Less than a year after North Carolina became the 19th state to create barriers to community networks, effectively outlawing them, the non-partisan organization Follow the Money has crunched the numbers and found that private telecommunications interests donated quite heavily to lawmakers that pushed their bill through the Legislature:

According to a report by the National Institute on Money in State Politics, Dialing Up the Dollars: Telecommunication Interests Donated Heavily to NC Lawmakers, Republican lawmakers and those who held key leadership positions, sponsored the bill, and/or who voted in favor of the bill received considerably more campaign contributions from the telecommunication donors than did their colleagues. For example, lawmakers who voted in favor of HB 129 received on average 76 percent more than the average received by those who voted against the bill. The four primary sponsors of the bill received an average of $9,438 each, more than double the $3,658 given on average to lawmakers who did not sponsor the bill.

Recall that Time Warner Cable pushed this bill for years with some help from AT&T, CenturyLink, and others that stood to benefit by limiting broadband competition. But the Legislature wisely refused to enact it... until 2011. Now we have a better sense of what may have shifted the balance. Consider this:

Thom Tillis, who became speaker of the house in 2011, received $37,000 in 2010–2011 (despite running unopposed in 2010), which is more than any other lawmaker and significantly more than the $4,250 he received 2006–2008 combined. AT&T, Time Warner Cable, and Verizon each gave Tillis $1,000 in early-mid January, just before he was sworn in as speaker on January 26. Tillis voted for the bill, and was in a key position to ensure it moved along the legislative pipeline.

Running unopposed for office, he collected more money from the cable and phone companies than any other Representative and almost 10 times as much as in the previous two cycle combined. As Speaker, he set the agenda and decided priorities.

After AT&T began pushing a bill in Georgia to revoke local authority to decide to build a publicly owned broadband network, the Georgia Municipal Assocation (GMA) and the SouthEast Assocation of Telecommunications Officers and Advisors began reaching out to Georgia's legislators to explain how the private sector has left serious gaps in broadband coverage, which stopped the bill. Below are two flyers they report being particularly helpful. GMA, SEATOA, and the Institute for Local Self-Reliance are among the vast majority that believe communities should decide locally if a community network makes sense to bring next-generation connections to local businesses and residents. Georgia is a conservative state and AT&T had enlisted the support of the Senate Majority Leader in pushing their anti-competition broadband bill. Unfortunately for AT&T, their CEO was too candid on calls with Wall Street, contradicting AT&T's lobbyist talking points in Georgia. Note, that AT&T was originally trying to define broadband at the absurd 200kbps level but a substitute bill would have bumped it up to a still-too-low 768kbps, which is referenced above. The other flyer that apparently made a difference with legislators is here: Rememeber that elected officials often think of broadband in binary terms. You have it or you don't. In their mind, if you have options aside from dial-up, the problem is solved. These are people that often do not know what is needed to attract economic development, work efficiently from home, or successfully compete remote education courses.

We are hearing that SB 313 in Georgia, AT&T's bill to overrule local authority, will be turned into a study bill. Despite the strong support of the Senate Majority Leader, the bill lost support after we and others exposed the frank admission of AT&T's CEO that they had no plans to expand broadband in rural areas. Given the strength of AT&T's lobbying and the support of the Senate Majority Leader, this is a tremendous victory. Congratulations to the communities in Georgia that successfully organized and defended their authority to decide locally if a network is a wise choice for them. We do not consider these issues resolved until the ink is dried, but it does look like AT&T lost this round -- which means thousands of local businesses and millions of people won. They can still hope for next-generation networks and a real choice in providers. Note: the South Carolina bill remains in play and will be discussed on Wednesday by a Senate Judiciary Subcommittee. We have been collecting some of the news coverage of this broadband debate in Georgia, but have neglected posting until now.

The SEC has moved network neutrality from the murky back rooms of day-to-day operations into the bright light of of shareholder resolutions. 

This is a significant turn for the SEC and it opens up a new avenue in the campaign for net neutrality. As the SEC helpfully reminds us, “One of the key rights of shareholders is the right to vote their shares on important matters that affect the companies they own.” The SEC gives companies a fair amount of discretion on resolutions. In previous years, the SEC’s Division of Corporation Finance ruled that similar net neutrality proposals pertained to “ordinary business” and could be excluded from shareholder ballots. 

The telcos have reason to be afraid. Proxy fights have derailed business plans and taken down CEOs. Most successful campaigns have been carried out by activist fund managers with substantial stakes in relatively small companies (by stock exchange standards). 

The Benedictine Sisters of Mount St. Scholastica, the Nathan Cummings Foundation, and Trillium Asset Management have led the effort to put this on shareholder ballots. They will need help to move it forward. Proposals must claim a minimum percentage of support in order to be allowed on the ballot next year.

