Va. Bill Forbids Muni Overbuilds

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Virginia lawmakers last week enacted legislation barring
local governments from building municipal networks capable of offering telecommunications

Backed by Bell Atlantic Corp. as a way of protecting its
local telephone business, the measure was also a win for cable operators that could have
faced municipal overbuilds brought on by increasing scrutiny over escalating subscriber

The Virginia Cable Television Association lobbied for the
bill on the grounds that without the prohibition, operators would be reluctant to invest
in high-speed networks that would have to compete against municipally owned systems.

As a result, in a vote taken just before adjourning for the
year, the Virginia General Assembly prohibited local governments from constructing fiber
optic networks in business parks, or from even establishing departments or commissions
that are capable of overseeing such projects.

Moreover, it bars municipalities from entering into joint
ventures with service providers that are seeking to lease space on such systems as a means
of getting into local telecommunications markets.

The measure garnered 54 out of a possible 100 votes. It now
goes to Gov. Jim Gilmore, who has until mid-April to decide whether to sign it into law.

"Our feeling was that we're not opposed to their
entry, as long as they play by the same rules that we have to play by," said Bell
Atlantic spokesman Paul Miller. "But they're not taxed, and they're not
regulated, so they would be at a distinct advantage."

Predictably, the Virginia Municipal League spoke out
against the measure, arguing that rural communities needed to build such networks in order
to attract new businesses and to offer services that incumbent telecommunications outfits
could not provide economically.

"We're not giving up on this bill," said
Mike Amyx, the VML's executive director. "At least we'll inform our members
about what's at stake. The idea was not to develop competing industries, but to run
fiber optics to industrial parks as a way to spur economic development, and to provide
educational tools that would not have been otherwise available."

Nevertheless. Amyx conceded that the issue of municipal
cable systems has been raised.

"It's been discussed from time to time, mostly
because of rates," he said. "But this prevents that."