Time Warner Cable Won't Compete, Seeks Legislation

narramissic writes "The good people of Wilson, NC pay $99/month for 10/10 Mbps internet service, 81 TV channels and telephone service. How'd they manage that, you ask? Well, the city-owned and operated cable service called Greenlight came into being when the City of Wilson approached TWC and local DSL provider Embarq and requested faster service for the area. 'TWC refused the request. And so Greenlight was born,' says blogger Peter Smith. 'Now Time Warner Cable and Embarq are upset that they've got competition, and rather than try to go head to head with Greenlight on price and service, they've instead been lobbying the state government of NC to pass laws to put Greenlight out of business. Apparently they're having some success, as the NC State Senate has proposed bills that would do TWC's bidding.'"

Comments

Convert?

[arizwebfoot]

Would it just be easier to convert Greenlight to a citizen run corporation or make it a utility?

I am not a legal eagle on NC law, but I would think it wouldn't be that difficult to convert to a citizen run profit/nonprofit corporation and then TWC is effectively screwed.

Re:Convert?

[kid_oliva]

That is exactly what they did in Wadsworth, where i used to live. They made it a utility. TWC bitched and the town said screw you. I worked as a night auditor back then in 2000 and told our management we should switch because it would be cheaper. We looked into and did. TWC threaten us with litigation, we told them to go fornicate with goat and our lawyers took care of it. This is ridiculous when a private company is stifling competition. More communities need to do this. If they would not have wasted the 250 billion given to them by Clinton, they would be having this issue.

Re: Convert?

[Black Parrot]

we told them to go fornicate with goat and our lawyers

How rude!

we told them to go fornicate with goat[,] and our lawyers took care of it.

Oh. I liked the first one better.

Re: Convert?

[Black Parrot]

This is ridiculous when a private company is stifling competition.

The benefits of competition are only of interest to companies as a mantra for getting government regulations eliminated. No company actually wants it.

Re:Convert?

[Narpak]

If the companies delivering internet doesn't deliver the speed or quality desired by the citizens of a region or city; then I see absolutely no problem with the people taking matters into their own hands. In fact I would call it democracy in practice. TWC trying to push legislation should be ruled as anti-competitive behaviour and they should be heavily fined.

If anything should be done it might be the privatization of the newly created service provider. The city should retain a minority controlling share, impose oversight and fair rules; and then let the company exist as a competitor. If TWC want to gain back their customers they should perhaps try to actually provide the services people want, at fair prices and with good service. Instead of using resources that could be better spent trying to hinder and punish citizens who's example should be honoured, respected and emulated.

Re:Convert?

[negRo_slim]

Personally I don't see how private interests are anything but harmful when it comes to running of important public infrastructures.

Re:Convert?

[Red Flayer]

But a government-run business charging break-even prices is not fair competition for any business.

So?

Seriously, if the people choose to provide the services themselves, why should they be prohibited from doing so?

I know, it's anathema to free-market idealists, but the end result is... better, cheaper service.

TWC does not have a right to make a profit. No entity does. If they can't compete with government-provided service, then they should rightly have no presence in the market.

Unless of course, you choose to ignore the economics of the issue... please recall from Econ 101 that in an ideal free market, profits will approach zero anyway. TWCs profit is a sign of market inefficiency. The ideal outcome is for both (or more) competitors to fight over minimal profit.

Re:Convert?

[NormalVisual]

Time-Warner had their chance to provide the service, and refused to do so. I personally think that communications/data connectivity needs to become a utility, just like power/water/sewer especially in light of the ridiculous amount of subsidies the phone companies/cable companies receive in the form of rights-of-way, easements, exclusive franchise agreements, etc.

Perhaps a more efficient way of doing things would be for the city to maintain the physical infrastructure, whereas smaller ISPs like yourself would lease bandwidth on the public lines.

Re:Convert?

[cptdondo]

I work for a government and I think you've been drinking too much Limbaugh kool-aid...

I am always amazed how industry has been yelling "big bad inefficient government; privatize now and we'll do it better cheaper quicker!"

Now that government is actually competing, they're yelling "big bad unfair government; they can do it cheaper than us and we need protection!"

So what is it? If government is so "inefficient" why does industry need protection? If privatizing is so much better, why worry about government getting into your business niche?

