Wisconsin Pols Trying to Curb Muny Networks



Munys in Telecom

Wisconsin legislators have introduced a bill to strictly limit the resources any town, county or municipal utility could use to launch telecommunications services.

A similar bill last year passed the Assembly almost unanimously but never got a vote in the Senate, said Tom Hanson, executive director of the Wisconsin Cable Communications Association.

Backers are hopeful for SB 272 because the sponsors, Rep. Phil Montgomery (R-Ashwaubenon) and Sen. Ted Kanavas (R-Brookfield), have stated in local press accounts they want to prohibit government from using their local property tax bases for creating "an uncompetitive situation."

"They understand the bill very well," Hanson said of the sponsors.

Governments still have lots of advantages but this bill evens many of them out, he added.

The bill would bar a government entity from financially supporting a telecommunications operation by using tax money from non-subscribers. Wisconsin towns couldn't use their greatest funding resource — property taxes — to support building a cable, Internet or telephone system.

Local governments that intend to move into telecommunications businesses would be required to report total cost and revenue estimates for the planned project.

This bill dictates that long-run incremental costs associated with operating a system, such as taxes, ROW use, licenses and similar costs incurred by competitors, must be factored into costs and rates charged by muni competitors. The report with that information must be made public before the first of three public hearings mandated by the bill.

Municipal telecommunications concerns are growing.

According to The Progress & Freedom Foundation, 350 municipalities offer commercial telecommunications services. That's up 124 (54%) since 2001.

Contributing to the growth, according to the study, are the "special advantages and protections" enjoyed by the government entities, such as less regulation, less taxes and lower fees. These special protections, according to the PFF, present obstacles to a fair marketplace.

(The PFF, a market-oriented think tank, includes among sponsors major media companies, the National Cable & Telecommunications Association, large electrical suppliers and other telecommunications suppliers).

The Municipal Electric Utilities of Wisconsin, representing 82 public-power companies, is raising a fuss about the new bill.

"While supposedly neutral, the Wisconsin bill is heavily biased in favor of incumbents, which faced no similar barriers to entry when they were getting started. Its passage would be a blow to competition and a disservice to the people of Wisconsin," said Jim Baller of the Baller Herbst Law Group, which advises municipalities on overbuilds.