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How Telecom Monopolies Killed Competition in North Carolina With HB 129, Part 2 - Community Broadband Bits Podcast, Bonus Episode Eight
For the eighth episode of our special podcast series “Why NC Broadband Matters,” Christopher and his guests, Catharine Rice and Jack Cozort, continue their conversation on HB 129, North Carolina’s restrictive law that prevents local governments from investing in broadband infrastructure. The first half of their discussion focused on the years leading up to the passage of HB 129 in 2011. Today, Christopher, Catharine, and Jack talk about the bill itself, the influence of the telecom industry over the state legislature, and how HB 129 has impacted connectivity in North Carolina.
Catharine and Jack explain that local broadband authority became a partisan issue after the 2010 election, which flipped control of the North Carolina legislature to the Republicans. They share their experiences advocating against HB 129, explaining how legislators restricted public comments on the bill by limiting speaking time and rescheduling hearings and meetings. Jack tells Christopher that there were as many as 25 lobbyists representing telephone and cable companies at the state legislature pushing for HB 129. Catharine relates how corruption and a lack of transparency in government are the reasons why the telecom industry successfully got the bill passed.
Christopher and his guests also run through some of the provisions of HB 129, dissecting the telecom monopolies’ misleading arguments in favor of the bill.
This is the second half of a two part discussion. For part one, listen to episode 412 of the Community Broadband Bits podcast.
We produced this episode and the “Why NC Broadband Matters” series in partnership with NC Broadband Matters, a nonprofit organization advocating for better connectivity across North Carolina.
This show is 32 minutes long and can be played on this page or via Apple Podcasts or the tool of your choice using this feed, at the Community Broadband Bits page, or at the NC Broadband Matters page. We encourage you to check out other "Why NC Broadband Matters" content at the podcast feed so you don't miss future bonus content that may not appear in the Community Broadband Bits Podcast feed.
We want your feedback and suggestions for the show-please e-mail us or leave a comment below.
Listen to other episodes here or view all episodes in our index. See other podcasts from the Institute for Local Self-Reliance here.
Thanks to Shane Ivers for the Music: What's The Angle? by Shane Ivers - https://www.silvermansound.com a Creative Commons Attribution (4.0) license.
Jack Cozort: We gave the big cable companies ten years under House Bill 129. They promised that they were going to put fiber out in these communities, and they haven't done it. And so we need to be asking all of our candidates for the legislature, "Are you going to stand up to those cable companies? And are you going to allow local government the options it needs to bring Internet to people who need it?"
Jess Del Fiacco: We're bringing you another episode in our special Community Broadband Bits Podcast series, Why NC Broadband Matters. I'm Jess Del Fiacco with the Institute for Local Self-Reliance in Minneapolis, Minnesota. NC Broadband Matters is a North Carolina nonprofit. Their mission is to attract, support, and champion the universal availability of affordable, reliable, high-capacity Internet access. The group has created the North Carolina Chapter of CLIC, the Coalition for Local Internet Choice. ILSR is working with NC Broadband Matters to produce this series focusing on issues affecting people in North Carolina that also impact folks in other regions. We're joined today by Catharine Rice, the project manager for the Coalition for Local Internet Choice, and co-founder of NC Broadband Matters. As well as Jack Cozort, a government relations consultant who is involved with broadband in the North Carolina state legislature.
Jess Del Fiacco: This episode is part two of a conversation about the history of North Carolina's HB 129. The law that preempted local telecommunications authority in the state. Reflecting on their first-hand experience, Catharine and Jack tell Christopher about the unfair games that cable companies play to prevent local governments in North Carolina from being able to invest in broadband networks. Now here's Christopher talking with Catharine Rice and Jack Cozort.
Christopher Mitchell: Welcome to another episode of The Community Broadband Bits Podcast! This is Christopher Mitchell at the Institute for Local Self-Reliance and we're going to pick off where we left off with Catharine Rice, who is the project manager for the Coalition for Local Internet Choice and the co-founder of North Carolina NC Broadband Matters. Welcome back, Catharine.
Catharine Rice: Welcome, Chris.
Christopher Mitchell: We also have Jack Cozort, a government relations consultant who has worked frequently with the City of Wilson and has a bit of a broadband passion bubbling through his veins. Welcome back, Jack.
Jack Cozort: Thank you Chris. Good to be here.
Christopher Mitchell: So we're going to pick up where we left off a few days ago. We were talking about the history behind how North Carolina came to have such a strict law stopping community solutions from solving broadband problems. And we're going to talk mostly about 2011 and where that has led to through today, the ramifications of the law that was passed in 2011. But Catharine, let me ask you to just set the stage of the election of 2010 that led into this decision that was made then in 2011.
Catharine Rice: Yes. So, the last time we spoke, we had taken the story up to about November 2010, when we ... of course, there were elections. And we saw the 100 year reversal of control in the House and the Senate. Same governor. But she had no veto proof majority. So we lost House Speaker Hackney and we got Representative Tillis who had been one of the biggest advocates for shutting down municipalities being able to provide broadband to their citizens and to their businesses.
Christopher Mitchell: If I could just add in quickly as well, I mean, that was certainly was probably his focus although he didn't mind that the language went considerably further and stopped basically any kind of innovative local partnership in many ways. I mean, it really overreached in terms of not just stopping the approach that Wilson used, but what many other communities might have wanted to do in partnership with local providers.