In other words, government all too often does do things "better cheaper quicker" - we may pay a lot for a consultant, but our CEOs earn $100K/year, and not $100M/year. You can buy a lot of consultants for what one private industry CEO gets in a year.

Re:Convert?

[faedle]

Except, if Time Warner is like most cable companies, they are not operating on a level playing field either. Most cable companies get a tax break on personal property taxes, often have subsidized costs on rights-of-way (because they are using municipally-owned RoW for their cables), and often had many of the startup costs subsidized by municipal and regional governments as part of the franchise agreements.

You, as a business owner, don't have a right to make money. For a group of citizens to invest their tax money to build infrastructure, it means the broadband providers have failed as business people.

TWC had a chance to provide the service, they declined. At that point, their moral right to complain disappeared.

Re:Convert?

[broen]

I know, it's anathema to free-market idealists, but the end result is... better, cheaper service.

I would suggest that this is completely in line with free-market idealism. They found a better solution and decided to go with it. The only thing anathema to a free market is coercion (i.e., punishment). For example, if they found a better solution but were prevented by law. In that case the punishment is fines or imprisonment. And that is exactly what TWC is doing: using the government to punish the free-marketers who found a better solution.

The only thing anathema to a free market is coercion.

(repeated for emphasis)

Re:Convert?

[interkin3tic]

But a government-run business charging break-even prices is not fair competition for any business. But a government-run business charging break-even prices is not fair competition for any business.

It's not fair competition because it's not competition: time warner refused to give them fast service, THEN greenlight was born. Furthermore, TFA points out that tax money is NOT used!

What is happening here is TWC offering B, the community wanting A and making it themselves, so TWC is trying to ban A so everyone has to buy their B.

Anyway, even if this were not the case, who cares? Maybe my pink roots are showing, but if the people of Wilson are getting a better deal, so what if it's not strict capitalism? I don't think most of us are capitalist because we think that's what God wants us to be. The only reason to go with capitalism is because it's generally more efficient. In cases of monopoly, like this basically is, it apperantly isn't more efficient. So why not do this?

And it's not like government goliath vs david TWC. TWC has way more money to invest, they have much more of an advantage than this grassroots organization. That they're unable to compete is all their failure and they should eat it.

Re:Convert?

[Mantrid]

I think most complaints are about the Federal Government. State governments can be bad as well, but when you get down to the municipal level, things can get a lot more efficient.

Re:Convert?

[gestalt_n_pepper]

Democracy means you get to choose *either* the socialist or the capitalist solution. As the health care system, the banking system, the real estate market and cable de-facto monopolies have shown, capitalism is NOT a one-size-fits-all solution.

Re:Convert?

[the_B0fh]

Excuse me, english is my fourth language, so, pardon my french, but what the fuck are you talking about?

TWC was invited to come in and provide the service. They refused. So the city built its own. And now you're saying TWC can't "compete" with that? Well, too bloody bad. The government offered it to TWC, and TWC turned it down. And now they want to cry "bad city"? Well, I'd like a pony with that too.

What crap...

[xgr3gx]

The US needs competition for all these Cable/ISPs. I just read an article about how most countries with high-speed internet offers about 50Mbps for the price I pay for 10 Mbps.

It's mostly because of the competition among the providers.
What's the matter TWC, afraid that your archaic bloated business model couldn't compete?

Re:What crap...

[twidarkling]

Why not? Governments are "For the people, by the people" aren't they? So if the people all say "Hey, we want this. Do it." to their government, and the government does it, and well, more power to them. After all, if the private entities failed to react to customer concerns on such an epic scale, why should we be stuck with them? Aren't private companies supposed to be better by virtue of being able to respond to the changing market more quickly than public institutions? If they need to resort to legislation to keep in business, they're doomed. It's just a matter of sooner or later.

Re:What crap...

[JCSoRocks]

I'm a huge proponent of small government but I actually agree wholeheartedly with this argument. Particularly when you're doing this at the city level. This is a small community (of 50,000) that obviously agreed this was the right decision for them. This sort of project is a large undertaking and I'm sure everyone had an opportunity to voice their opinion. If a monopoly is completely screwing your town over there's no reason you shouldn't be able to organize yourselves and roll your own solution.

What's happening at the state level where TWC is manipulating the law to prevent this is actually a perfect example of how broken government is the higher up you get.

