Point of View

At the bottom of the broadband barrel

A new law sticks too many North Carolina businesses and residents with last-generation cable and Digital Subscriber Line networks

January 28, 2013 

Slow Connection

Knot in network cable, slow connection

MELISSA KING — Melissa King

The Tar Heel economy is continuing its transition from tobacco and textiles to high technology. Internet startups populate the Research Triangle, and Charlotte’s financial services economy depends on high-quality data connections. Truly, next-generation Internet connections are crucial to the state.

It is deeply disturbing that the Federal Communications Commission ranks North Carolina at the bottom nationally – tied with Mississippi – in the percentage of households subscribing to a “basic broadband” connection. The residents and businesses of nearly every other state have superior connections.

Why the abysmal ranking? Too many North Carolina businesses and residents are stuck with last-generation cable and Digital Subscriber Line networks that have been replaced elsewhere with faster and more reliable connections, often next generation fiber optic networks.

Statistics from Netflix, which streams video to over 30 million households, show that Time Warner Cable is one of the slowest cable networks and that every large cable network in the nation is superior to both CenturyLink and AT&T (including U-Verse).

The major reason is a lack of competition among Internet providers. The state’s largest providers are big enough to crush new competition from small, private-sector providers and no longer face the threat of competition from community-owned networks.

After state legislators collected more than $1 million in campaign donations from Time Warner Cable and AT&T, the General Assembly passed a law in 2011 that effectively barred communities from building their own networks. These corporations are members of the American Legislative Exchange Council, a national organization that drafts business-friendly “model bills” to push a corporate agenda in statehouses across the country.

The impetus for that effort was the city of Wilson’s decision to build its own network after existing providers declined to improve their services. The city’s globally competitive fiber optic network offers Internet connections far faster than possible on DSL or cable – and it is far more reliable.

Because it is owned by the city, the Wilson network keeps its prices affordable. And because locals now have a choice, Time Warner Cable priced its services more competitively in Wilson than in nearby towns without meaningful competition.

Time Warner Cable, AT&T and CenturyLink waged a multiyear lobbying campaign to secure the 2011 bill. They claimed it encouraged fair competition, but their real goal was to eliminate consumer choice, as documented in a new report by the Institute for Local Self-Reliance and Common Cause: “The empire lobbies back: How national cable and DSL companies banned the competition in North Carolina.”

If the goal were to increase investment in the state, it failed. In fact, it accomplished the opposite effect: The big companies are investing less in North Carolina because they face less competition. To top it off, AT&T just told 75 call center workers in Greensboro that they can move to Alabama or be laid off.

The question for North Carolina is how it can improve access to the ultimate job creator: the Internet.

The first answer is to stop listening to out-of-state cable and DSL companies. They want to preserve their own business model, even if that means sticking other businesses with higher prices for slower, less reliable speeds.

Communities should have the authority to build their own networks and to creatively partner with independent entities, including businesses and nonprofits. Wilson has had tremendous success with its network, keeping prices down and helping local businesses gain a competitive edge in the digital economy.

Other communities may choose different paths, but each should be able to make its own decision.

Nationally, most communities have done quite well in building their own networks. Those that have stumbled have generally been able to solve their problems despite cable-funded efforts to brand them as failures. The simple fact that a community could make a mistake doesn’t justify removing its authority to make decisions about essential infrastructure.

In 2011, the state government placed the future of North Carolina’s digital economy in the hands of a few massive out-of-state companies. The results to date are what should have been expected: higher prices, fewer jobs and no investment in next-generation networks.

It is time to remove barriers for communities to solve their problems locally by investing in themselves.

Christopher Mitchell is the director of the Telecommunications as Commons Initiative at the Institute for Local Self-Reliance in Minneapolis and editor of MuniNetworks.org. Todd O’Boyle is the program director for the Media and Democracy Reform Initiative at Common Cause.

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