Catharine Rice: That's right. It was pretty stunning the difference of going from having hearings and being able to talk about why communities were interested in this. Why they wanted to do this. Why they would even want to compete to going to not even seeing the bill. And Jack can really pick up and tell the story on the ground. But, the first version of the bill even though it was introduced in around January of 2011, the Level Playing Field Act, H129, also known as Local Government Competition Act and Act to Create Jobs. The first version we saw was around mid-February. And that was version 17 out of the Senate.
Christopher Mitchell: So you're saying there was 16 revisions?
Catharine Rice: Yes. Before the public saw it. And then it was introduced the next day. It was one of the first bills out. We really couldn't touch it. We couldn't get even close to it. And Jack representing Wilson, and to your credit, Jack, and to Wilson's credit, really had the battle of its life. Because we couldn't get hearings. If we got hearings, we were allowed to speak for two minutes, where somebody was waving a cardboard piece of paper at us. Representative Avila was pretty much doing the work for Tillis. And Jack, as you have said, everybody knew that she was doing the work for Tillis. And the first meeting that I remember going to where it was going to be ... there was so much public outcry again because we had gotten used to this every year.
Catharine Rice: She was forced into having a meeting and she called all the city reps in. She called some of the public reps. The grassroot reps that I represented. And the industry. And Jack, you can talk about this meeting. I'm sure it's as clear as in your mind as mine. What I remember is her saying pretty quickly, "Well, I really need someone to run this meeting who is an expert and passing control of the entire meeting to Mark, who was the top lobbyist for Time Warner Cable, who ran the cable association out of his law office, and who didn't even need to look at a piece of paper because he had memorized every word of the legislation, because he had written it. Jack, do you remember that meeting?
Jack Cozort: I remember it very well. There's so many of those meetings. I remember it just like it was yesterday. Let me talk a little bit more about the political background coming into all of this. During the last half of the first decade of this century, from 2005 to 2010, when we were dealing with this issue in the legislature, when the cable companies were trying to seize an advantage, after they had broken free from city regulation, from local regulation, most of the efforts to help them or to oppose them were bipartisan.
Jack Cozort: There were Democrats who worked with the cable companies who didn't believe that cities ought to be doing what Wilson was doing. There were Republicans, though, who thought it was okay for Wilson and local government to do what they were doing. So we were dealing with folks from both sides.
Christopher Mitchell: I'm sorry. I wanted to note that that reflects on the ground situation. It was a little bit different back then I know people ... Since, I'd say for 15 years, many of us have thought this was an essential service. As more people have come over, people have, basically since 2012, it's polled that roughly 70% of Americans support this decision being made locally and we don't see a big difference between Democrats and Republicans. But there's some on each side.
Jack Cozort: That's the way it was for those four or five years. And because the courts had ruled it was an essential service. And the people who in the legislature generally were trying to reflect the feelings of their folks back home. So that the Democrats who were usually in support of the cable companies were from the Charlotte area where they had service.
Catharine Rice: And Time Warner Cable.
Jack Cozort: Yes. That wasn't an issue for that. But the further you got away from those metropolitan areas, the more you had bipartisan support for local government being able to do something. All of that changed in 2011. After Thom Tillis became the speaker, it became a highly partisan caucus issue from the Republican party.
Christopher Mitchell: And I think ... you can tell me if I'm wrong. I think Marilyn Avila, it was her first year, right? She came in in 2010, and she came from the John Locke Society or the John Locke Foundation. And that John Locke is forever sewed into my head as promoting WiMAX as the best solution for the entire country long after. I mean, there was doubts about it early on. And WiMAX could have gone a different way, with different technological decisions. But they didn't know anything about the technology. They simply got money from cable and telephone companies, as best I can tell, and just did whatever they wanted to say, and there was no credibility.
Christopher Mitchell: I think of them as being a group that has an ideological position and no interest in facts whatsoever. But anyway, she came from there. She brought in this bill. And she decided that was her big thing.
Jack Cozort: Well, it wasn't just her, though. Julia Howard was a cosponsor.
Catharine Rice: Oh yeah.
Jack Cozort: And Julia Howard was a long-time veteran of the general assembly. Republican from Mocksville, Davie County. She had been chair of the finance committee before when Harold Brubaker was the speaker. She was one of his top person's. So that she was someone who really carried clout in the legislature. So, they were the two principal sponsors of the bill on the House side. And of course that was the bill that ultimately went all the way through the House and the Senate. But from day one, we knew it was going to be a different playground, or a different playing field from what we had dealt with in the past.
Jack Cozort: And of course, I was still representing Wilson. And was looking around, trying to find comfort and aid and support in defending what Wilson had done. And by now, Wilson had pretty much completed Greenlight. It was operational. They were killing Time Warner Cable. Now, they were providing upload and download speeds that nobody else could match. Better customer service. Time Warner started reducing their rates to try to keep customers from going to Greenlight. And I would keep track of what I was paying as a Time Warner customer in Raleigh, and what it would cost me to get the same service in Wilson. And it would have cost me about a third of what I paid in Raleigh to get comparable service.
