State-sponsored Monopoly: How North Carolina is Crushing Internet Competition and Hurting Rural

Most North Carolina residents have experienced frustration with their lack of options when it comes to Internet Service Providers (ISP’s). And although this issue is common throughout the country, it is particularly problematic in North Carolina. In response to this problem, Wilson, NC decided in 2006 to create their own municipal high speed fiber network to better serve their citizens – and the cable industry has been fighting them ever since.

Wilson’s service is significantly faster than any other cable provider in the area, offering up to 1 gigabit per second speeds (three times faster than anything Time Warner offers) for a reasonable price.  Due to the success of its municipal internet service, Wilson attempted to expand outside of the city to smaller, underserved towns close by.

Lack of Internet connectivity is a massive problem in rural North Carolina. In 2013, the FCC ranked North Carolina last in the country for the number of homes with an Internet subscription. This lack of connectivity affects rural North Carolinians both personally and financially. Many businesses lack the bandwidth to effectively operate, and online business owners are forced to relocate to run their businesses. Local municipality ISP’s, such as Wilson, have attempted to extend internet service to these underserved communities – but the state government blocked their efforts completely. In 2011, North Carolina passed a law that prohibited the expansion of municipal broadband service to other local towns and cities.

The people of Wilson, Salisbury, and other cities throughout the country petitioned the FCC to preempt the North Carolina laws that limited their municipal service.

In 2015, FCC Chairman Tom Wheeler overturned North Carolina’s law, arguing that “the bottom line is some states have created thickets of red tape designed to limit competition. . . and local residents and businesses are the ones suffering the consequences.”

However, North Carolina immediately sued the FCC in a bid to reverse their decision.

This legal struggle finally came to a conclusion last month, when a federal appeals court overturned the FCC’s decision and upheld North Carolina’s right to limit municipal broadband. And although Wilson has been fighting lawsuits and regulations for over a decade, they are officially giving up their fight to expand municipal broadband to lesser served areas. State legislators argue that municipalities who create their own internet services are essentially costing their citizens more. By “subsidizing” the cost of these internet startups with diverted funds, cities like Wilson are creating unfair advantages for their internet services in comparison to cable giants. Overall, they believe that allowing municipalities to compete over internet service hurts both business and consumers.

If this was truly the case, however, then why don’t North Carolinians have internet access? Time Warner and other ISP’s simply don’t have the economic incentive to provide services to these rural homes. Laying cable is prohibitively expensive – even enormously wealthy companies like Google have balked at the cost of competing with entrenched cable companies, and are instead shifting their model to wireless.

In reality, most people in underserved communities simply have no way to purchase wired internet access to their homes. To these people, municipal internet providers represent their only hope. Local towns and businesses on the outskirts of Wilson have been receiving high-speed internet for the first time in their lives recently. Already, businesses have built their infrastructure around the availability of high speed internet. With this most recent federal circuit decision, however, it is likely that these businesses will have to relocate or shut down.

Over the past decade internet connectivity has grown to become an essential part of the average person’s life. One can receive a college education, work a high paying job, or run a business solely through the internet. In this case, North Carolina legislators have made sure that many rural citizens will not be able to do any of these things for the foreseeable future.

 However, I’m sure that this decision was made solely for the good of their constituents.