The Center for Public Integrity
SECOND OF TWO PARTS
Editor's note: This story was published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.
A war to stop the spread of municipal broadband Internet is raging.
Telecommunications giants don't want the competition, which can offer cheaper and faster Internet service to far more customers if allowed to do so. Yet 20 states, including Tennessee, have laws that ban or restrict municipalities from offering Internet to residents and the industry heavyweights want to keep it that way.
Meanwhile, Tullahoma managed to build its own high-speed network and has experienced job and business growth as a result. Chattanooga has done the same.
But the story is different in Fayetteville, N.C.
Like Tullahoma, the North Carolina city is adjacent to a military base: Fort Bragg. But Fayetteville's economy has been struggling for years. Unemployment has been reduced since the depths of the recent recession, but not as quickly as in the rest of the state. The unemployment rate in Cumberland County, where Fayetteville serves as county seat, was 7.6 percent in June, placing it 78th out of the 100 counties in North Carolina and a sharp drop from 21st just five years ago, according to the Bureau of Labor Statistics.
Job growth has been anemic in the last five years, with employment increasing 0.55 percent a year compared with 1.27 percent statewide.
It was the struggling economy, combined with his own experience that led Eric Mansfield, a soft-spoken physician in Fayetteville and a former Democratic state senator, to fight a law that would restrict his city from providing fast Internet to its residents and businesses.
The city's Public Works Commission operates a gigabit network of more than 200 miles of fiber-optic cables throughout Fayetteville that connect computer systems to monitor its electric, water and sewer systems, and provide Internet access to local government buildings, fire stations and the city's hospital.
But residents and businesses can't hook into the network. Mansfield's Cape Fear Otolaryngology pays $359 a month to Time Warner Cable for a slower connection that frequently crashes trying to manage the load from the practice's electronic medical records and CT scans, Mansfield said.
"It's just horrible," he said.
Time Warner told Mansfield it would cost $500 a month for a faster line.
Mansfield said as a businessman he understands Time Warner Cable's refusal to upgrade its network in Fayetteville, because the return on its investment is just not there.
"But we still need a fast, affordable network," Mansfield said. "They have a monopoly, and they act that way. I just think a little competition from the city would go a long way in getting better service for everyone."
Time Warner Cable said it couldn't respond to Mansfield's experience unless they knew the facts of his situation.
Friend of telecoms
Less than four months after Mansfield was elected to the North Carolina General Assembly in 2010, Rep. Marilyn Avila, a Wake County Republican, introduced a bill that would prevent cities from building or expanding existing broadband networks, by requiring them to follow prescribed and time-consuming procedures and financial requirements. The bill became law in May 2011.
Avila's colleagues in the General Assembly describe her as a friend of telecommunications companies. Before heading to Raleigh in 2006, Avila worked for the John Locke Foundation, a free-market public policy think tank founded by Art Pope, who while a college student also helped establish the Libertarian Party of North Carolina.
Pope, who amassed a fortune in the family retail business, is a prolific donor and is described as a close ally of billionaire industrialists Charles and David Koch. He is a former board member of the Kochs' Americans for Prosperity.
A few months after her bill passed, Avila spoke at the 2011 meeting of the North Carolina Cable Telecommunications Association in Asheville, in the scenic Great Smoky Mountains, where Avila's and her husband's expenses of $1,045 were paid for by the association.
In the 2012 election cycle, when her bill passed, Avila's campaign received $9,000 from CenturyLink, AT&T and Time Warner Cable, four times more than the previous cycle, according to the National Institute on Money in State Politics. Fayetteville's Internet provider Time Warner Cable gave $6,000 of the total, 12 times the $500 the company gave in the previous cycle. Avila was among the five North Carolina lawmakers who received the most from the telecommunications industry that year.
Avila didn't return phone calls or emails asking for comment.
'We should be so powerful ...'
Numerous lawmakers and lobbyists said they suspect the bill was heavily influenced by Time Warner Cable, if not written by the company. Gary Matz, senior vice president of government relations for Time Warner Cable, laughed at the accusation.
"We should be so powerful," Matz said. "It was a bill that had bipartisan support. It was certainly a bipartisan effort."
When Avila's bill hit the Senate floor, Mansfield tried to exempt Fayetteville from the requirements. Colleagues had already been able to get exclusions for four other North Carolina cities that operated their own networks: Wilson, Salisbury, Davidson and Mooresville. Mansfield knew he had the votes to pass his amendment.