Christopher Mitchell: And one of the other key details, I think, is that we now know that Wilson is successful. It's never had problem paying its debts. It succeeded in every metric that you can lay in front of it in terms of its business plan. But at that time, as is almost always the case for any telecommunications expenditure, you spend almost all of your money upfront before you have customers. And then you spend years chasing customers to get enough of them to be able to break even. And so during this time period for people who don't understand telecom, it looks like Wilson is failing, because it has spent all this money and its revenues are so low. But that's just what happens in the second, third years of the business. Sometimes the fourth.
Christopher Mitchell: And so, they were demagogues by ... people were saying that they were failures, when in fact they would go on to tremendous success. There was nothing wrong with where they were and at that time.
Jack Cozort: But Wilson knew that and they had studied that. And so they had a chart. They knew what they had to make each of those first few years, even though they were lean years, to keep on track to become first to the point where they were breaking even. And then to the point where they were doing so well that they could accelerate paying off their debt. They were ahead of schedule at every benchmark, because they were doing so well and it was so successful. But if you were listening to AT&T and Time Warner, you would have thought it was the biggest failure in the world. And so that's what we were dealing with. I was the sole lobbyist for Wilson. And when you added up the in-house lobbyists that the cable companies had with the industry and then with the contract lobbyists that each of them had hired, at one point during the session, they had 25 lobbyists working for the cable industry to stop Wilson from doing any more and to keep any other local government from being able to have Internet service.
Christopher Mitchell: You know, we actually did an analysis based not on the numbers of what they were paying in-house, but the amount of campaign contributions that they had given. And between the biggest companies like Time Warner Cable, AT&T, CenturyLink, I believe it was on the order of $1.6 million over many years leading up to that. And we then reverse that to say, "If you saw competition in more cities like you saw in Wilson, how many cities would have to build a network in order for the cable companies to have been smart in spending that money because of how much they lose in competition?" And it wasn't many. If they basically stopped three cities from building a network, then they came out ahead.
Christopher Mitchell: It was a cheap expenditure for them to stop competition, because competition lowers their revenues so much.
Jack Cozort: Yeah. That's what they feared the most. I can remember going to committee meetings where they would have a lobbyist assigned to every single committee member so that if a committee member were out in the hall talking and was supposed to be in the committee room getting ready to vote for what the cable companies wanted, one of the lobbyists would grab the legislator and drag him or her into the room, put the person in the chair so that they would be ready to vote when the time came. So that was the kind of atmosphere we were working under. And we simply could make no headway because they had enough people that they were able to go around and poison the well of just about every person in the legislature.
Jack Cozort: And so our job of trying to cleanse them of what they had been told by the cable companies was almost an insurmountable task. I had help from Catharine. I had some help from the league. But again, they were still not quite understanding exactly what this was going to mean. This was entirely new to them as well. And they were also under assault at the same time. Speaker Tellis was not just against local government being able to provide Internet for their citizens. He and a number of other legislatures were against local government being able to do anything. And so they were having to fight against their revenue sources being cut off.
Jack Cozort: Their ability to control planning developments. Environmental issues. I mean, they were under assault from all quarters. And so they were having to spread out and try to deal with as many of those issues as they can. And were simply not able to put the resources into dealing with losing the right to do broadband. And so that was what the circumstances were like. A legislative week normally begins late Monday afternoon. There may be a late afternoon committee meeting. Most of the time, there isn't. The caucuses meet at 6:00. And then session is at 7:00 on Monday night. It's usually something that's not very long and complicated. And then Tuesday and Wednesday are the hard working days. They have committee meetings from 8:00 in the morning till early afternoon, and then they have full session that'll last two or three hours each afternoon.
Jack Cozort: Thursday is another short day with usually finance committee meetings very early in the morning. 10:00 or 11:00 session with the idea that they would finish up at about 2:00 or so on Thursday afternoon. Legislators get to go home. More time for the weekend with their families and constituents. I don't remember the exact week during the session, but we had a week that a special meeting was announced on Friday, and this was the meeting where we were to go and we were going to be allowed to negotiate what we could get for our cities. So I was there on behalf of Wilson. There were folks there from Salisbury. Morganton.
Catharine Rice: Morganton. Morrisville. Davidson.
Jack Cozort: Yes. And Fayetteville had been laying fiber, but for whatever reason they didn't get invited to the meeting. As I recall, they didn't get to participate. And so we all gathered there and it was 9:00 or 10:00 on a Friday morning. And we were in those, one of those committee rooms at the general assembly. And up at the front at the head table where the chairs and the vice chairs and so forth the committee usually sits, were Representative Avila and Representative Howard. And then three people from the cable companies. And then the rest of us were around the table as if we were ordinary committee members.
Jack Cozort: And they would call up which entity they wanted to deal with. And so they decided they would deal with Salisbury first. And so Salisbury came up and made a pitch for what they were doing and what they wanted to do. But then they were told, "No. Here's what you're going to be allowed to do."
Catharine Rice: By the cable lobbyists.
Jack Cozort: By the cable lobbyists. Representative Avela and Representative Howard would occasionally interject something into the discussions but it was generally the presentation being made by the representative of the cable company who was closest to where that city was located. And so they had finished with Salisbury and I raised my hand and I said, "I represent Wilson, and we're very similar to Salisbury in that both of us have been in the process of building." And so we have a lot of common issues and it looks to me like it would make sense to take us next. And Representative Howard said, "Oh, no, no, no. We're saving you for last."
