Hometown Utilicom

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Hometown Utilicom

“Keeping Your Money in Your Community Working for You!”

Borough of Kutztown, FTTH Project

American Public Power Association

2004 National Conference

State Legislative Challenges to Community Broadband

Seattle, WA

June 21, 2004

Jaymes Vettraino, Manager45 Railroad Street

Kutztown PA 19530-1112610-683-6131 * (f) [email protected]

Property of the Borough of Kutztown, jv1-052804

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Borough of Kutztown, PA Population: 5067

Total Budget: $17 million

Size: 1.5 square miles

Households: 2200

Rental properties: 45%

Student Residents: 1800+

Median Age: 24.5 (2000 U.S. Census Bureau)

Median Income: $49,653 (2000 U.S. Census Bureau)

• Kutztown University (enrollment of 8000+) located on western boarder

• Approximately twenty (20) miles from the Cities of Allentown and Reading, PA

• Low taxes relative to the surrounding communities


3“Providing Utilities and Communications Services To Your Community”

Electrical Utility

Water Utility

Wastewater Utility

Telecommunications

Voice, Video and Data

Police Services

Planning and Zoning

Parks and Recreation

Highway Maintenance

Refuse/Recycling Collection

Railroad Management

Services Provided by Kutztown


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Fiber to the Home (FTTH) Objectives

• Enhance current municipal services

• Bring broadband technology to our community

• Create opportunities for Economic Development

• Control our own destiny in the “knowledge based economy”

• Complimentary function to our Electric Service * grow an existing asset

• Diversify the Borough’s operations

• Reduce telecommunication costs for residents


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2003 Legislation

• January 2003: Prohibit government competition with private enterprise– House Bill 298, companion Senate Bill 321

• April 2003: Prohibit government involvement in telecommunications– House Bill 30, companion Senate Bill 30


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HB 298 and SB 321

“Prohibiting government competition with private enterprise”


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HB 298 and SB 321 (con’t)

• Yes. The legislation is that broad… it is meant to stop ALL competition .

• From a summary distributed by the sponsoring politicians, the legislation is targeted to prohibit governments from operating: Housing projects

Internet servicesNursing homesParks (amusement)School busesTelecommunicationsTelephone service

Book storesCable televisionChild care centersConventions centersFitness centersGolf coursesHome security monitoring


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• The following function or services are excepted from the government competition prohibition:

• “Essential services, except that if private industry can provide essential services, government agencies and authorities shall entertain bids from private enterprise, and if practicable, contract with private enterprise to provide essential services”– “Essential services” are defined as “water supply,

sewers, garbage removal, recycling, utilities, streets and local correctional facilities.”


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• The following function or services are excepted from the government competition prohibition:

• “Vital services, but only to the extent they are not available from private enterprise.”– “Vital services” are defined as “food stores,

drugstores, child care, elder care and telecommunication services.”


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• The legislation contained inadequate “grand-fathering” language:– “…the government agency or authority may continue to

engage in competition but may not exceed the scope of the competition.”

– This language would not protect the Kutztown project. • To continue to leverage our investment in FTTH we must be

free to provide new services

• The language could be read as not allowing us to “sign-up” any more customers


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• Borough of Kutztown’s reaction– Wrote drafting legislators– Wrote local legislators and chairpersons of

critical committees– Communicated with the Pennsylvania League

of Cities and Municipalities and Pennsylvania State Boroughs Association

– Testified at a Intergovernmental Affairs Committee Hearing on May 15, 2003


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HB 298 and SB 321 (con’t)• Testimony given at the Intergovernmental Affairs

Committee Hearing– Goal #1, work with municipal partners to argue that the legislation

is overly broad and unnecessary– Goal #2, argue that telecommunications services should be

considered “essential”

• Testimony was also given at the Hearing by– The Pennsylvania Cable and Telecommunications Association,

speaking in-favor of the legislation– Business associations testified in-favor of the legislation (health

clubs, private pools, etc.)– Other municipal service providers and associations testified against

the legislation


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• Current status:– Bill did not moved out of Committee– Most likely will not be dropped by sponsors

and “corporate pushers”


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HB 30 and SB 30• The bills propose amendments to Title 66 of the

Pennsylvania Consolidated Statutes.– Title 66 (the original Chapter 30 legislation), passed in 1993,

outlines telecommunications laws for the Commonwealth. The legislation contained a 10 year sunset provision.

