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South Carolina Legislature Puts AT&T Monopoly Above Own Infrastructure Needs

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Last week, South Carolina's General Assembly passed H3508, the ALEC and AT&T bill we previously warned you about. AT&T, ALEC, and cable companies pushed this bill to limit broadband competition and revoke local authority to decide if public investments in broadband infrastructure are wise.

H3508 is one of the worst pieces of legislation we have seen. States usually incorporate language that "grandfathers in" existing projects as a way to avoid legal challenge and federal scrutiny of their anti-competition legislation. In South Carolina, however, crafty drafting puts one county BTOP project in the cross hairs while permitting two other projects to continue.

Below is a roundup of media coverage of the bill. We will soon release our analysis of the supposed "exemptions" to this bill but in the meantime, this coverage explains several of the problems with South Carolina's latest Monopoly Protection Act.

Ars Technica's Cyrus Farivar contacted Jim Baller, a preeminent telecom attorney and expert in broadband issues:

"States have different ways to achieve the same end—discourage, delay, or derail public broadband initiatives," wrote Jim Baller, a telecom lawyer based in Washington, DC, in an e-mail to Ars on Thursday. He noted that similar bills were introduced in Minnesota and Georgia this year, the former of which has led to a "study bill," while the latter did not make it out of committee.

"In some ways, the South Carolina bill is worst of all because it does not grandfather existing projects and would retroactively undermine federal stimulus grants that Orangeburg and Oconee Counties have received,"  he added.

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Farivar also looked into the chief author and found:

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Community Broadband Legislation Alert: South Carolina

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Yesterday the South Carolina Senate voted in a second reading of H 3508, a bill that has been debated in the State Legislature since it was introduced in January of 2011. The bill, pushed by AT&T and ALEC, has been on our radar for quite some time.

We have watched this piece of legislation because it will have immediate and unfortunate negative implications for the people of South Carolina. Right now, the state has a miserable adoption rate with an average of 53 out of 100 households connected. Like many other states in the South, poverty, geography, and lack of interest from the major carriers have left South Carolina behind the rest of the country.

The bill will revoke local authority to pick up the slack where the private industry has failed. If this bill passes, South Carolina will entrust its future to AT&T, which has admitted it has no solution for rural broadband. And in the meantime, it is ripping off our schools and libraries, as revealed in a recent ProPublica article examining E-rate Program.

If you live in South Carolina, call your elected officials and let them know you are a constituent and you believe communities should make these decisions locally.

Find your legislator here. Tell them to oppose H.3508 and any efforts to limit local authority to make decisions about broadband.

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Recent Articles show ALEC and South Carolina Pushing to Limit Community Broadband

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Community Broadband networks are increasingly getting the attention they deserve as an option for communities that want better, more accountable connections to the Internet. We have long been warning about an AT&T-pushed bill in South Carolina to make it even harder for communities in that state to build the infrastructure AT&T has long neglected. But now The New Republic has also noticed -- in "Why are Telecom Companies Blocking rural America from Getting High-Speed Internet?" The story starts by discussing rural and impoverished Orangeburg County, which received a stimulus award to help build the telecom infrastructure they need to succeed in the modern economy.
In an effort to improve the area’s economic prospects, county officials have worked in recent years to secure funding to refurbish roadways and sewer systems—but they also know that, in a globalized marketplace, old-school infrastructure is not nearly enough. That’s why, in 2009, Orangeburg County applied for, and received, $18.65 million in stimulus money to finally give the area access to high-speed broadband internet. County Administrator Bill Clark and his colleagues envisioned a municipal, or muni, network that could reach roughly a quarter of Orangeburg’s rural population, including just over three thousand households and one hundred businesses. ... But the titans of telecom aren’t operating on quite the same wavelength. Since last January, AT&T, CenturyLink, and Time Warner have contributed just over $146,000 to politicians in South Carolina who back legislation that would cripple networks like Orangeburg’s. It’s only one example of a broader campaign by telecom companies to protect their cartel at all costs—even at the expense of keeping the country’s poorest on the wrong side of the digital divide for many years to come.
Same story, different state. We've seen the same efforts across the U.S., which is why nineteen states have created barriers to community broadband. Meanwhile, the source of a lot of those barriers -- the American Legislative Exchange Council -- or ALEC has been getting attention for the many bad bills they have ushered through state legislators.
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Honesty From Heartland: Munis Outgunned in Competition with Private Sector

