Siding with the city of Laurinburg against Bellsouth Telecommunications Inc., North Carolina Appellate Judge B. Craig Ellis found that cities within the state were acting legally when they created a 19-mile loop of fiber optic cable and provided Internet access to local schools, universities and hospitals.
Ellis ruled that the fiber network, originally created to only allow broadband access between Laurinburg’s city hall and its public works building, acted appropriately when it decided to sell access to non-governmental groups in order to make the network cost-effective.
Bellsouth had argued that a 1971 state law that stated that municipal governments could only sell certain types of services, including a cable television system, prohibited the city from operating as a business.
“Just as Bellsouth is able to leverage its telephone infrastructure to provide low cost DSL broadband services in the market, so too should a municipality be able to leverage its infrastructure,” wrote the court.
“We acknowledge that Laurinburg’s fiber optics network was most likely not something the legislature envisioned in 1971 when they enacted the statute allowing a municipality to operate […] as a public enterprise,” wrote the court. “However, if Laurinburg were currently offering the kind of cable programming in place in 1971, and doing so over their fiber optic network, they clearly would be authorized to offer the current bundle of network services over those same lines as ‘additional and supplementary powers that are reasonably necessary or expedient.”
The decision brings one of the first defeats for telecom companies that have been accused by critics of attempting to leverage threats of decreased broadband deployment against regulators in order to force states to allow them to have a monopoly on high-speed Internet access.
In exchange for promising to run fiber lines straight to homes, for example, the FCC ruled that telecoms should not be forced to open their lines to competing companies. However, the companies have been pushing the limits of what “to homes” means since then, first asking to run fiber only to neighborhoods and then using copper wires to connect to homes, and then asking to run fiber only to the nearest node.
“By splicing in a little fiber, the Bells can squelch competition,” Earthlink vice president Dave Baker told USA Today. “There can be and should be competition in broadband services on new networks.