• The stated purpose of the legislation is to encourage the deployment of “broadband” across the Commonwealth. – The legislation is broad and far reaching, attempting to make

law on everything from the definition of broadband, to the distribution of service to tax subsidies for deployment.


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• Language from the bills– “A political subdivision or any entity

established by a political subdivision, including a municipal authority, may not provide any telecommunications services to the public for compensation within the service territory of a local exchange telecommunications company operating under a network modernization plan”


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• Effect of the bill– Once a telecom company enrolled in a network

modernization plan which, (based on the experience of the original Chapter 30 legislation) guarantees nothing, the local municipality is hostage to the deployment whims of the telecom company.

– Would be disastrous to rural municipalities

• The bill is anti-competitive, at a time when the only proven motivator for private companies to deploy broadband to rural communities is the introduction of competition


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HB 30 and SB 30 (con’t)• Quick Progress of HB 30

– Referred to CONSUMER AFFAIRS, April 30, 2003 – Reported as amended, Nov. 17, 2003 – First consideration, Nov. 17, 2003 – Laid on the table, Nov. 17, 2003 – Removed from table, Nov. 18, 2003 – Second consideration, Nov. 18, 2003 – Re-referred to APPROPRIATIONS, Nov. 18, 2003 – Re-reported as committed, Nov. 24, 2003 – Third consideration, with amendments, Nov. 25, 2003 – Final passage, Nov. 25, 2003– In the Senate Referred to CONSUMER PROTECTION AND

PROFESSIONAL LICENSURE, Dec. 1, 2003


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• Borough of Kutztown’s reaction (scrabbling because of the quick progress of the legislation)– Worked with consumer advocate groups– Worked with “non-Verizon” private companies– Wrote drafting legislators– Wrote local legislators and chairpersons of critical

committees– Wrote the Governor– Communicated with the Pennsylvania League of Cities

and Municipalities and Pennsylvania State Boroughs Association


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• Legislation did not pass by the end of 2003– Legislation passed to extend the original

Chapter 30 legislation by one year– The threat still looms large


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Lessons Learned• Private Companies understand the power of legislation

– They are willing to spend, spend and spend

• Local government is not equipped to lobby– Organizing local governments to work together is a huge

challenge– It is very difficult for small (and politically inexperienced)

municipal staffs to track legislation and lobby over a long period of time

• Convincing local governments that it is in there interest to be involved is very difficult– If the legislation is in Committee or seen as a “distant threat” it

is hard to get local government to react


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Conclusion

• Be diligent

• Be informed

• Be supportive

• Do not give up


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Additional Conclusions

• National organizations (like the APPA) need to help locals in tracking and lobbing for (or against) legislation.

• Anti-municipal legislation will impact all of Public Power, especially with the emergence of Broadband of Power Line (BPL). Public Power must have a “telecom option” in order to offer the services that customers will require of their electric companies in the next 5 to 10 years.– Private electric will offer BPL, customers will expect the

same service from public power


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Questions?

“Keeping Your Money in Your Community Working for You!”

Borough of Kutztown, FTTH Project

American Public Power Association

2004 National Conference

State Legislative Challenges to Community Broadband

Seattle, WA

June 21, 2004

Jaymes Vettraino, Manager45 Railroad Street

Kutztown PA 19530-1112610-683-6131 * (f) [email protected]


Hometown Utilicom

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