Story reprinted from Business North Carolina, January 2003
BellSouth wants city to go out of business
By Arthur O. Murray
Through three quarters of 2002, Atlanta-based BellSouth Corp. grossed $16.7 billion. So why is it suing Laurinburg, population 15,980, over a three-year, $72,000 contract with a Fayetteville company that sells Internet access as a sideline to installing and maintaining computer networks? BellSouth says that the city is violating state law by selling excess capacity on its fiber-optic network to Schoollink Inc., which, in turn, is swiping BellSouth Internet customers.
It's the principle of the thing, says Clifton Metcalf, spokesman for BellSouth's North Carolina operations, who wouldn't comment directly on the lawsuit. 'Government, by definition, sets the ground rules by which companies operate and has the ability to subsidize operations through taxation. They have advantages against whomever.' That's why state law lists services, such as electricity, water and cable television, that cities can provide. Services that a city is not specifically allowed to provide are prohibited, he says.
Nonsense, says City Manager Joe Huffman, who notes that BellSouth was offered the same contract as Schoollink. He likens the case to leasing space on city utility poles for BellSouth phone lines. "We've got an infrastructure in place they're making use of. The same is true of a fiber line. If we have a line up that we're not using all of the capacity that we can make available, I don't see it as any different."
Schoollink will bring in about $14 million in 2002 through sales of educational record-keeping software, network installation and maintenance, and Internet service, CEO Erik Wells says. He thinks BellSouth, which had $3.2 billion in revenue through nine months for digital and data services, which include Internet access, is mad because Schoollink has taken customers such as Scotland Memorial Hospital and the school system.
At least 2,000 cities nationwide offer telecom services, according to the Newton, Mass.-based Center for Civic Networking. So why is Laurinburg getting sued? "There might be something special about us", Huffman says, "but I don't know what it would be." No great mystery, Metcalf says: Laurinburg is the only Tar Heel city selling excess capacity in BellSouth's service area.
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