Jack Cozort: So that's what they did. They went through everything else. And they got to me I guess about 3:00 on Friday afternoon. And most everybody else had left. They had received their penance and had moved on. And it was there that I was told basically by the cable companies, "Here's what we're going to let you do." And it was clear that they were completely in charge. I mean, it was AT&T and Time Warner telling me that Wilson will be allowed to operate in Wilson County where it now exists. But I don't think we had all of Wilson County at the time. It was mostly going to be just the City of Wilson. And we were able to get them to agree later on to basically let us do Wilson County. But it was what the cable companies would allow. It wasn't what the legislature would allow.
Jack Cozort: They were clearly in charge.
Catharine Rice: They were listing the roads for Salisbury, for instance. Which roads the community would be allowed to provide fiber down. The cable lobbyist was doing this.
Jack Cozort: Yeah. Well, basically, a lot of it, what it was, they knew where the best locations were. They knew where you were likely to get the most subscribers. I mean, they had a minute detail of each one of the communities that was being discussed.
Christopher Mitchell: What they were telling the representatives and the legislature was that it was not fair for y'all to compete in that as long as the legislature restricted access then they would be investing all over North Carolina. And I think it's ... I don't want to spoil the ending, but we haven't seen AT&T and Time Warner Cable now with Charter Spectrum, actually doing anything for the rest of the state.
Catharine Rice: Actually, that's what you saw. And don't forget CenturyLink. But what you've seen, especially with Time Warner Cable is they sold out.
Jack Cozort: Exactly.
Catharine Rice: They had a deregulated market with no competition. They sold.
Jack Cozort: But that was the promise that was made by the cable companies. And that was that the cities are not going to have to do this. We'll do it. We'll provide the service in those areas. We're ready to go. And of course all we could do was relate to them our experience over the last several years which had been that any time we asked them to come into underserved areas, and in Wilson a lot of people think Wilson must be very wealthy. It's a rich community. It used to be the big tobacco community and everything. Well, yeah. There was some of that. But in some respects, Wilson has some very impoverished neighborhoods. And a lot of those places didn't have any cable service at all.
Jack Cozort: There were a lot of neighborhoods in Wilson that had nothing. And part of Wilson's request to Time Warner had been not just to beef up service to Barton College and BB&T and the businesses they were trying to recruit, but put cable into these nonserved areas. These poor areas in Wilson. And Time Warner wouldn't do that. And so that was part of what Wilson was wanting to do is to make sure that not only could they serve the colleges and the major corporations, but they wanted to serve all their citizens. And that was what they were trying to do. And that was what the cable companies said that they would start doing. That if the legislature would level the playing field so that if a municipality tried to get into it, it would have to overcome all these burdens which would make it almost impossible for local government to do anything.
Jack Cozort: The cable companies said, "If you create this network or this system, then we'll show you what we can do. We'll go out and we'll do it." And so that was the premise upon which the bill was sold. And all we do is say, "They haven't done that in the past."
Catharine Rice: And the context also was that at the time, Time Warner was madly selling off its rural systems and shutting them down. And CenturyLink was not maintaining its plant. And there was huge public outcry about it. But they had so many lobbyists. And the legislators were ... it was like drinking Kool-Aid. Of course the campaign didn't hurt either. And I think that's just watching the story unfold and making the legislators believe that cities were incompetent, that they were just failing left and right. That they had abused their employees. That they were reckless with tax dollars. That they had no sense of technology. These were stories that if you repeat them enough, and you don't really know what's going on in the local community, you start believing it.
Catharine Rice: And that was what was so troubling. It wasn't ... it was hearing those stories and then not having any opportunity, really, to counter them. Not even in hearings. Jack, you remember the hearings, but we started a petition and in a week, we had 350 signatures to oppose the legislation. And they wouldn't ... they gave us two minutes to present whatever we wanted to present. You say your name and you're maybe 15, 20 seconds into the two minutes. So we had no time. They were just shutting down the discussion.
Jack Cozort: And they would switch committee meetings around on us.
Catharine Rice: Yes. Yeah.
Jack Cozort: It had to go through several committees in the House. Fewer in the Senate. But in the House, they would schedule a committee meeting. Our bill would be on the agenda. So we would all show up. And a lot of times seeing us there, they would decide not to take the bill out. And they would reschedule the committee meeting for some time later in the day. Sometimes we would get 30 minutes notice that the committee was going to meet and take up our bill.
Catharine Rice: And remember.
Catharine Rice: Salisbury is a three hour drive.
Jack Cozort: That's right. And Wilson is an hour. And so sometimes it was just impossible to get our people there.
Catharine Rice: We couldn't get the newspapers to cover it because Time Warner Cable got so much advertising that it was ... we started bringing our own cameras.
Jack Cozort: That's right. Yeah.
Catharine Rice: In fact, Wilson had their cameras in the room, because that was the only way that we could get a conversation going even.