They need to be put in check

[Erie Ed]

This is why TWC needs to be investigated for their practices. It seems to me that the NC government just wants to roll over to TWC wishes. I for one applaude that community that actually went out and did something to improve their service. Also I believe 10/10Mbps for $99 is a fair price as long as the quality is there.

Sickening

[whisper_jeff]

It's sickening to watch massive corporations give up on the ideals of commercialism (competing for the consumer's dollars on the basis of quality, service, and price) and instead simply doing business through legislation (make it illegal for your competition to exist...). I feel like I'm watching someone's Cyberpunk or Shadowrun campaign come together as megacorps take control of governments... It's all sickening...

Re:Sickening

[tnk1]

We let that sort of thing happen every time we concede more and more to the government in terms of providing services for us. With all of the extra money and the ability to represent everyone, you suddenly realize that corps don't have to care what individuals want any more, they only have to care what the government wants.

And the advantage from their perspective is that unlike in the market, where they have to serve millions, when you play to the government, you only have to satisfy a few hundred legislators and bureaucrats. And bribing/lobbying a few hundred people is honestly a lot cheaper than bringing a quality product to market.

So, if you were a corp, what would you do?

Government regulation and lobbying controls aren't going to do diddly until people realize the problem isn't with the lobbyists, per se. It's due to the fact that we've created the perfect customer for these corporations. It has incredible amounts of money to spend, not very high standards, a preference for a centralized and monolithic "low bid" sorts of vendors, and of course, it is easily and efficiently manipulated by controlling just a few key people.

The only question is whether the multinationals need the bloated government or if they can someday discard its bloated corpse and operate like the dystopian sovereign megacorps that you refer to.

Re:Sickening

[Keith_Beef]

It's sickening to watch massive corporations give up on the ideals of commercialism (competing for the consumer's dollars on the basis of quality, service, and price) and instead simply doing business through legislation (make it illegal for your competition to exist...). I feel like I'm watching someone's Cyberpunk or Shadowrun campaign come together as megacorps take control of governments... It's all sickening...

A corporation that exists to make profit will use any means available to make those profits. If lobbying and back-room deals pay better than R&D, then that's where the corporation will put its efforts.

I don't like that any more than you, but we have to face the facts: that's how it works.

If you want corporations to compete on value (i.e., cost/benefit for the consumer), then you need a system where R&D gives better returns than lobbying.

This kind of stuff has been going on for ever. In feudal times, there were monopolies, guilds, charters; in the renaissance there monopolies, guilds were less influential, but there were still charters; in the 18th century, businessmen like Boulton and Wedgwood would petition parliament for extensions of patents in order to corner markets and build monopolies... TWC is behaving somewhat like the Dutch or British East India Companies... just taking care of business in the most efficient way that the system allows, and if that means using political influence then so be it.

You can't wish it away. If you want to think of TWC as the enemy and defeat it, you need to understand the strategy and tactics available to your enemy and adapt your own strategy and tactics in consequence. If TWC has access to those who write and enact bills, then get access for yourself, or block TWC's access to that resource.

K.

Businesses cry "free market capitalism!"

[erroneus]

But only when it is convenient. When it isn't convenient, they expect the government to prop up their business model in order to ensure that their profits are maximized and that their competition is none.

This is an extremely ugly an hypocritical face of modern business today. People want lower prices and more affordable services and if they have to build it themselves to get it, they should be allowed to do it.

This is not an entirely new story as other communications/media companies have sued municipalities to prevent them from making competitive progress in areas where they otherwise did not want to compete or operate. And these companies won. I am a little lost on what legal justification was used in winning their cases though... anyone have any insight?

Old Practice

[mlingojones]

ISPs and cable companies have a history of trying to avoid competition like this. A similar municipal wi-fi initiative was stifled in Pennsylvania a few years ago.

The result of the duopoly that currently defines "competition" is that prices and service suck.

Amen to that.

And why has this suprised anyone?

[JDAustin]

Corporations have always used the power of government to stifle their competition. It has been this way especially since the advent of mercantilism 400+ years ago.

It was this way when the East India company was importing tea to England. It was this way with the railroads in the 1800's. It was this way under FDRs New Deal (which had the gove help big corps and put policies in place to screw over smaller ones). Its that way now.

