1. 1 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, Manager 45 Railroad Street Kutztown PA 19530-1112 610-683-6131 * (f) 610-683-6729 jvettraino@kutztownboro.org Property of the Borough of Kutztown, jv1-052804

2. 2 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 Property of the Borough of Kutztown, jv1-052804

3. 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 Property of the Borough of Kutztown, jv1-052804

4. 4 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 Property of the Borough of Kutztown, jv1-052804

5. 5 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 Property of the Borough of Kutztown, jv1-052804

6. 6 HB 298 and SB 321 “Prohibiting government competition with private enterprise” Property of the Borough of Kutztown, jv1-052804

7. 7 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 services Nursing homes Parks (amusement) School buses Telecommunications Telephone service Book stores Cable television Child care centers Conventions centers Fitness centers Golf courses Home security monitoring Property of the Borough of Kutztown, jv1-052804

8. 8 HB 298 and SB 321 (con’t) 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.” Property of the Borough of Kutztown, jv1-052804

9. 9 HB 298 and SB 321 (con’t) 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.” Property of the Borough of Kutztown, jv1-052804

10. 10 HB 298 and SB 321 (con’t) 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 Property of the Borough of Kutztown, jv1-052804

11. 11 HB 298 and SB 321 (con’t) 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 Property of the Borough of Kutztown, jv1-052804

12. 12 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 Property of the Borough of Kutztown, jv1-052804

13. 13 HB 298 and SB 321 (con’t) Current status: –Bill did not moved out of Committee –Most likely will not be dropped by sponsors and “corporate pushers” Property of the Borough of Kutztown, jv1-052804

14. 14 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. Property of the Borough of Kutztown, jv1-052804

15. 15 HB 30 and SB 30 (con’t) 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” Property of the Borough of Kutztown, jv1-052804

16. 16 HB 30 and SB 30 (con’t) 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 Property of the Borough of Kutztown, jv1-052804

17. 17 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 Property of the Borough of Kutztown, jv1-052804

18. 18 HB 30 and SB 30 (con’t) 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 Property of the Borough of Kutztown, jv1-052804

19. 19 HB 30 and SB 30 (con’t) 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 Property of the Borough of Kutztown, jv1-052804

20. 20 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 Property of the Borough of Kutztown, jv1-052804

21. 21 Conclusion Be diligent Be informed Be supportive Do not give up Property of the Borough of Kutztown, jv1-052804

22. 22 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 Property of the Borough of Kutztown, jv1-052804

23. 23 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, Manager 45 Railroad Street Kutztown PA 19530-1112 610-683-6131 * (f) 610-683-6729 jvettraino@kutztownboro.org Property of the Borough of Kutztown, jv1-052804