ilecs keep swinging at munis

IN A CASE THAT IS SYMBOLIC OF THE growing tension between phone companies and municipalities expanding into telecom, BellSouth Corp. plans to ask the North Carolina Supreme Court to review a ruling that found a city offering telecom services was not in violation of state law.

A state appeals court ruled in January that a fiber-optic network the City of Laurinburg has leased to a North Carolina Internet company did not violate state law. The court found that the city is operating a cable television system and has authority to contract with School Link Inc. for Internet services.

School Link has been providing Internet service to a local college, hospital and other organizations over the fiber-optic network, and the city receives $350 per connection per month from each connected user, according to the state appeals court ruling.

BellSouth argues state statutes continue to prohibit municipalities from acting as a telecom company. “North Carolina is quite specific regarding the activities in which municipalities are permitted to engage. However, the court of appeals is essentially saying the municipalities are free to expand their powers and public enterprises as new technologies develop,” BellSouth spokesman Clifton Metcalf said in a statement.

The BellSouth lawsuit is not an isolated incident in a new battle pitting local phone companies versus local government. Philadelphia’s plan to deliver Wi-Fi was nearly sidetracked recently when the state government passed a bill placing severe restrictions on the ability of local government to provide Wi-Fi if it competes with private enterprise. The issue was forwarded by the lobbying efforts of Verizon.

In a victory for the local phone companies, the U.S. Supreme Court ruled last year that states have the right to bar municipalities from entering the telecom business. “Neither statutory structure nor legislative history points unequivocally to a commitment by Congress to treat governmental telecommunications providers on par with private firms,” the high court wrote.

In Missouri, a public utility can deploy Internet access, but not voice services, and VoIP is classified as telecom. In Tennessee and Texas, the government can do neither, for example.