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The Heartland Institute is one of those organizations that will say anything its massive corporate funders want it to. It is embroiled in a scandal from the release of internal documents due to its work challenging the science behind climate change. In the telecom space, Heartland's employees have encouraged laws to take decision-making authority away from communities in order to benefit the massive cable and DSL companies (like Heartland-funder AT&T). They advocate for efforts like Georgia's SB 313 and South Carolina's H3508, saying:
  1. Muni networks are doomed to failure because of the general incompetence of government
  2. Muni networks will drive private sector providers out of the market because governments are too all powerful and have too many advantages in competition
This is why we see bills that are supposed to "level the playing field" pushed by big companies like Time Warner Cable in North Carolina last year. If you take a gander at Heartland's telecom work, you have to wonder why the playing field needs to be leveled if they believe what they have written:
A municipal government cannot possibly hope to compete with well-capitalized broadband providers in a highly competitive market.
For those unfamiliar with Heartland, they don't use the same definitions for common words like "competitive" as the rest of us do. In Heartland's world, "competitive" means a market in which one of our funders operates regardless of how much competition exists in it. So why do we need new legislation to make it even harder for communities to build the networks that the cable and DSL companies won't build?
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South Carolina Cable Association Also Wants to Limit Competition

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Many complain about gridlock in Washington, DC, but I sometimes subscribe to the cynical counter-reaction that gridlock is great. It is when the Democrats and Republicans agree that Americans should beware. Though this may or may not be true about politics, it is certainly true when applied to two of the most hated industries in America: cable television companies and DSL companies like AT&T. When they come to agreement, you can bet that prices are going up for the rest of us. In our coverage of AT&T's bid to limit broadband competition in South Carolina by revoking local authority to build networks for economic development, we have thus far ignored the position of the cable companies. We took a tour through the newsletters of the South Carolina Cable Television Association over the course of 2011, which is when AT&T introduced its H.3508 bill. Unsurprisingly, the cable companies are thrilled at the prospect of limiting competition in communities by cutting off the ability of a community to build a network when the private sector is failing to meet their needs. From the 1st Quarter newsletter [pdf]:
The SCCTA has been actively following the AT&T-backed legislation that would amend the Government-Owned Telecommunications Service Providers Act. House Bill 3508 would impose the same requirements on government-owned broadband operations that are currently imposed on telecommunications operations.
Of course, H.3508 goes far beyond applying the "same requirements." It enacts a host of requirements that only apply to public providers, which are already disadvantaged by being much smaller than companies like Time Warner Cable and AT&T. We have long ago debunked the myth of public sector advantages over the private sector. The second quarter newsletter [pdf] identifies this bill as the highest priority of the cable association:
H3508, the AT&T backed legislation, has been our dominate piece of legislation in 2011.
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Pay Attention to the Man Behind the Curtain: Listen to AT&T's CEO, not Lobbyists

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AT&T lobbyists in Georgia and South Carolina are arguing that local governments should not be allowed to build the networks that communities need, suggesting that the private sector is primed to make the necessary connections. But AT&T's CEO had a different message for investors a few weeks ago, in an earnings call on January 26:
The other is rural access lines; we have been apprehensive on moving, doing anything on rural access lines because the issue here is, do you have a broadband product for rural America? We’ve all been trying to find a broadband solution that was economically viable to get out to rural America, and we’re not finding one to be quite candid. The best opportunity we have is LTE.
Whoa! LTE is what you more commonly hear called 4G in mobile phone commercials. The best they can do is eventually build a wireless network that allows a user to transfer just 2GB/month. That is fine for hand-held devices but it does nothing to encourage economic development or allow residents to take advantage of remote education opportunities. But even the CEO admits they are not bullish on LTE as the solution:
[W]e’re looking at rural America and asking, what’s the broadband solution? We don’t have one right now.
Some may be wondering about "U-Verse" -- AT&T's super DSL that competes with cable in the wealthy neighborhoods of bigger cities. U-Verse cannot match the capacity or quality of modern cable networks but is better than older DSL technologies. But U-Verse is not coming to a rural community near you. For those who missed the fanfare last year, AT&T's U-Verse build is done. AT&T's lobbyists have probably forgotten to tell Georgia and South Carolina Legislators that the over 20 million AT&T customers without access to U-Verse are not going to get it.
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Corporations Oppose Limits to Local Authority in South Carolina

