by Jon Sanders
Research Editor and Senior Fellow, Regulatory Studies, John Locke Foundation
Under the North Carolina Constitution, municipalities are creations of the state legislature, which has constitutional authority over municipal government as well as local taxation and debt.
The City of Wilson’s petition seeks an end-run around these constitutional constraints that would, if granted, allow it to act independently of the legislature that created it.
In 2009 the John Locke Foundation warned of coming financial problems with the City of Wilson’s Greenlight network. Those warnings, unheeded, have proven accurate.
Other, similar problems have hampered other municipal broadband systems: Salisbury, Morganton, and Mooresville and Davidson.
Those systems were financed with Certificates of Participation, which don’t require voter approval. But local taxpayers are still obligated to fund their operating losses.
Legislators’ concern over these problems led to the passage in 2011 of the Level Playing Field Law. Wilson says the law is anticompetitive.
Wilson has the idea of competition backward. It’s the government entry — guaranteed to have its losses and discounts covered by taxpayers — that brings unfair competition to the market.
The Level Playing Field law mostly doesn’t apply to Greenlight, which is specifically exempted in the statute.
Where it does apply shows exactly the problems with Wilson getting into the broadband market. Greenlight still needs money and therefore customers, which it cannot attract enough even within the entire county.
An examination of the provisions in the Level Playing Field law shows that it seeks to protect competition from anticompetitive forces.