Jack Cozort: And you got to remember, this is 2011 and we have just started to come out of the worst recession since the 1930s. 2008, 2009 were terrible years. And there were some cities who were struggling financially. But it was not necessarily of their own doing. And then the other issue you had especially in Eastern North Carolina in cities were the ElectriCities in Eastern North Carolina had gone together to the equity owners and proposed nuclear power plants by Duke Energy. And that has been an absolute failure. And they were saddled with enormous debt. And that was used in a lot of instances by legislators to argue that cities don't know what they're doing. Look at how they've gotten themselves into such terrific debt here over providing electricity.
Jack Cozort: If you let them provide cable, Internet, it's going to be even worse. And so we had all those arguments to try to deal with to try to respond.
Catharine Rice: And again, what's stunning about that is that the cable companies were the competition. So why are they complaining that their competition are failures?
Christopher Mitchell: Well, I think it's worth noting that this is an issue that is just, it's complicated enough that people can just say these things, right? I mean, it drove me nuts that what I would see in the newspapers that did cover it from time to time is I would be in contact with reporters trying to get them to write about it is I would tell them, "Look, this is called the Level Playing Field Bill", and then it lists a whole bunch of ways in which cities are disadvantaged relative to their rivals. So it's not a level playing field. And the reporter would then write a story in which they would say, "This is called the Level Playing Field bill and the lobbyists for Time Warner Cable say that this will make it a level playing field." And I'm like, "But you know it won't. I just explained it to you." What does it take?
Catharine Rice: They're billion dollar companies. They are billion dollar companies. These towns were tiny towns. Wilson has 50,000 people.
Jack Cozort: 50,000 residents. People. Yeah.
Catharine Rice: I mean, it was grants-
Christopher Mitchell: Time Warner Cable has like 50,000 employees. Or I mean they used to back in ... it was like 35, 40,000 employees.
Catharine Rice: ... a grant showing that poster where they have a little dot-
Jack Cozort: A little dot. Yeah.
Catharine Rice: ... and that was Wilson's community.
Jack Cozort: This is Wilson.
Catharine Rice: And then they had Time Warner and it took up the entire poster.
Jack Cozort: You know, Wilson borrowed around $38 million to build Greenlight, and that's a bargain, because they had so much infrastructure in place, being an ElectriCity. But that was also about the same amount as the CEO at Time Warner was making a year.
Christopher Mitchell: Right. You mentioned that in the last episode.
Jack Cozort: So that's what we were dealing with. And so obviously they could pay as many lobbyists as much as they wanted to. As many campaign contributions as they possibly could.
Christopher Mitchell: I want to just note. I mean, I feel like we should probably try to get through HB 129 so we can get on to the impacts after that. But I'll just note quickly. HB 129, the way it was enacted, it was much like it was proposed. There's a number of different seemingly innocuous provisions that require cities to do certain things if they're going to build a network. One of the ones that's the most pernicious is this idea of these phantom costs that a city would have to incorporate that are reflective of what a private company would pay. Now, there's no mechanism for that because what Time Warner would pay is different from what AT&T would pay is different from what a local wireless ISP would pay.
Christopher Mitchell: And so from people who understand how the legal system works, no city is going to move forward with this because they're inviting years of litigation if they were attempting to do this while it was sorted out, what they meant. And so effectively, you have these requirements and then you have people like Marilyn Avila, Representative Avila saying, "Well, if cities just comply with this, they can build a network." But no city has attempted to build a network since that legislation passed because the legal costs would be probably greater than the costs of building the network.
Jack Cozort: And we knew and most everybody knew at the time those who were dealing with the facts that Wilson was somewhat unique in its ability to be able to build Greenlight because of the infrastructure it had. And there was never a lot of thought that other cities would try to duplicate what Wilson did, but they certainly were interested in especially partnering with ISPs to be able to create a network or to do like Fayetteville had done, invest in some of the fiber. And then try to get somebody to come in and help you deal with it or help you manage it. Have a private company come in.
Jack Cozort: But finishing up on House Bill 129, it was a long, arduous process getting through the House, trying to get a few crumbs to help out. Which we were able to do to preserve Wilson's ability to at least keep going. Of course, most businesses can't survive without growing. If you're going to be static, it's going to be difficult to survive. And that's where Wilson was left. It was going to be very difficult for them to expand. To do very much. But we basically got the best deal we could get. Tom Apodaca was the senator who managed the bill for Representative Avila and Representative Howard when it got on the Senate side.
Jack Cozort: And of course he was the right hand man for President Pro Tem Phil Berger and so there was no opportunity to have anything happen in the Senate that was going to help Wilson or anybody else. It was a foregone conclusion there.
Christopher Mitchell: But I wanted to note that the growth issue, Wilson figured out how to manage itself as best it could but for Salisbury, there was a lot of people outside Salisbury who petitioned to expand the network. And Salisbury had a lot of troubles. Some of them of their own making and some of them imposed by the state. You can't say one or the other is the only cause of problems. But if they had been able to expand to those desperately willing customers, it probably would not have resulted in the problems it did that led to it becoming a public private partnership.
Jack Cozort: Right.
Catharine Rice: This model of clamping down on the size of the competition, this was something that Time Warner had succeeded in doing in Lebanon, Ohio, where they finally got legislation passed to reduce the size of their service footprint. And so it was a successful network but they ended up having to sell it to, I think, Cincinnati Bell. So they had learned from that, that if they can just narrow the service area as much as possible. And remember, Wilson has a five county electrical footprint. It has the poles.
Jack Cozort: That's right.
