Incumbent Dirty Tricks In Wilson, NC > Has anyone bothered to read the bill?

Has anyone bothered to read the bill?

This bill isn't looking to make local gov't not offer service, however make it an even playing field. Don't use gov't funds to prop up your system if it fails and send any tax revenues to the general fund, and we want independent audits of such.

If gov't wants to compete with private business, it should follow the same rules!

BTW Karl - please show in the blog where Embarq is behind this or any other poll? That is sloppy reporting!

reply to Go Tarheels
I can agree with 3. I live in a city that attempted to run its own cable network. Had to move funds from other sources to keep paying for it. Billing was coming out of General Tax fund. Was supposed to be reimbursed but never happened.

In the end millions of dollars got moved around never repaid. City run electric department seemed to fund the brunt of it. They ended up selling it off for a major loss.

reply to Go Tarheels
I agree with most of the bill, but there are a couple of points that are arguable. The bill draws parallels with other city provided 'enterprise' type services, i.e. water, sewer, garbage collection, etc. So far so good. Most governments run those as enterprise operations meaning they need to be self funding but also meaning they are not profit generating.

I might even be persuaded that the cost of capital should be included, although I suspect that many governments do not build the cost of garbage trucks or water line improvements into their rates for those services. Capital investment is typically paid as a part of a bond issue and recovered by general taxes.

Forcing an enterprise service to pay tax equivalences to the government is just dumb. No water or garbage department has to do that, why should a broadband department?

On the tax issue, the easy answer is to stop collecting taxes from Embarq and TW. The problem with your argument about trash and water, is that there is no one who competes with them in the City limits. You will have 2 direct competitors, not to mention several small independent ISP's that have to compete with gov't backed service. Making it an even playing field is all this does.

Nope - you haven't convinced me. This isn't an Olympic competition or a horse race. All the players do not have to be equal. There are some things a government has the advantage in and one is that they don't pay taxes.

I would really like to see an economic analysis of why Utopia isn't working in Provo as that seems to be the ideal model. Let the government build the 'tubes' and let any ISP/Telco/Cable Company/Content Aggregator that wants to serve those residences. That's an equal playing field.

What I suspect is happening is that the cablecos and telcos realize that they can't compete on content, price and service; that they need the artificial scarcity of being the only supplier in order to run through those annual price increases they've become addicted to.

Even if I were to agree with your point, the tax provision is not the biggie. It is item 3. They want local gov't funds to backup any loss they take in on income. The reason is b/c they would have to end up selling at a loss and paying off creditors with tax money anyhow.

Just like the trash pickup guys, this will eventually run private business (TW and Embarq) out of town if successful as it did with Bob's Trash pickup when they started collecting trash. If that is what the people of Wilson want, then thats that. However with the electrical debacle that Wilson got themselves into (google electricities), I would think most folks would not trust their local gov't to handle another utility.

reply to travelguy
And just as an aside, I'll share the following. It's not germane to the subject at hand as it pertains to a private enterprise, but interesting just the same.

The Phoenix Cardinals NFL team does not allow cell companies to install equipment on their property. Instead of having hundreds of antennas hanging around the stadium with varying levels of coverage, they installed a single common antenna system that provides great coverage everywhere (inside and out) of the stadium.

Anyone who wants to serve that property must contract with the Cardinals, and interface at a common location about a mile away. The Cardinals take things from there.

That kind of model can work...

reply to Go Tarheels
3, 4, and 5 are not designed to level the playing field. It is designed to look that way while putting additional burden on the municipality that is not there for the private organization.

Bottom line is as it is my understanding.... the incumbents were asked to provide service and have refused. So this city is free to do what it wants. Again, you have these greedy bastards that don't want to serve the very people they should be serving because it isn't profitable enough for them, yet they don't want to allow them to serve themselves. They were given a chance and have declined so screw em, they can leave if they don't like the playing field.

If this city wants to create another tax just for the incumbents and have them pay for this 100% through that tax, then so be it. If they want to build a city owned broadband company and fund it any way they want that the people have approved, so be it. The city serves the people and if the people have spoken then the city does what the people have asked. If the private companies don't like and and don't want to compete then they can close up shop and move on. They aren't doing anyone any good being there, so they might as well leave.

reply to Go Tarheels
There is a lot of language in that bill that would allow a private communications company to sue the government for tactics they themselves use.

