for Americans for Prosperity-North Carolina

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