Catharine Rice: In five counties.
Jack Cozort: That became another issue later on with Pinetops. I was on the phone yesterday with a lobbyist in Michigan talking about a different issue, and this came up during our discussion. And she told me the same thing had happened in Michigan.
Christopher Mitchell: So one of the things I really wanted to make sure that we hit on is that throughout this, actual private sector companies that aren't in the cable industry are opposing the bill. Both from outside the state and within the state. BB&T of course is coming out there on their own dime to say, "Don't do this. This is bad for our communities." When the bill passes the House and the Senate, Red Hat, a major company that's expanding in the Triangle area writes a letter, an impassioned letter, to Governor Perdue asking her to veto it, and she hems and haws and ultimately caves because she doesn't want to use some of her political capital which she then ... I think she resigned shortly thereafter anyways.
Catharine Rice: Oh, no. She did not have the veto proof majority. She didn't have the votes. Even if she-
Jack Cozort: Yeah. They would override her veto.
Christopher Mitchell: But I feel like that would have been preferable to the governor signing it. It would have been a sign of who is responsible for that.
Catharine Rice: So, she actually didn't sign it. That was the way she protested. She didn't sign it.
Catharine Rice: And then it becomes law.
Christopher Mitchell: I just, I don't have a lot of sympathy for that. I mean it's like this little thing. It's like have the courage of your convictions. And I felt that one of the things that she was doing was she was bailing out Democrats from having to take a hard vote on the override. And I just, I don't have a lot of sympathy for that. But that's why I'm in this seat. Jack, you're in a different seat. And Catharine's in a different seat. So we can all respect that.
Catharine Rice: So what we saw was a bill that was introduced. I think it was February 16th. Became law by May 21st. So you can see that even though it seemed like a very long time, it was not a very long time. It was basically bulldozed through.
Jack Cozort: Well, it was long because for me it was almost every day.
Catharine Rice: Every day. Yeah. Well, I know. I think one of the reasons that, Chris, that we wanted to do the podcast is just to for people who weren't around then. For students in who are studying broadband policy to understand what happens when you don't have good government. How do things happen? What do they put the public through? And what does it mean when you have a lack of transparency? When you literally have a billion dollar company listing the streets that a community that just wants Internet choice, we'll be able to provide you. And where we are now, 15 years later, when we now have a pandemic, and we're discovering, oh my gosh. There are all of these people who don't have broadband.
Christopher Mitchell: Right. And let me just note. I mean, some of the press in North Carolina has been very good at covering some of this. I mean, there's people that are three miles from Chapel Hill downtown. We're not talking about people that are out on the Outer Banks. We're talking about-
Catharine Rice: Chatham County.
Christopher Mitchell: Yeah. Chatham County, Orange County. I mean, there's a bunch of people that you would assume, you would think that a lot of these people would have decent access. But they haven't. Because who decides? The cable and telephone companies themselves have the ultimate power in North Carolina. There is not good reporting on where they serve. And so there's been no way to check them. They've had total reign to do whatever they want to do.
Catharine Rice: The numbers are actually really interesting, because it's pretty much impossible to get accurate numbers. But even trying to filter through the numbers you get, the Department of Instruction was saying they have about 300,000 students who don't have access to Internet at home, so they can't do their homework right now during the pandemic. And this is the repercussion. This is the repercussion of being purchased, basically, by an industry 15 years ago.
Jack Cozort: Well, this is what you see now. With the pandemic you can see how much Internet would make a difference for students who can't go to school. For especially the elderly who shouldn't be going to a hospital or a doctor, but if they had Internet, they would have a way to communicate and get medical services. And for small businesses, especially home businesses, who need to have enough bandwidth to be able to run a business, to put products out online and make money, and in some places they just simply can't do that. So we're getting some coverage now about the problems. But from 2011 until just a couple of years ago, it was almost impossible to get the media to understand what we were talking about.
Jack Cozort: And I spend a lot of time trying to get the local TV stations to get it. To understand why something needs to be done. And they were all slow to come around. To really catch on to it.
Christopher Mitchell: Well I'm glad that the WRAL did the sponsored documentary, Disconnected. And then more recently they also sent a crew out to interview a teacher who was in the rural parts of Wilson County and Greenlight has been trying to expand out to these very low density areas over time. And expedited construction to her house to make sure she could teach, because the private sector had not bothered to give her a connection with which she could fulfill her duties.
Jack Cozort: The last few years, WRAL in particular has been fantastic. I mean, they're getting it now. They understand what needs to be done.
Catharine Rice: And also the League of Cities, they admitted for six years they lost six years while the cable industry wined and dined the legislature. And told them that cities and local government were just horrible things.
Christopher Mitchell: Predatory, in fact. That's what Avela said. Avela claimed that the problem is that AT&T and Time Warner Cable are these fine, upstanding corporations and it's the cities that are corrupting them.
Jack Cozort: Yeah. So the League-
Catharine Rice: I have a-
Jack Cozort: ... has worked really hard the last few years. We're getting some publicity now.
Catharine Rice: They were able to get 70 sponsors in the House for the NC Fiber Act, which is more than they would need to pass the bill in the House.
Jack Cozort: Right.
Christopher Mitchell: If there was a vote.
Catharine Rice: If there was a vote.
Jack Cozort: If there were a vote.