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With AT&T continuing to push H.3508, a bill to further erode local authority over broadband and ensure AT&T faces no competition in areas of the state, a number of corporations have signed a letter asking the South Carolina Legislature not to chase jobs out of the state. Though the bill has not yet had a hearing this year, we have seen hearings scheduled and know that the bill is being actively considered behind the scenes. Dear Senator McConnell and Members of the Senate Judiciary Committee: We, the private-sector companies and trade associations listed below, urge you to oppose H.3508 because these bills, on top of South Carolina’s existing barrier to public communications initiatives, codified in SC Code §§ 58-9-2600 et seq., will harm both the public and private sectors, stifle economic growth, prevent the creation or retention of thousands of jobs, hamper work force development and diminish the quality of life in South Carolina. In particular, these bills will hurt the private sector in several ways: by curtailing public-private partnerships, stifling private companies that sell equipment and services to public broadband providers, and impairing educational and occupational opportunities that contribute to a skilled workforce from which businesses across the state will benefit. The United States continues to suffer through difficult economic times. The private sector alone cannot lift the United States out of this crisis. As a result, federal and state efforts are taking place across the Nation to deploy both private and public broadband infrastructure to stimulate and support economic development and jobs, especially in economically distressed areas. For example, in South Carolina, Orangeburg and Oconee Countieshave received broadband stimulus awards to bring much-needed broadband services and capabilities to communities that the private sector has chosen not to serve adequately.
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NATOA Encourages South Carolina Senate to Preserve Local Authority

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With AT&T again pushing a bill in South Carolina to revoke local authority to build community broadband networks, the National Association of Telecommunications Officers and Advisers has sent a letter to the Chair of the Senate Judiciary Committee [pdf] opposing H3508. The bill will be considered by that committee on Thursday, January 26. South Carolina already restricts local authority to build networks but this bill would essentially close off any possibility of doing so. Dear Senator Rankin: The National Association of Telecommunications Officers and Advisors (NATOA) joins the growing chorus of business, consumer, and government groups and associations in opposing H. 3508 (Government Owned Communications Service Providers). This bill will harm your state’s economic growth and do little if anything to promote competition or to bring advanced communications services to the citizens of South Carolina. Hamstringing local government efforts to provide fiber networks will simply result in the further flow of millions of investment dollars to neighboring states such as Tennessee. NATOA has long supported community broadband networks because they offer the promise of increased economic development and jobs, enhanced market competition, improved delivery of e-government services, and accelerated and affordable Internet access for all. Communities across America are ready and eager to bring the economic and social benefits of broadband access to their citizens. But private providers alone will not bring these advanced services to all parts of our country, especially to those communities that do not fit into the companies’ business plans. As a result, hundreds of cities have launched community broadband initiatives, either with private partners or on their own, and many more are now in the planning stages. Communities should be encouraged to step forward to do their part to ensure the rapid deployment of broadband to all Americans, and they should have the freedom to choose what makes the most sense for their citizens. H.
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AT&T Bid for Broadband Monopoly in South Carolina Resurfaces

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AT&T, one of the few dominant Internet access providers in South Carolina, is again pushing a bill in the state legislature that will gut the self-determiniation of local communities in the digital age. The market power of AT&T and Time Warner Cable has already driven most private sector competition from the market -- now they want to use their lobbying clout to ensure that the communities themselves cannot build the networks they need to attract economic development and maintain a high quality of life. Last year, we were deeply concerned about House Bill 3508 but it was orphaned in committee after AT&T lost its credibilty by encouraging the state adopt a broadband definition lower than even the much-maligned 200kbps previously used by the FCC. The bill is back this year and would have been taken up by the Senate Judiciary Committee today but that meeting now appears to be cancelled. Nonetheless, AT&T will undoubtedly find a way to bring it back this year and we shouldn't count on AT&T's stupidity to save us again from its massive lobbying clout. Phil Dampier has issued a call to action at Stop the Cap!, calling AT&T's bill the Profit Protection Act. He has a list of the Senate Judiciary Committee members so people in South Carolina can contact them. It is crucial that Senators and Representatives hear from constituents on these matters. Issues of telecommunications policy rarely generate phone calls, so even a few calls can make a different and will serve notice to elected officials that they are being monitored on this issue. There is no need for additional barriers in South Carolina for rural communities to build the networks they need. As we show on our community broadband preemption map, South Carolina has already enacted additional regulatory barriers that public sector entities must surpass in order to build this essential infrastructure in their community. South Carolina's communities have very poor access to the Internet compared to regional and international peers.
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