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  ‘Use Public Power’ Will Open Up the Information Super Highway for Nebraskans

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• How U.S. Policy Is Undermining the Prospects for World Peace

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• ARCHIVE

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Initiative Petition to ‘Use Public Power’
Will Open Up the Information Super Highway for Nebraskans

Paul Schumacher
www.usepublicpower.com

Nebraskans deserve the same benefits from competition as people in other states. Nebraska communities should be able to provide services to their people, as do communities in other states. And Nebraskans are entitled to the same benefits of technology as people in other states.

The fact that Nebraskans were smart enough to be the only 100-percent public power state in the nation and to own their own public power infrastructure should not now handicap them and force them to underutilize resources.

The “Use Public Power” initiative petition now being circulated in the state would grant local public power boards the authority over internet connection access. ‘Local option’ authority is critical in a big state like Nebraska where one size does not fit all. For instance, some boards may choose to:

• ‘wholesale’ infrastructure access to the private sector;

• string fiber optic lines to farms, residences or industrial parks to link them to a buffet of private communications providers;

• work in dynamic partnerships with local investors — young talent and old visionaries growing the information age in Nebraska, not just from the consumer side, but the all-important production side as well;

• build a state of the art communication system in their service areas;

• utilize existing power lines to deliver communications services using a technology called BPL that the FCC says holds great promise, but is currently prohibited by Nebraska law;

• do nothing but stand ever vigilant as a deterrent force ready to enter the market if private interests use their monopoly position to deter competition or otherwise do not operate in the public interest;

• employ existing investments and assets directly or in partnership with the private sector; or

• perform any other role that public power boards, as trustees of the public heritage exercising local control, find in the interest of their communities.

Under Nebraska’s current telecommunication’s policy, Nebraskans pay the highest taxes on their phone bills of any state — due in large measure to a “Universal Service Fund” assessment which raises $65,000,000 per year and is almost all doled out to legacy phone companies to give them incentive to provide rural dial tone and broadband. Most of those companies are closed private corporations that have broad discretion with their internal finances. By contrast, the public power companies are in a position to offer a broadband service carrying voice, internet and possibly digital television to the same rural areas using much the same resources they already have. The 6.95 percent Universal Service Fund assessment drives up the cost of telephone in the metropolitan areas and weighs against companies considering relocation to the urban centers. In rural areas it creates a heavily subsidized competitor which discourages private broadband investment and innovation there.

Many rural states do not even have a universal service fund. Nebraska’s 6.95 percent is the highest in the nation. The fund frees up legacy company finances for the massive political activity that, in turn, keeps it on the books and continues to outlaw public power involvement. For those legacy companies with operations in other states, it may even free up resources for infrastructure in other states. While the accounting on the $65,000,000 per year is very difficult to come by, clearly the assets purchased with the subsidies belong to the corporate recipients and increase their stock value. There is no obligation for the private companies to repay the subsidies should the firm merge or sell. If the public is going to pay for infrastructure, shouldn’t the public own it?

The Federal government likewise hands out almost an equal amount in annual subsidy to the same legacy phone companies. Should public power companies choose to position themselves properly — and allowed by the initiative petition — they could share in the federal subsidy and create public wealth with it. The principal argument against giving our public power companies authority to deliver telecom services (or not, as they choose) is that government should not be allowed to compete with private entities.

Such an argument ignores that in many respects public power is simply a business like any other — except it pays its shareholders dividends in the form of cheaper rates than the national average. Public power has few of the ‘markers’ usually associated with government. It levies no tax. It has no police. It passes no laws. The general philosophical issue in the ‘government vs. private’ debate is rooted in the government being able to use such powers to compete unfairly. But like business corporations, public power is established under authority of statute passed by the legislature. It, like business corporations, is governed by a board or directors with fiduciary duties to the business operations. It, like business corporations, is driven by the forces of the private marketplace.

In one very important respect, however, public power is like government. It is obligated to treat all equally and fairly. It is bound by public openness. It is bound by the principles of free speech and neutrality with respect to content of communication. These form the essential foundation of a communications platform consistent with our most sacred principles.

In fact, with respect to our current telecommunications situation in Nebraska, the ‘government vs. private’ arguments are actually reversed. It was the local phone companies that got the Unicameral to impose the 6.95 percent universal service assessment on every phone bill. It was the local phone companies that created a special eligible class to assure they had special status and access to those funds vis-à-vis innovators and competitors. It was the local phone companies that insist on their ability to bundle their product line and limit access to infrastructure in discriminatory fashion.

We live in an age where the private and public sector often provide similar services and commodities.

Examples:

• Parking Facilities

• Theaters and Arenas

• School Systems

• Shipping Ports and Airports

• Garbage collection and disposal

• Insurance (Medicaid and Medicare vs. private insurance)

• Hospitals and Public Health (Nebraska University Medical Center, etc.)

• Transportation (mass transit and subways compete with taxis, etc.)

• Radio & TV (Nebraska Educational TV and Public Radio/TV)

• Energy (public power competes with Natural Gas)

• Advertising (park benches, Buses, Score Boards, selling naming rights for public buildings)

• Right of Way (providing access for phone, cable and gas lines on public property competes with the private land owners who could sell access along their adjoining property otherwise.)

• Postal Service (competition with UPS, Fed Ex, DHL, etc.)

• National Weather Service competes with private weather forecasters

• Banking (federal government’s Farm Credit Service is the largest lender — USDA competes with private banks)

• Office Buildings (government owns office buildings and leases off space competing with private landlords; government also sells timber and grazing rights which would have to be purchased from private companies if the government wasn’t in the business)

• Municipal water wells compete with landowners who could drill qualifying wells to connect to the distribution system and sell water to customers.

• Publicly run ambulance services compete with private ambulance companies.

The ultimate debate needs to focus on who should own the information super highway? Should the owner be answerable to the local people or far-away investors? Should the owner be in a position to discriminate in favor of those who buy other services from it? But if the owner is a public utility, then the consumer is free to select which private vendor to carry its voice packets (VoIP)´… which email service to provide its email and spam filters… which video company to provide its movies and news… and which online radio station to listen to. If the highway is a public road, then the door is open to the competitive marketplace for services delivered on that road system. The vision of a reasonably unregulated competitive information marketplace has a chance of becoming a reality because the consumer has the choice and the accompanying benefits of competition. But if the highway is not a public road, the owner is someone in a position to restrict consumer choices to those approved by it and to collect tribute from each and every packet of information each citizen sends or receives.

Nebraska, as the nation’s only fully public power state, is in a unique position to pioneer at creating a true public information super highway. That pioneering spirit was powerfully evidenced in a late 2006 statewide scientific poll of likely voters:

Just over half of all respondents believe the public power companies should be allowed to provide Internet and other telecommunications services. Another 24 percent don’t know or don’t have an opionion one way or the other.

Approximately 89,000 verifiable signatures representing at least five percent of the registered voters in each of at least 38 counties are necessary to place the initiative on the November 2008 ballot. The signatures need to be submitted to the Secretary of State by July.

The petition text and extensive background information is available at www.usepublicpower.com. Petitions are available for circulation by a simple request on the website or email to petition@usepublicpower.com.

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