January 25, 2012 By Brian Heaton
The fight to retain local government authority over building community broadband networks in Georgia has officially begun.
SB 313, the Broadband Investment Equity Act, was introduced in the Georgia Senate on Jan. 19. If it becomes law, the bill would enact numerous barriers to providing government-owned broadband services, including the requirements that private providers be solicited first before establishing a community broadband network and that a special election must be held for citizens to approve the project.
According to a statement released by the Georgia Senate Press Office, the goal of SB 313 is to encourage private investment and level the playing field by making government entities adhere to the same rules that private companies follow when establishing communication networks.
Sponsored by Senate Majority Leader Chip Rogers, R-Woodstock, the measure would also mandate that local governments not pay for a community broadband system using tax revenue or any other revenue attained through a government service. Municipalities would also be prohibited from raising taxes or fees levied on private broadband providers to cover the costs of a public network.
“This bill will allow for robust competition in the communication marketplace and encourage continued economic growth throughout our state,” said Rogers in a statement. “By extending our long-standing commitment to policies that encourage private investment and market-driven competition, we are putting the needs of our citizens above those of government.”
Not everyone is buying into Rogers’ explanation of the bill, however.
Christopher Mitchell, director of the Telecommunications as Commons Initiative for the Institute for Local Self-Reliance, a nonprofit economic and community development consulting group, believed the proposed law is catering to big cable companies at the expense of local economic development.
He said that both Pennsylvania and Michigan have laws on the books that require municipalities to look to the private sector before establishing their own networks. Mitchell felt the problem with this approach is the enforcement of such a requirement.
In a fictitious example, Mitchell explained that a community in Georgia could send out an RFP, determine that the cable companies responding aren’t fulfilling the requirements the way the city intended and conclude that no one has properly answered the RFP — setting the stage for development of a potential community broadband network.
But if one of the private providers or someone else disagrees and ties the issue up in court, it could severely impact any chance of getting a network built.
In addition, Mitchell said that SB 313’s requirement of the public entity paying the same taxes or the same cost of capital as the private sector is another red herring. He said that while the provision looks reasonable on the surface, it would critically hamstring any effort to establish government-owned high-speed broadband services.
“That’s like telling me I have to pay the same taxes that another American would,” Mitchell said. “Are we talking about my middle-class neighbor, or Mitt Romney? Whose taxes am I going to pay a similar rate to? These are all issues that are left open-ended intentionally so that it’s uncertain for a community and they are more likely to end up in court, which is possibly the most devastating situation.”
The road to becoming law could be a long one for SB 313. As with many legislative matters, interest groups are likely to testify on the bill as it works its way through various committees. That commentary has played vital roles in modifying legislation that was introduced in other states such as Louisiana, and Mitchell expects the same sparring match in Georgia between large cable providers and those favoring local government control.
Mitchell made it clear, however, that since powerful cable and DSL companies are the ones pushing for community broadband network restrictions, he’s far from sold on the reasoning behind the Broadband Investment Equity Act in Georgia.
“They’re not welcoming competition, why would they — it limits their profits,” Mitchell said of private broadband providers. “Every time they say they welcome competition it’s inviting a shareholder lawsuit because it’s violating their fiduciary responsibility to maximize value for the shareholders.”
Calls from Government Technology to the offices of Rogers and fellow SB 313 sponsor Sen. David Shafer, R-Duluth, to discuss the measure were not immediately returned.
SB 313 was referred to the Senate Regulated Industries and Utilities Committee. At press time on Jan. 25, no date had been schedule for a hearing on the bill.
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