Catharine Rice: And the leadership wouldn't let the vote happen, until-
Jack Cozort: But, filling the gap between 2011 and the introduction of the Fiber Act last year, each year the legislature tightened the screws a little more so that where you had some language which appeared to allow a local government to partner with a private company to work on its Internet problems. Suddenly, that language would be changed or would disappear. And I don't know that it came up in any motorcycle helmet bills. But it came up in a lot of strange places and frequently where the language would show up would be very late into session, in the budget bill. Which is almost impossible to amend once it gets written. It's pretty much in stone, except for friendly amendments or correcting amendments that are allowed in the appropriations committee or the finance committee.
Jack Cozort: And so that's what we were up against. A veto proof majority which was on the side of the cable companies, putting their language in the budget bill to further limit local governments opportunity to provide Internet for its citizens. Each year, the budget came out. Tightening the screws a little more. And so it just became harder and harder for cities to try to do anything. Meanwhile, you are getting more and more people in groups who are beginning to voice their concerns about not having Internet. And then this year when the ... well, last year, thanks to a lot of really hard work from the League, Erin Wynia and her folks presented a white paper, Scott Mooneyham, were able to convince a few legislators to come and sponsor the press conference to introduce that.
Jack Cozort: I remember Representative Szoka, for example, from Fayetteville who was with the League to present that report to show where we were and some of the things that could be done. But I can remember having a friend of mine who's on a town commission board down on the coast and he knew I was involved in this issue. And so he came to me and said, "Every time I go to a county commissioner meeting, one of the county commissioner's complains about the county not being able to do anything about poor Internet service." It's Pender County. A poorer county in the Eastern part of the state which has some Internet service along the coast. Along the beaches. And a little bit in the center of town in Burgaw. But the rest of the county has almost nothing.
Jack Cozort: And so one of the county commissioners was always complaining. And he said, "Will you call her and explain to her why they can't build their own system?" And so I called her and I explained it to her. I said, "The law doesn't allow you to do this." And she said, "Well, how can we pass such a crazy law?" And I said, "Well, I think the cable companies have a lot to do with it."
Christopher Mitchell: I spoke with her and it breaks my heart because she's a person whose politics strongly supports people like Thom Tillis, from what I can tell. And I don't think she has an appreciation for what people like him have done to the state. And I can appreciate that her and I may not agree on a lot of issues, although there's many we might agree on if she had a better sense of how some of these people are putting corporate interests ahead of the state.
Jack Cozort: Yeah.
Catharine Rice: Well, also the mayor from Macclesfield, when the whole Pinetops experience was happening, he was a staffer. I believe he was a staffer to and now I think he is some kind of state representative for Tillis. He was furious, because Pinetops, which is a mile away, was getting fiber to the home from Greenlight. And he knew that Greenlight, because they provide electrical service to his town, had a fiber that stopped right in his town border, and he was furious that he couldn't get Greenlight service. And he went back and talked to the North Carolina senators. And so this is the thing. Locally, this is not a partisan issue. It just is not ... it's an infrastructure issue.
Jack Cozort: It is.
Catharine Rice: And that's what we have to push up, is like what is it going to take for the leadership to finally say, "This is infrastructure now." And it's critical infrastructure as we're seeing during the pandemic.
Christopher Mitchell: This was something I wanted to make sure we got up. And I forgot. Jack, you were there, I think. There was a person who confronted Representative Tillis, because a Republican who was very frustrated. His district had been harmed and wasn't grandfathered out. And tillis tore him apart in ways that were shocking to some.
Jack Cozort: I think that was Fayetteville, but I'm trying to remember now.
Catharine Rice: It was the senator from the finance committee, Jack. Remember? He said Tillis said, "I have a business relationship with Time Warner."
Jack Cozort: Right.
Catharine Rice: He was a dentist. And he spoke up before the Senate and then he resigned from the finance committee.
Christopher Mitchell: So do you remember that story? Can you tell us that?
Catharine Rice: We need to know more of the detail on that story because he was ... I think he was a dentist. And his community wasn't able to get, to have decent Internet. He could see it was impacting the businesses in his community. And so he on his own introduced a bill that would allow municipalities to provide broadband service. And Tillis was furious when he found out. And apparently walked in his office.
Christopher Mitchell: Slammed the door shut is what the article said.
Catharine Rice: Slammed the door shut. Yeah. And said, "What are you doing here?" And he's like, "I'm doing what needs to be done." And Tillis said to him, "Well, I have a business relationship with these companies, and I'm not going to let you get that bill out of committee. I'm not even going to let you introduce it." And there was a lot of bad words between the two of them, and I think it led to Brawley actually reading his letter to the entire body on the floor.
Jack Cozort: He did.
Catharine Rice: And then resigning.
Jack Cozort: Yeah.
Christopher Mitchell: Yeah. It's a mess. I mean, there is ... we haven't even scratched the surface of the corruption that was around that bill in 2011. I mean, there's so much more.
Catharine Rice: Here's the deal though. Right now, Senator Tillis who I actually was shocked to learn right after H 129 became law that he was going to run to be a senator back in 2011, he has now become good friends with Elon Musk. And now is telling everyone that satellite service is going to be the end all and is going to solve everybody's broadband problems. And that breaks my heart, because I love Elon Musk. I think he's a genius. But we're in bad economic times now, and he can't possibly focus his technology on but a few, at best, a few rural areas. I mean, he's focusing on the world, right? And it's going to be expensive.
