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The Associated Press March 17, 2011, 5:03PM ET

NC towns battle telecoms for right to be wired

North Carolina lawmakers aiming to stop cities from building their own broadband networks decided Thursday to allow public comments the next time they consider the latest effort by telecom companies to keep local governments out of the business.

The House Finance Committee will hear from the public next Wednesday as it reviews legislation that would sharply restrict the chances for municipalities to step in when cable and phone companies decide not to build high-speed Internet systems in lightly populated areas. Opponents say telecom companies aren't extending super-fast Internet at reasonable prices, and that keeps smaller communities behind in the wired world of commerce.

"They don't want to provide these services in a lot of areas because it's expensive, and they don't want municipalities to offer these services. That's an unlevel playing field for our citizens," said Rep. Deborah Ross, D-Wake.

Legislation unveiled Thursday was changed to ease the rules for communities in which at least half the households have no access to high-speed Internet except through a satellite provider. Another change ensures the new rules don't affect the municipal networks already established in Wilson, Salisbury, Morganton and Iredell County, which have borrowed to build their systems.

Cable and phone companies have been urging the General Assembly to restrict municipal broadband services since a 2005 state appeals court ruling upheld the right of towns and cities to offer their residents broadband. Companies argue that local governments have an unfair advantage because they don't have to pay taxes and can subsidize their rates by shifting profits from their electricity or gas customers, undercutting the corporate competitors.

The cities argue that companies can undercut competitors by pricing below cost while making strong profits in heavily wired areas like Research Triangle Park.

The North Carolina conflict is playing out amid a national push to extend broadband to corners of the country that private enterprise hasn't reached, including $7.2 billion set aside for broadband in 2009's stimulus bill. North Carolina nonprofits have been awarded $125 million in stimulus funds to extend broadband service.

A bill making its way through South Carolina's legislature uses similar language to set operating rules where broadband is available. Oconee County plans to install about 245 miles of broadband cable with nearly $10 million in stimulus funds.

The Legislature's annual tussle over municipal broadband also is playing out this year under Republican leadership after more than a century of Democratic rule. GOP lawmakers believe they are protecting jobs and spurring investment by clearing the playing field for businesses.

"I don't believe that providing service isn't a core part of government," said Ruth Samuelson, R-Mecklenburg.

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