State senator proposes broadband bill for N.C. cities

RALEIGH — John McLean III works for Bank of America, but prefers to telecommute from his home west of Lincolnton instead of making the 50-mile commute into Charlotte every day.

“A lot of people like to live out here,” McLean said. “I’d rather spend my money here than downtown Charlotte.”

McLean needs a broadband connection to be able to work from home. He lives between two highways that have broadband connection. But the connection doesn’t come down the road where he lives.

“Nobody will come down our road because we’re not (developed) dense enough,” McLean said.

McLean said his only broadband option is to use a wireless card that operates on a 3G mobile network.

“It’s limiting, so sometimes I can’t work from home,” McLean said.

McLean did not like past efforts by Sen. David Hoyle, D-Gaston, aimed at preventing municipalities from getting into the broadband business. But he said he had no problem with a more recent proposal by Hoyle which would require cities that borrow money to finance broadband construction to get approval from voters.

Hoyle’s proposal, which has already gained the approval of an interim legislative oversight committee, would require such financing to come from general obligation bonds, which pledge the taxing power of the city and require a referendum.

Currently, municipalities use a funding measure called certificates of participation (or COPs), which allow the cities to borrow money without a referendum.

“They use the system as collateral for their debt,” explains Catharine Rice, president of the Southeastern Association of Telecommunications Officers and Advisers, which supports the municipalities’ authority to borrow and get into the broadband business and opposes Hoyle’s bill.

Hoyle said he has philosophical problems with city governments getting into the broadband business.

“Government should not be competing with the people who pay taxes,” Hoyle said. If cities get into the broadband business, they would be in direct competition with cable and DSL providers who pay corporate income, sales, franchise and fuel taxes, he said.

Five North Carolina cities (Morganton, Mooresville, Davidson, Salisbury and Wilson) have already gotten into the broadband business, Hoyle said.

He said some cities are losing money on the venture and others are transferring money from other utility accounts to help finance the infrastructure projects.

He said he expects the number of municipalities getting into the broadband business to grow.

“There are a whole lot of cities that can’t wait to jump on the bandwagon — monkey see, monkey do,” Hoyle said.

Rice said that cities should be allowed to get into the broadband business to fill a void left by private industry.

“Everybody would like the private sector to do this,” Rice said. But private companies aren’t extending their lines to some communities if they don’t see enough return on investment, she said.

“When the private sector isn’t doing the job, then local governments have to step in and do the service,” Rice said.

Rice said the cities are serving two different tiers of communities. The first is in areas that don’t have broadband at all and the residents are just using dialup Internet service. She said that in those areas, the cities aren’t competing with private industry for broadband business.

The second tier, Rice said, is in areas where private business isn’t providing the higher speed broadband. In those areas, the cities will put in fiber cables.

“What we’re really talking about is speed,” she said, referring to downloading and uploading speed.

The issue could be resolved by the General Assembly this summer. Hoyle said he expects a Senate committee to begin considering his bill this coming week.

Barry Smith can be reached at barrysmith@freedom.com.