Christopher Mitchell: The challenge with Starlink is that if you're a stockbroker living in Eastern North Carolina, you will do well with that service. If you're trying to connect every last home of Eastern North Carolina, that technology is not even designed to be able to do that. So it's great for people who will be able to be the first in line. But this is not a solution for North Carolina. What it is, is an opportunity for people who have refused to allow communities to solve this problem locally. It gives them a few more years, but they say, "No, wait. Really the magic solution is here. We've been waiting 25 years. But the magic solution has arrived. Just wait another two years."
Catharine Rice: So the guy who basically is responsible for leaving rural areas has broadband deserts is now filled with more empty promises for their future.
Jack Cozort: Well, and I understand that what Musk was relying on was that there was going to be federal funding to help with all of this, as well. Wasn't that a part of his plan?
Christopher Mitchell: He's trying to get into the next auction from the FCC. I think he is still going to be launching this without that. It might change his plans. But a lot of that's in flux. I mean, but I don't want to spend more time on this because I mean, we ... Catharine probably remembers. 20 years ago we were talking about broadband over power lines. And that was presented as we don't need government policy. Broadband over power lines is going to solve this. And then it was WiMAX, which the John Locke Foundation still loves. So I mean, there's no end to people throwing false solutions out.
Jack Cozort: I understand that there are those in North Carolina who think that Musk's proposal to use satellites to provide broadband is going to be the solution. But from what we know that doesn't appear to be something that's coming up in the horizon. And so those who are dropping their support of the North Carolina Fiber Act, thinking that that's going to be a solution, need to rethink where they are.
Christopher Mitchell: Yeah. I think so or at the very least, hold responsible the people who hold up these false promises.
Jack Cozort: Absolutely.
Christopher Mitchell: And this is something that I think we can leave at. And we didn't talk about Pinetops as much as we might have. Although, Jack, this podcast has talked with people from there. Suzanne Coker Craig has been on.
Jack Cozort: Okay. Oh yeah. She's been terrific. And you know how it came up, why Wilson went into Pinetops and then the federal courts made us get out.
Christopher Mitchell: Yeah. I lost a few weekends of my life dealing with writing briefs and things like that. Responding to federal comments. But I did want to note this thing that I think is worth ending on which is that, again, I think some Democrats and a lot of Republicans have come in for negative words in this discussion. But fundamentally, the answer is not to vote for the different party, necessarily. Everyone needs to hold their elected officials accountable. That's the key.
Jack Cozort: They've got to ask that question. Are you going to support legislation that allows local government to partner with private industry to build Internet?
Catharine Rice: Are you going to allow all options to be on the table?
Jack Cozort: That's right.
Catharine Rice: We know what it means now, from the pandemic. We know how essential access to Internet is. So where are you going to stand on that vote?
Jack Cozort: We gave the big cable companies tenures under House Bill 129. They promised that they would go out and build fiber. Not that old copper cable that they ran for so many years. But that they were going to put fiber out in these communities. And they haven't done it. They simply haven't done it. And so we need to be asking all of our candidates for the legislature, "Are you going to stand up to those cable companies? And are you going to allow local government the options it needs to bring Internet to people who need it?" Especially now where we see so dramatically what happens when you don't have it. I mean, when you see kids sitting on a curb at McDonald's trying to do their schoolwork, that's pretty sad.
Catharine Rice: In a pandemic.
Jack Cozort: Yes. We ought to be better than that. And we need to elect people who will commit to our being better than that.
Christopher Mitchell: Yeah, that's a great place to end it.
Catharine Rice: Perfect.
Christopher Mitchell: I mean, it's frankly not a great place. But it's a hopeful message we can do something with.
Jack Cozort: Gosh, I hope so. But those are the questions we need to start asking and I think I've got a ... I talked to both of you about getting broadband questions into a poll. So I'd like to see how that turns out.
Catharine Rice: Did you get them in?
Christopher Mitchell: Yes.
Jack Cozort: I think I did.
Catharine Rice: Okay.
Jack Cozort: Yeah. So ...
Christopher Mitchell: Good.
Jack Cozort: I'll be checking in back with Maggie to see what comes out of it. So ...
Christopher Mitchell: Thank you so much, Jack.
Jack Cozort: Glad to. Thank you for what you do!
Catharine Rice: Thank you, Jack.
Christopher Mitchell: And thank you so much, Catharine.
Catharine Rice: Thank you so much, Chris, for all your work that you're doing in this area. It's a pleasure to know you.
Christopher Mitchell: Likewise. It's been great. You've been one of the people I've known the longest in this field and it's been wonderful.
Jess Del Fiacco: Thanks for tuning in to this episode in our Why NC Broadband Matters podcast series, and for listening to the Community Broadband Bits podcast from the Institute for Local Self-Reliance. Remember to follow Christopher on Twitter. His handle is @communitynets. And if you follow @NCHeartsGB on Twitter, you'll tap into all the NC Broadband Matters material. We want to thank Shane Ivers of Silvermansound.com for the series music, What's the Angle, licensed through Creative Commons. And we want to thank you for listening. Until next time.