But Sen. Thomas Apodaca, a Republican from Hendersonville, in the western part of the state, used a procedural maneuver to block Mansfield's proposal, introducing an amendment of his own that would prohibit city-owned cable companies from providing adult entertainment channels. If it passed, it would kill Mansfield's effort. But a vote against it was a vote for pornography.
The debate turned nasty when Apodaca suggested that if Mansfield, a part-time Baptist pastor, didn't support his proposal, that perhaps meant he wanted his young daughters to have access to pornography, Mansfield recalls. The statement surprised lawmakers so much they called a recess. Apodaca eventually apologized, but Mansfield was still stung.
"I told him 'I know how this works, but your light is a little bit dimmer with me now,'" Mansfield said.
Apodaca and the telecom companies won. Fayetteville wouldn't be offering residents access to its network.
Apodaca, chairman of the powerful Rules Committee, is a big beneficiary of telecommunications company largesse. He received $16,750 from AT&T, CenturyLink, Time Warner Cable and Verizon Communications Inc. in the 2012 election cycle, the third-largest amount among North Carolina lawmakers, according to the National Institute on Money in State Politics. Since he was first elected in 2002, Apodaca has received $62,000 from the telecommunications carriers, the second most of any lawmaker in North Carolina.
Apodaca didn't return phone calls and emails asking for comment.
For Steven Blanchard, chief executive of Fayetteville's Public Works Commission, prohibiting Fayetteville residents from using the fiber network that's already there doesn't make sense.
"Why shouldn't we be allowed to sell fiber if it runs by everyone's house?" Blanchard said. "They are already paying for the fiber to be there, so why not allow them use it for telephone and Internet and capture back a lot of the cost they put in to have it there?"
Time Warner Cable said this summer that Fayetteville is on a short list to get faster Internet next year.
Seeking federal help
In spite of the laws, cities like Tullahoma and Fayetteville may end up being able to expand their networks.
On July 24, the Electric Power Board in Chattanooga and the city of Wilson, which both operate fiber networks, petitioned the FCC to pre-empt their respective state laws that restrict them from expanding service.
Both cities said towns and businesses outside of their areas have asked for Internet service. Chattanooga said cities wanted it for economic development and to replace dial-up modems.
Wilson, which serves six counties with electricity but provides broadband services to just one, said it "stands ready, willing and eager to expand the scope of its broadband capabilities into neighboring communities."
FCC Chairman Tom Wheeler has vowed numerous times, including during testimony to Congress, that he would pre-empt the state laws if the agency is asked to do so. U.S. Rep. Marsha Blackburn, a Republican who represents a district just west of Tullahoma, inserted an amendment in the fiscal 2015 funding bill for the FCC that would prevent the agency from pre-empting state broadband laws, saying to do so would "trample on our state rights." Some Democratic lawmakers have come out to support the pre-emption.
The National Conference of State Legislatures, a nongovernmental organization that promotes the interests of states in Congress, has threatened to sue the FCC if it voids the state laws.
The outcome may, however, come down to a footnote. In January, in a federal appeals court ruling on a related issue, U.S. Circuit Judge Laurence Silberman laid out in a minority opinion the FCC's regulatory powers in deploying broadband as stated in the Telecommunications Act of 1996.
Silberman, who was appointed by President Ronald Reagan, noted that Congress granted the FCC the ability to "remove barriers to infrastructure investment." In a footnote, he wrote that a definitive example of such a barrier "would be state laws that prohibit municipalities from creating their own broadband infrastructure to compete against private companies."
The footnote "is a powerful argument" for the FCC to block the state laws, said Blair Levin, a former lawyer who oversaw the FCC's National Broadband Plan in 2010, which laid out a road map for providing universal Internet access. The policy goal as outlined in the Telecommunications Act has always been to provide "abundant bandwidth," he said.
If there were no restrictions, "it is very likely new networks creating such abundance would be deployed," Levin said.
The FCC has set Sept. 29 as the deadline for replies to comments on Chattanooga's and Wilson's petitions. No date has been set for when the five commissioners will vote.
In the meantime, the tide in states may be turning against the telecommunications giants. Kansas and Utah, where Republicans control the legislatures, defeated bills this year that would have restricted or banned municipal broadband networks. Republican-led Georgia defeated similar bills in 2012 and 2013.
What it comes down to for communities is self-determination, and even self-preservation, said Baller, the attorney representing Chattanooga and Wilson. He said officials want to provide fast Internet to their communities for the same reasons they provided electricity a century ago.
"Local officials want to give their businesses, institutions and residents, particularly their kids, a reason to remain in and thrive in the community," he said.
Copyright 2014 The Center for Public Integrity