How A TimeWarner Power Play In North Carolina Threatens The Core Of American Democracy

TimeWarner was once a very reputable company. I can be really proud to say I was once president of one of their divisions. Then AOL bought it. I couldn't imagine a corporate culture degenerating so rapidly. Once a model of corporate good governance that consciously sought to align the interests of shareholders with employees, customers and society, AOL's primitive instincts turned TimeWarner into the untrustworthy mess it is today. The company's valuation reflects that change. Taking splits into account, the company once traded at over $250 a share. Today, a much-diminished company, it's lucky to be over $30 a share. TimeWarner was once the single-biggest contributor to progressive causes (and the Democratic Party) of any company in America. Today TimeWarner is like an amalgam of what Thomas Jefferson and Franklin Roosevelt warned America about in regard to corporations. Jefferson on the power of corporations:

"I hope we shall take warning from the example of England and crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our Government to trial, and bid defiance to the laws of our country."

We didn't take warning and the situation got exponentially worse until corporate barons with familiar names-- duPont, Bush, Rockefeller, Morgan...-- attempted a right-wing coup d'etat against President Roosevelt. FDR's warning, of course, sounds even more contemporary:

"The liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic State itself. That, in its essence, is Fascism-- ownership of government by an individual, by a group or by any controlling private power."

What does this have to do with TimeWarner? Glad you asked. Tim Karr sent me this extremely disturbing news from Charlotte, North Carolina.

North Carolina has a long tradition of self-help and self-reliance, from founding the nation's first public university to building Research Triangle Park. Befitting the state's rural heritage, North Carolinians routinely take self-help measures to foster economic growth and provide essential local services such as drinking water and electric power.

Statesville built the state's first municipal power system in 1889, and over the years 50 North Carolina cities and towns followed suit. In 1936, the state's first rural electric cooperative was launched in Tarboro to serve Edgecombe and Martin counties. Today, 26 nonprofit electric networks serve more than 2.5 million North Carolinians in 93 counties.

Strangely, this self-help tradition is under attack. The General Assembly just passed a bill to restrict municipalities from building and operating broadband Internet systems to attract industry and create local jobs. Although pushed by the cable and telephone lobby, similar bills were defeated in previous legislative sessions. But the influx of freshmen legislators and new leadership in both houses created an opening for the dubiously titled "Level Playing Field" bill (HB 129).

No one disputes the importance of broadband access for economic growth and job creation. That's why five cities-- Wilson, Salisbury, Morganton, Davidson and Mooresville-- invoked their self-help traditions to build and operate broadband systems after years of neglect from for-profit providers, which focus their investments in more affluent and densely populated areas. Not coincidentally, all five cities own and operate their own power systems or have ties to nonprofit electric cooperatives.

(While the bill does not outlaw these five municipal networks, it restricts their expansion and requires them to make annual tax payments to the state as if they were for-profit companies.)

How does a state that values independence, self-reliance and economic prosperity allow absentee-owned corporations to pass a law essentially granting two industries - cable and telephone-- the power to dictate North Carolina's broadband future? This question will be moot if Gov. Beverly Perdue exercises her veto power and sends this bill where it belongs: to the dustbin of history.

However, if the bill is signed into law, its passage could embolden the cable/telco lobby to take aim at the state's many independent, nonprofit broadband networks, primarily in the most rural areas. These networks, with little fanfare or publicity, have made real progress in addressing the rural broadband crisis over the last decade.

These nonprofits include traditional rural electric and telephone cooperatives as well as more recent start-ups such as Mountain Area Information Network (MAIN) and ERC Broadband, both based in Asheville. MAIN launched in 1996 to provide dial-up Internet access via a local call in some of the region's most remote communities. Prior to this, many mountain residents had to call long-distance to reach the Internet.

The catalyst for ERC Broadband's launch in 2003 was the possible loss of the National Climatic Data Center, which was looking to relocate to a community with more abundant and affordable broadband access. This homegrown fiber network helped keep NCDC and its high-paying jobs in Asheville. ERC's success helped spawn a second nonprofit fiber network, PANGAEA, serving Polk and Rutherford counties. Likewise, the Eastern Band of the Cherokee and a local software firm in Franklin joined forces to launch a third fiber network, BalsamWest, to serve the mountain counties west of Asheville.

This corporate assault on North Carolina's heritage of self-help and self-reliance is all the more bizarre because these out-of-state cable and telephone carriers have begun using the state's nonprofit networks, both rural and municipal, to supplement their network capacity and reduce their bandwidth costs. Common sense dictates that this corporate power-grab should end with a stroke of the governor's pen.

At least it's a Democratic governor... so there's a chance that she'll stand up to what Jefferson and Roosevelt clearly defined as an existential threat to our democracy.