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

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:

Public records show that in 2011, AT&T, itself an ALEC member, contributed $1,000 to the coffers of Michael Gambrell, South Carolina assembly member and lead author on the bill. Other sponsors of the bill, including Bill Sandifer, Bobby Harrell, and many of its supporters, also received donations from AT&T as well.

Gerry Smith, of the Huffington Post, also noted a correlation between H3508 and political support:

In South Carolina, AT&T, CenturyLink, and Time Warner contributed more than $146,000 to state lawmakers since last January who supported the bill, according to an analysis by The New Republic.

Last year, North Carolina also passed a law restricting local governments from building publicly owned broadband networks. Lawmakers who voted in favor of the bill received on average 76 percent more in donations from major cable and telecom companies than those who voted against it, according to the National Institute on Money in State Politics.

Smith sought out the chief author, who offered the number one AT&T/ALEC talking point:

"What this law does is level the playing field,” Mike Gambrell, a state lawmaker who sponsored the legislation, said in an interview.

But critics say AT&T, the major telecom company in the state, does not serve broadband to many rural areas where local governments could provide their own networks. In addition, they say the law leaves rural communities with sluggish Internet speeds because it defines a "served" area as one that can access internet speeds of least 190 kilobits per second, which is slower than the FCC's definition of broadband.

We address "level playing field" arguments here.

Catharine Rice, President of the SouthEast Association of Telecommunications Officers and Adviors (SEATOA), contacted us with a practical application of the bill's "served" versus "unserved" application:

This bill limits their [municipal networks] service areas to surrounding rural areas, and effectively prohibits any other communities in SC (and there are many) from filling the broadband gap created by the large private carriers.

Unserved areas are defined by census blocks. So you'd have to cull together tens of thousands to make a network viable, and all of them would have to qualify as unserved. According to the bill, an unserved area is a census block where 90% of the homes in the census block don't have access to 768 Kbps service. So if 11% of the homes have 768Kbps (not enough speed to even download a Netflix video), that Census block is "served." 

Bad, bad, and more bad

Hartsville seal

While two current Broadband Technology Opportunities Program (BTOP) projects, Orangeburg and the City of Hartsville, appear to fall into H3508's exemption and will be able to proceed, Oconee County faces special problems with their project, F.O.C.U.S (Fiber Optics Creating Unified Solutions). Jim Baller's legal analysis for Oconee County concludes that :

By requiring the County to show that “the middle-mile services it offers are used to actually provide communications services to end users in unserved areas,” ... would ... render the exemption useless to the County. That is so because it is impossible for the County to comply with H.3508’s prohibitions on an end-user-by-end-user basis. As a result, if even a single Community Anchor Institution served even a single end user outside an unserved area, the County would be subject to the full panoply of H.3508’s onerous prohibitions.

This type of project, focused on providing upgraded connections for anchor institutions, and not focusing on last mile connectivity, is one type of project encouraged by the National Broadband Plan.

The Plan also calls for Congress to make it clear that all communities have the authority to build their own networks. Since H3508 doesn't adequately grandfather in existing projects, which most states do, the bill is open to legal challenge. It is contrary to the letter and the spirit of the National Broadband Plan.

Baller also notes a potential Constitutionality issue. The United States legal system takes great pains to limit and avoid retroactive laws. This bill prevents Oconee County from honoring commitments and contracts with the federal government and with the private sector. With no insurance against retroactivity in the law, the economic drivers in our country are loathe to commit and shy to invest.

This bill is bad for communities, bad for the private sector, bad for people who want a real choice in broadband providers. Google, Alcatel-Lucent, NATOA, SEATOA, and other groups in the telecom industry advocated against H3508. South Carolina is near the bottom of adoption rate in the U.S. and has a higher than national average of residents living below the poverty line. With laws like this, those statistics are unlikely to change.

Comments

Maybe it is time to relocate

Maybe it is time to relocate to another state. There will be no growth in this state w/ hr 3508 now passed. The state is finished.