This time of year about 20 percent of U.S. households receive proxy voting forms, and most are promptly discarded. If you ask your parents and grandparents, chances are good someone owned some shares of Ma Bell at one time and now has voting rights in a telco.

If your only investments are in mutual funds, you can still make your voice heard. Contact the fund management company, tell them you support net neutrality, and ask them how they are planning to vote on the issue.

Susan Crawford's op-ed in Bloomberg makes a tremendous case for publicly owned broadband networks. She notes the importance of broadband and the failure of big cable and DSL companies to meet the growing needs of communities, just as the electrical trusts were insufficient to electrify much of America. I'm a bit biased because she cites our work:

Today, the Institute for Local Self-Reliance, which advocates for community broadband initiatives, is tracking more than 60 municipal governments that have built or are building successful fiber networks, just as they created electric systems during the 20th century. In Chattanooga, Tennessee, for example, the city’s publicly owned electric company provides fast, affordable and reliable fiber Internet access. Some businesses based in Knoxville -- 100 miles to the northeast -- are adding jobs in Chattanooga, where connectivity can cost an eighth as much.

Though I encourage readers to read the full column, I love the conclusion:

Right now, state legislatures -- where the incumbents wield great power -- are keeping towns and cities in the U.S. from making their own choices about their communications networks. Meanwhile, municipalities, cooperatives and small independent companies are practically the only entities building globally competitive networks these days. Both AT&T and Verizon have ceased the expansion of next-generation fiber installations across the U.S., and the cable companies’ services greatly favor downloads over uploads. Congress needs to intervene. One way it could help is by preempting state laws that erect barriers to the ability of local jurisdictions to provide communications services to their citizens. Running for president in 1932, Franklin D. Roosevelt emphasized the right of communities to provide their own electricity. “I might call the right of the people to own and operate their own utility a birch rod in the cupboard,” he said, “to be taken out and used only when the child gets beyond the point where more scolding does any good.” It’s time to take out that birch rod.

The absurdity of AT&T's push to define broadband as 200kbps is so great, it boggles the imagination. We developed the graphic below to highlight just how slow 200kbps connections are. Feel free to spread it around. Higher quality pdf below.

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.

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.

A group of rural residents living east of Madison, Wisconsin, gathered near Portage of Columbia County to discuss their lack of affordable high speed access to the Internet. These are people for whom slow, overpriced DSL would be an improvement. Lack of access to the Internet is a drain on rural economies -- their real estate market suffer and they are unable to telecommute, when they would benefit more from it than most who do have the option. They lack access to long-distance education opportunities in a time when the cost of gas makes driving to school prohibitively expensive. Andy Lewis, who has been working with the Building Community Capacity through Broadband Project with U-W Extension, was on hand to discuss some of the lessons learned through their work, which is largely funded by a broadband stimulus award. The incumbent providers encouraged residents without access to aggregate their demand and create petitions to demonstrate the available demand. Of course they did. And if CenturyLink decides it can get a sufficient return on its slow and unreliable DSL, they will build it out to some of those unserved areas. This is a "damned if you do, damned if you don't" scenario for rural residents. DSL was starting to be obsolete years ago. The better solution is finding nearby cooperatives and munis that will extend next-generation networks that can provide fast, affordable, and reliable access to the Internet. Getting a DSL to a town will do very little to attract residents and nothing to attract businesses. It is a 20th century technology in a rapidly evolving 21st century world. The Beaver Dam Daily Citizen covered the meeting, which eventually turned away from how to beg for broadband to how they can build it themselves:

But several attendees asked why the government can't play a role in making high-speed service available everywhere, in the same way that the government helped bring about rural electrification and telephone service.

This is a very good question. They may decide not to follow that path, but given the importance of access to the Internet, they should look at options for building a network that puts community needs first.

We have long been arguing that the telephone and cable companies are not sufficiently investing in the connections needed by communities. Quarter after quarter, companies offering DSL see decreases in their lines as subscribers jump to cable or fiber-optic alternatives (where available, which is not many places). Recall that AT&T's CEO himself believes DSL to be obsolete. As this trend continues, most communities will find that a single cable company has a monopoly on high speed broadband access and those willing to settle for slower, less reliable alternatives will have a choice between DSL and wireless options. Susan Crawford has written about this, terming it the Looming Cable Monopoly. The main reason is that cable is cheaper to upgrade to higher capacity connections than the telephone lines. Unfortunately, due to the reality of natural monopoly, the big cable companies will almost certainly continue to dominate in their communities. It is just too hard and risky for other businesses to challenge their market power. This is why smart communities are evaluating all their options and determining if a long term public investment in fiber-optic infrastructure would generate enough benefits to justify the high upfront cost.