The product may change over time but the methods used to bury your competition are ancient.

Re:$99 per month ain't cheap!!!!

[Volante3192]

FTFA:

A comparable plan from Time Warner Inc., with six fewer channels (no Cartoon Network, Disney, The Science Channel, ESPNU, ESPN News, or ESPN Classic) and lower upload speeds costs $137.95, for an introductory rate, which lasts a few months and then will likely be ratcheted up.

Re:Total BS

[Opportunist]

You may be sarcastic, but it does beg the question: Isn't that what we pay those people for? Isn't it their damn job to investigate what to do and what laws to pass? Isn't that basically their only reason to exist, to find out what's "best" for what is considered the common good and act in this manner?

If they cannot act that way, fire them. Yes, fire them. Out of a cannon if necessary, but they are essentially our employees. If I'm not satisfied with the performance of an employee, I send him packing and hire someone who can do his job.

Re:So they have two Cables running in parallel?

[UnknowingFool]

Probably not. I'm guessing with a $28 million initial cost, the city wanted to run fiber. TWC and Embarq refused saying it would cost them too much. By the way, federal taxes since 1995 have paid something on the order of $202 billion to these companies to put in fiber but they have taken the money and have never installed it. So the city took it upon themselves to run fiber. So TWC and Embarq cannot compete since they are most likely using copper. What TWC and Embarq would like to do is put Greenlight out of business then take over their lines. Then they could offer higher speeds. Of course they will charge their customers double the price Greenlight was charging even though they paid nothing for the infrastructure.

Comment removed

[account_deleted]

Comment removed based on user account deletion

Utter BS

[ady1]

here is the link to the actual bill: http://www.ncga.state.nc.us/Sessions/2009/Bills/Senate/PDF/S1004v0.pdf

In essence, what the bill is saying is that a govt provided internet service should be self-sufficient, unsubsidized and be applicable to all costs and taxes that a private organization is. It is not trying to establish a monoply but instead trying to take the unfair advantage away from a govt sponsored organization.

Here is the text from actual bill:

Requirements. â" A city that operates a public enterprise under G.S. 160A-311 that provides communications services to the public for a fee over a communications network that is directly or indirectly owned or operated by or provides a financial benefit to the city or another city shall meet the following conditions with respect to the provision of communications service:
  (1) Comply with all local, State, and federal laws, regulations, or other requirements that would apply to the communications services if provided by a private communications service provider.
(2) Establish a separate enterprise fund for communications service and shall use this fund to separately account for revenues, expenses, property, and source of investment dollars associated with the provision of communications service.
(3) Shall not subsidize the cost of providing communications service with funds from any other noncommunications service, operation, or other revenue source, including any funds or revenue generated from electric, gas, water, sewer, or garbage services. In complying with this requirement, a city owned communications service provider shall not price any communications service below the cost of providing the service.
(4) Shall, in calculating the cost incurred and in the rates to be charged for the provision of communications services, impute: (i) the cost of the capital component that is equivalent to the cost of capital available to private communications service providers in the same locality; and (ii) an amount equal to all taxes, including property taxes, licenses, fees, and other assessments that would apply to a private communications service provider including federal, state, and local taxes; rights-of-way, franchise, consent, or administrative fees; and pole attachment fees.
(5) Shall annually remit to the general fund of the city an amount equivalent to all taxes or fees a private communications service provider would be required to pay the city or county in which the city is located, including any applicable tax refunds received by the city owned communications service provider because of its government status and a sum equal to the amount of property tax that would have been due if the city owned communications service provider were a private communications service provider.
(6) Shall prepare and publish an independent annual audit in accordance with generally accepted accounting principles that reflect the fully allocated cost of providing the communications service, including all direct and indirect costs. The indirect costs shall include amounts for rights-of-way, franchise, consent, or administrative fees, regulatory fees, occupation taxes, pole attachment fees, and ad valorem taxes. The annual accounting shall reflect any direct or indirect subsidies received by the city owned communications service provider, and any buildings, equipment, vehicles, and personnel that
32 are jointly used with other city departments shall be fully allocated to the city owned communications service. The North Carolina Utilities Commission may adopt rules and regulations to ensure compliance with the provisions of this subdivision, and all records demonstrating compliance shall be filed with the North Carolina Utilities Commission and made available for public inspection and copying.