Thursday, May 31, 2007

North Carolina Revisited

It looks like they are on top of it in Wilson, NC. The local Wilson newspaper has come out with a strong editorial condemning the North Carolina version of the "Local Government Fair Competition Act" Yes, that's exactly the same misleading name given Louisiana's BellSouth-authored version. Creative and original, these guys are not. (Previous LPF coverage of Wilson: 1, 2)

And the similarity is more than skin deep as is demonstrated by the following points from the Wilson editorial:
While some of the provisions can be justified, others are transparently intended to discourage cities or counties from creating competing networks, such as the fiber-optic network the city of Wilson is already installing.
Yep, they understand the basic purpose of this sort of legislation. And the essay covers other oddities we will recognize:
The bill... would for the first time require the N.C. Utilities Commission to regulate a municipal function. None of the usual municipal utilities — water, sewer, electricity or natural gas — is regulated by the Utilities Commission, which was established to protect consumers against monopolistic corporate giants. Because consumers are also voters and can change leadership at the next election, municipal utilities have been considered self-regulating.
In Louisiana the PSC is forbidden by the constitution to regulate municipalities. So we get around it by requiring that they do all the work of regulation but hand the legally indefensible segment over to the (drumroll, dramatic cymbal clash) the legislative auditor. (Hunh? Loud raspberry.) More similarities:
The bill also requires a public referendum on any financing for the system. Because these networks are expensive (Wilson's estimated cost is $28 million), financing will be a necessity. While the bill requires a referendum, like a general obligation bond, it does not allow municipalities to repay the bond in the manner of a general obligation bond. In fact, it might make it impossible to repay the bond.

The bill forbids securing or repaying the bonds with anything other than revenues generated by the enterprise. It forbids paying any costs related to the bonds from "the local government's general fund or public enterprise funds." Because those are the only kinds of funds a municipality has, the bill essentially forbids making bond payments. And because it requires these networks to pay the equivalent of corporate and other taxes to the general fund, it requires the enterprise to subsidize the city.
Ok, this part sounds like the original version of he Louisiana bill in which BellSouth (now AT&T) set up the neat Catch-22 of 1) requiring an elaborate study 2) requiring that the study be paid for from revenue derived from the new utility. So in in order to plan to get the new utility up and running you had to already have the new utility up and running. Yossarian would understand perfectly. (And so should the people of North Carolina.)

The editors of the Wilson Times understand; they close their editorial with:
If this bill passes, cable monopolies will be unstoppable.
Lagniappe: Apparently the city council there is pretty enlightened as well; they've passed a unanimous resolution opposing the proposed law.

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