What started as an experiment in a small tobacco community in Eastern North Carolina has shown how a local government can provide its residents with some of the fastest Internet speeds available anywhere.
The success of the city of Wilson, about 45 miles east of Raleigh, is intriguing city officials statewide with the possibility of achieving an elusive goal: broadband access to every home and business.
But the powerful cable TV industry, led in this state by Time Warner Cable, is alarmed at the prospect of vying for customers against government agencies that can tap public money and don't pay property taxes, among other advantages.
Time Warner Cable, which offers its own phone and Internet service, is pushing for rules that North Carolina town officials say would kill municipal telecom service by raising its cost.
This week, after Time Warner's request hit a wall of opposition, legislative committees in the General Assembly put off debate for more study, buying a year's reprieve for municipal broadband advocates.
The Time Warner proposal is opposed in this state by Raleigh and Fayetteville, as well as the N.C. League of Municipalities and the N.C. Metropolitan Mayors Coalition. Also lined up against the proposal are Google, Intel and Alcatel-Lucent. A common concern: The cable industry's wishes could imperil the ability of North Carolina to qualify for $4.7 billion in federal stimulus grants for expanding broadband Internet access.
But more than one dozen states already restrict the ability of municipal governments to offer broadband service to their residents.
"The reality is we've got these enormous cable monopolies that want to protect their monopolies," said Kevin Foy, chairman of the state mayors coalition and the mayor of Chapel Hill.
"The threat is that Wilson is successful and provides a real model [showing] that you can protect your economy and provide an excellent service to your citizens at a lower cost."
Time Warner Cable contends that going head-to-head against a city government's cable and Internet service is unfair because local governments can pay significantly less to build a municipal telecom system.
"The purpose of the bill is to establish parity between private companies and municipal systems that are being built all over North Carolina," said Brad Phillips, president of the N.C. Cable Telecommunications Association in Raleigh.
"Why should I compete against an entity that is obviously being given operating and other economic advantages?" asked Phillips, whose full-time job is lobbying in Raleigh for Time Warner.
Wilson's Greenlight service, introduced last summer, runs over a high-speed fiber optic network that brings a broadband connection directly into homes and businesses.
Time Warner's fiber optic cable stops in neighborhoods and doesn't reach individual homes.
As a result, the top Internet speed in Greenlight's residential service is 100 megabits per second -- 20 times as fast for uploading data and 10 times as fast for downloading as Time Warner Cable's Road Runner Turbo service.
Wilson officials say theirs is the communication system of the future that will be able to handle gargantuan amounts of data. The town is building out the communications system as an economic development strategy to attract businesses.
"Public ownership of the pipes -- the infrastructure -- is the only true path to competition in the future," said Grant Goings, Wilson's city manager. Goings said Wilson decided to build its own system only after Time Warner rejected a request to upgrade the system and Embarq, the local phone company, said the payback on investment would take too long.
The town of Salisbury, about 125 miles west of Raleigh, is building out a similar broadband network and expects to offer Internet, phone and TV service to residents and businesses next year.
"For the past 10 years we've seen nothing but rate increases from Time Warner Cable," said Salisbury City Manager David Treme. "Now that we're here, brother, they're going door to door trying to lock up customers in a two-year contract."
Time Warner Cable, with its introductory discount rates, has an edge on price right now against Wilson, but that hasn't stopped 2,746 residents and businesses from opting for Greenlight. The Greenlight Basic package of Internet, phone and TV costs $99.95, the same as Time Warner's entry level package. Greenlight's Ultimate package costs $169.95, compared to Time Warner's high end combo for $154.90. Greenlight's priciest package, with the top Internet speed, costs $364.95 a month.
"A 100 megs of speed is almost unheard of in the United States," said Craig Settles, an independent telecom consultant in Oakland, Calif. "If you're trying to move medical imaging, or talking about live video conferencing, or distance learning -- all of that stuff is going to rely on super-fast networks."
Wilson officials estimate Greenlight needs to sign about 6,000 customers within its first three years of operation for the town to pay off the $28 million cost of its system in 12 years. About $5.5 million of that start-up money was borrowed internally from municipal reserves.
Wilson officials stress that no tax revenue has been used to pay for its system. The bulk of the money comes from institutional investors, and the internal funds came from utility service fees.
Issue put off till 2010
This week's delays by legislative committees give Wilson, Salisbury and other interested cities likely one year to continue planning and developing their own cable-telecom systems. Before the Public Utilities committee's decision, Rep. Thom Tillis, a Republican from Mecklenburg County, said analyzing the issue is the wisest course for now as public officials decide on the best way to ensure universal high-speed Internet access.
"It makes the most sense instead of this thing [bill] coming back again and people filling this room with yellow tags and red shirts on opposite sides," Tillis said. "At the end of the day we all agree that what we're trying to do is wire North Carolina."
