A statutory provision (237.19) in Minnesota requires a municipality to hold a public referendum which passes by 65% if it wants to construct a new telephone exchange to offer telephone service and a local exchange already exists. That provision has a checkered history in Minnesota where some referenda have failed, some have first failed and then succeeded while others have succeeded at first attempt. Critics argue a referendum requirement and especially the 65% approval level creates an unjustifiable barrier to entry and has a chilling effect on the emergence of competitive new broadband services, especially since telephone service has become part of a larger package of broadband services from most providers. Supporters argue it is useful to require specific community approval.
Here are the notes:
Ann – hoped to eliminate voting requirement, now focusing on broadband.
Wally – NSP was the electric utility. They had telephone prior to 1915! Their goal was to make NSP unique. Lost election not war. Year ago, survey support was 70 percent.
Steve – Early adopters communities were members of MMUA. They found that even joint ventures difficult to pass legislatively.
Dan Olson from Windomnet. Reports of demise are incorrect. Right now tey’re so busy there’s a week wait for new installations.
Dennis nelson from Windomnet. They had two referendums; the first one got 50 percent vote. After Qwest bypassed Windom again, the second one passed with x percent.
Windom used revenue bonds only. Initial bookings exceeded finances. Business plan called for negative cash for 7 years.
The law – permission to put in a switch. Does it matter? In NSP’s case, this was not the issue. In Windom the attorneys said that vote must follow language. Legal definition has expanded beyond the switch to include the plant and service. Clear legal authority makes financing possible.
Windom noted that recruiting voters equals willing customers.
Unequal requirements for issuance of public sector debt. Business community does not vote locally.
There was discussion about linkages between referendum and marketing and presale.
There was discussion of incumbent and outside forces expenditures. Local advocates outspent at least 10 to 1. Opposition funded buses to the polling places.
NSP thought that they did a good job of community education and awareness. The first community meeting was 2003.
There are no current efforts to remove the 65 percent benchmark to pass a referendum. MMUA says change in law brings legal uncertainty. Predatory pricing needs to be restricted via law to protect start up operations.
Communities need to be aware of anti forces and plan for it.
Fear of GO bond issue by residents and its impact on property taxes even though GO cheaper than revenue bonds.