#3 would allow Time Warner to come in, price their service at $9.99/month and then because of that same section, drive the municipality out of business in a few short years. This was most evident with UTOPIA, but has happened in every area a muni operates. Just look at the Time Warner rates you can get in Wilson.

Then #4, #5, #6 do nothing but to make sure the municipality can't price their services any lower than the local private company and on top of that, add the additional expense of ridiculous tracking of every nickle.

It's a BS bill and is meant to make it impossible for a local government to offer a superior service for less money.

reply to Go Tarheels

Re: I've read the bill...

reply to Go Tarheels

Re: Has anyone bothered to read the bill?

reply to Matt
Out of curiosity, how low did Comcast/Qwest go when fighting UTOPIA price-wise? Link? I heard it was pretty crazy...

reply to KatieB

Re: I've read the bill...

reply to travelguy

Re: Has anyone bothered to read the bill?

reply to Go Tarheels
Well with Wilson, NC the original story is, neither TWC nor Embarq wanted to service Wilson due to the cost, they were offered to put in the network before this project took place, they refused. So the city did it found a 3rd party to put in the network for 28mil. Now that TWC and Embarq see that it worked out in Wilson they fear that more and more rural small towns will take this route.

Greenlight provides their service at what seems to be their cost. Which is probably why they would be exempt from taxes in the first place. If TWC and Embarq or any other service provider was willing to provide their services at no profit I would assume they would also be exempt from taxes.

The private business models fear this because more and more communities will see that they can get a lot more and pay a lot less if they band together and throw out the greedy big business practices. They want to charge a arm and a leg for service, while being the only player in town. With the whole we need to add caps stories, it only proves they are after more money for even less.

And that bill does make it almost impossible for a city to put up a Greenlight type system in place. They would need a whole accounting division just to prove that they are doing as number 4 5 6 are stating, which means they would have to prove they are handicapping themselves. Which private business do not need to do.

In the end if something like Greenlight was in my city, and was the same cost and same connection speed as say TWC. I would choose Greenlight, I rather know that the money is going to the community rather then some guy in a office so he can buy a new $400k watch.

This bill may not say "local government can not offer service". But it is saying we are going to make it almost impossible for you to do so.

But you really have to ask the question, why are these service providers lobbying so hard spending so much to get bills like this even on the table. When these type of networks being put up are in areas they do not even want to service in the first place.

reply to batageek
Yep - I can see both sides of the argument. The incumbents do not want to compete against an entity with essentially unlimited funds through taxation. OTOH, the incumbents have already decided that they can't provide the services requested. I've not seen any governments jumping at building a broadband delivery system when a modern system already exists. The current situations are a bit like a little kid grabbing his ball and running home, saying that if he can't set the rules then no one can play.

As to Utopia, like I said a bit further up, I'd really like to read a disinterested third party analysis of that situation. Seems like some BYU business professor could do a great service with that as a grad student project.

I'm not so sure they should be wholesaling anything (if they are) and their objective ought to be to just break even on the infrastructure costs. Let the content/service providers bring the content to Utopia's network and let Utopia manage the physical delivery of the bits to the house.

Shoot - Utopia shouldn't even need to manage connections or system maintenance. Connections could be done by the providers themselves under rules established by Utopia and maintenance could be contracted out as well. Basically a physical plant management contract that someone like Qwest could bid for, if they really wanted to.

reply to iansltx

That's the basic flaw in the the model that assumes the municipality operates a system that will compete with private enterprise. Both parties could conceivably operate their systems below cost for different reasons. There are thousands of privately run water systems in this country and many more publicly run systems, but I'd be willing to bet that there aren't any places where you have a choice.

I don't think the model of a government run cable/internet/phone system is fatally flawed. If that is what a community wants, more power to them. They can fund construction and operation any way they want and it doesn't have to be break even. Just don't expect an overbuilder to come in and compete.

It would be interesting to run the numbers on what it would take to run the infrastructure as a government sponsored enterprise with zero content or retail face, and let whoever wanted to provide services over that network do so. The services companies would trade the capital investment in physical plant for a monthly cost based recovery charge.

But the more I think about it, even if the economics worked I'm not sure they would want to as the barriers to anyone else offering a competing service over the same network would be next to nothing.

reply to iansltx

Re: I've read the bill...