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In name of fairness, bill could cost Ashland Fiber Network users Cities that run telecommunications networks would have to add charges By Dani Dodge A bill being considered in Salem would make it harder for cities to develop their own telecommunications networks as well as drive up costs for subscribers to high-speed data networks like Ashland Fiber Network. House Bill 2680�s sponsor, Salem Republican Rep. Bill Witt, said the legislation is important to maintain a fair playing field between private companies and cities like Ashland that offer cable and Internet options in direct competition. "If the private company has to pay property taxes, or franchise fees, and the city doesn�t have to, then the city is using its status as a government entity to secure an unfair competitive advantage," said Witt, a Republican from Portland. "So, I believe the solution is to impute those costs into the price they charge their customers." Ashland officials say they are concerned that the bill will actually stifle competition by keeping municipalities out of the telecommunications market, and thus leave rural Oregonians with fewer Internet and cable options. In 1997, high-speed Internet wasn�t available in Ashland, so the city borrowed $5.2 million to put a fiber-optic network in the city. City leaders made the investment to spur high-tech business development and also so they could offer a package of services if deregulation threatened their electrical customer base. But since the beginning of the project, the city has faced criticism by the local cable provider, which is now Charter Communications. Witt sponsored the bill at the request of the Oregon Cable Telecommunications Association, the Oregon Telecommunications Association, Verizon and Qwest. A public hearing was held on the bill Monday in the House�s Smart Growth and Commerce Committee. The committee will vote Wednesday on whether to forward the bill to a full vote of the state House of Representatives. "I�m sure it will come out of committee and get to the floor," said Witt, the committee�s chairman. Rep. Alan Bates, a Democrat from Eagle Point who is also on the committee, said the bill is flawed and probably unnecessary. "The essence of this is they want a level playing field," Bates said, "but I don�t think this does it." The bill would require local governments that provide telecommunication services to do a number of things, including: � Establish and charge prices or rates that include "all direct and indirect costs" incurred by local government in providing service. Indirect costs include items that private companies pay but governments don�t, such as franchise fees, pole attachment fees and property taxes. � Develop a three-year cost projection before providing new telecommunications services. � Prohibit discrimination by local government against private telecommunications service providers. � Require full annual accounting of costs in a specified federal format. When Ashland began providing AFN to customers in February 2000, it was the first municipally owned telecommunications network in the state competing head-to-head with privately owned cable. Dick Wanderscheid, Ashland�s director of administrative services, said he doesn�t know what kind of cost increases Ashland customers should expect if the bill passes, but said new municipalities getting into the business would be impacted even more than Ashland. Ashland�s fees would increase because the city would be forced into using a new accounting system different from the rest of the city�s, and also because the city would be have to add the cost of nonexistent property taxes onto AFN�s cable and Internet bills. "The (legislation) would add an unnecessary layer of regulation that will stifle competition," Wanderscheid said. "The intent is to get us to raise rates so we aren�t competitive." Wanderscheid said there isn�t any sort of unfair advantage, even now. Ashland Fiber Network customers are actually paying more than Charter customers in Ashland for the same service, Wanderscheid said. Outside Ashland, Charter charges more than it does inside the city limits. "It�s good for citizens, because even if you don�t get the Ashland Fiber Network, you�re getting a great deal," Wanderscheid said. Bob Towe, general manager of Charter Communications, said rates aren�t the only determination in overall costs. " I don�t think specific pricing for specific services reflects on ability to compete," he said. "We are talking about long-term business investment." Towe said he has no issue with Ashland being in the market for high-speed data and cable television. "This is not aimed at Ashland," he said. "It�s aimed at creating the same rules for the same game. "If you want to play, let�s all play by the same rules and if you are good enough, more power to you. There�s nothing wrong with competition." A number of cities, including Eugene, McMinnville and Portland, are looking at getting into different aspects of the telecommunications business, said Mike Dewey, executive director of the Oregon Cable Telecommunications Association. He said the legislation would simply assure competitors and the public that publicly owned utilities are playing fair and not offering prices lower than cost to push out competition. "There could be an incentive to allocate costs unfairly so you put expenses on the power side of the ledger," Dewey said. "We�re saying this is what you should do to make sure the taxpayer or ratepayer isn�t being improperly charged." But Tom O�Connor, director of Oregon Municipal Electric Utilities, said governmental agencies entering the telecommunications market already are regulated by federal and state rules. He said the bill is poorly written and would create problems for libraries that grant Internet access to patrons as well as rural communities that want high-speed data services but have no private provider willing to provide it "It sweeps in a wide range of telecommunications services offered by local governments � everything from what Ashland is doing to internal communications between departments," O�Connor said. And he noted that public entities face burdens that private companies don�t, such as open-meeting requirements and records laws. They lack the financial backing of huge companies like AT&T and Charter. "You can�t make them exactly the same. You can�t at state level go in and say you can only do it this way," O�Connor said. "It really stifles local initiative." Reach reporter Dani Dodge at 776-4471, or e-mail [email protected] Mail Tribune Home | Ottaway Newspapers, Inc. | Dow Jones & Co., Inc. | Privacy | Contact Us Copyright � 2001 Mail Tribune, Inc.