Putting telecoms to public vote is thorny issue



SALEM -- State lawmakers are considering a bill this legislative session that would impose regulations on local governments looking to create publicly-owned telecommunications utilities.

Among the provisions outlined in House Bill 2445 is that voters would have to approve the financing methods that a city, county or special district would use to start a project.

The proposal was drafted by officials from the Oregon Telecommunications Association (OTA), a trade organization that represents the state's chief data and communications providers, except for Qwest.

Representatives Tom Butler (R-Ontario) and Micheal Shaufler (D-Happy Valley) are sponsors of the bill, which has been referred to the House Committee on Business, Labor and Consumer Affairs and was scheduled for a public hearing Wednesday morning.

HB 2445 has been met with criticism from groups such as the League of Oregon Cities, and from several municipalities, including Monmouth and Independence.

Those two towns are in the middle of an expansion of the Monmouth-Independence Network (MINET), their publicly-owned broadband utility.

Supporters argue that the bill is meant to give citizens a voice and provide transparency in the government process.

"If a local government feels it is a good idea to compete with the private sector in providing a service," said Brant Wolf, OTA executive vice president, "the industry feels that full disclosure of the financing mechanism ... for the venture is completely appropriate -- especially if service is already currently available."

Opponents of the bill say it complicates the process governments use to form public telecoms, and call it an attempt by industry lobbyists to discourage the creation of such utilities in order to avoid competition.

Ben Doty, president of NoaNet Oregon, a member-owned cooperative that operates an extensive fiber network throughout Oregon, said most towns create utilities because large incumbent providers don't offer advanced services in their small communities.

He believes the bill could hinder economic development in such areas, and referred to a recent deal by Internet-search engine giant Google to locate some of its technology infrastructure to The Dalles.

It was that city's investment in a fiber-optic network in 2003 that made the deal possible, he said.

"Google is putting a pile of money into that community. That never would have happened had this process been in place," he said.

Bills similar to HB 2445 introduced by the Oregon Cable Television Association in 2001 and 2003 didn't garner enough votes to pass legislation.

Those bills failed because of an outcry from municipal officials who perceived the proposals as threats to 911 emergency communications and library and local government networks, Wolf said. He added that those entities wouldn't be affected this time.

Under HB 2445, governments must provide a three-year cost projection plan for a project and hold a public hearing before moving forward.

The financing method used to fund the utility would then require a vote. Citizens would also have to approve any associated capital construction.

For example, if the utility offered only cable initially and decided to add Internet service, the public would have to vote, Butler said.

Wolf said he believes the bill is straightforward. It is not meant to be retroactive, and couldn't be applied to broadband utilities already in service. Expanding the utility with the growth of the city would also not require a vote, he said.

But Doty said the language of the bill is vague and potentially harmful.

As an example, he said that attorneys for the City of Eugene believe the language of the bill technically prevents that town from moving around or upgrading equipment associated with its existing fiber system without voter approval.

It's the public vote provision that is most controversial. Opponents argue that the possibility of having to go to the polls for each improvement or expansion complicates the process of creating and running a municipally owned telecom.

Butler said he believes that advanced telecommunications services for economic development are indeed lacking in many rural areas.

But "... The primary charge of cities is running their police service, running the fire department," he said. "If you want to use city funds to start up a business enterprise, people should and have a say in it."

"It makes the whole decision-making process more transparent," he also said.

Wolf said municipally owned telecoms have caused financial turmoil for several Oregon cities. He noted that Ashland's fiber network is currently in debt for millions of dollars, and that officials in Brookings shut down their utility in November.

"If a public vote is seen a barrier to a venture, then that's the wrong attitude to adopt," Wolf said. "Why wouldn't you want people to vote on it?"

In the case of MINET, officials argue that the public had been involved since the planning of the first phase of the system -- to schools, business and government offices -- began in 1998.

For the current expansion to residential areas, officials did a feasibility study, a 20-year cost projection analysis and held public hearings in both cities.

Councils from both cities created a separate governmental entity to operate MINET and received $8 million in loans for capital funding from the state.

"No part of our decision has been done without public input," Monmouth councilor Marc Miller said. "We're a public entity; we couldn't even have begun without their (residents') consent."

Doty said the election process would create an inequity that favors government-owned telecom detractors -- most notably, private companies.

"It's against state law for municipalities to advertise about their position on a bill, whereas the industry can start a propaganda campaign," he said.

"You get only one side of the issue. Citizens would essentially be uneducated," he said.



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