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e-NC, facing drastic budget cuts, says broadband efforts in N.C. at risk

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RESEARCH TRIANGLE PARK, N.C. – e-NC, the organization tasked by the General Assembly to spread broadband access across North Carolina, is in big-time budget trouble.

How ironic, e-NC backer say, is this? Just as the Obama administration and the Federal Communications Commission prepares to spend billions to spread broadband across the U.S. the group that has worked for years to accomplish that same mission in N.C. could be rendered ineffective.

The group, led by longtime Gov. Jim Hunt tech advisor Jane Patterson, faces more than a 50 percent cut in funding if the current budget recommended by Gov. Bev Perdue and the North Carolina Senate is endorsed by the House. If so, e-NC insiders warn, the group will have to cut staff and cease offering matching funds to private companies to “incent” the Internet providers to expand high-speed services into rural and other areas lacking high-speed access.

The governor is tacking a hatchet to the state budget due to the recession. On Thursday, she tightened spending even more.

Perdue has been a long-time backer of high tech, especially for use in education. But even MCNC, which announced this week it has extended broadband connectivity to all school districts as part of a program Perdue staunchly backed as lt. governor, has also taken a hit. MCNC Chief Executive Officer Joe Freddoso said Thursday that he and senior management have taken pay cuts and the staff is being reorganized due to cuts that started last fall under Gov. Mike Easley.

e-NC supporters took to the Internet this week trying to muster support for restoration of some $500,000 if stands to lose in the new budget.

“Gov. Perdue put us in her version budget for $495,000, and that stuck in the Senate's version, minus an across-the-board cut of 2 percent,” an e-NC insider told Local Tech Wire.

“BUT - this is only half of what we need to operate,” the insider added. “And even still, this amount would not provide funds for deployment incentives, demand-building programs, etc. The amount coming from Perdue/Senate could be cut by the House - you just never know - it is a tough budget year and we are all very aware of that.”

Last month, e-NC announced “incentive grants” worth nearly $1 million to Embarq and Verizon to expand high-speed access in Caswell, Cherokee, Duplin, Graham, Pamlico and Tyrrell counties. E-NC requires that its grants be at least matched dollar-for-dollar by private firms.

Some at e-NC fear the worst. If the budget crisis continues to grow, what happens if the group loses all support? The $30 million given the state by MCNC to launch e-NC has long been invested in earlier broadband efforts.

“If everything is cut and we get nothing, then we will only have around $20,000 in the bank at the end of June (end of fiscal year), and would have to shortly thereafter close our doors,” the insider said.

“It is ironic, you know? At the VERY moment that broadband is finally on the lips of leaders nationwide, we may have to shut our doors. Also, for what it is worth, the roughly $7.2 billion in federal broadband funds do NOT allow a percentage to go toward grant administration or operations. So the only way that e-NC could manage or administer any federal funding that MIGHT come to N.C. is if we continue to operate.”

Other casualties of the budget cutting could be bills introduced by two powerful e-NC allies that actually want millions to update and expand high-tech job centers created by e-NC as well as other Internet related efforts. Tony Rand in the Senate and Joe Tolson in the House introduced similar bills.

What follows is the text of a letter e-NC backers distributed Thursday:

“Partners of the e-NC Authority:

“We know that you, as a partner of the e-NC Authority, understand how access to broadband is critical to enabling economic competitiveness for our state. But now, all of a sudden, it seems that even more people are interested in rural broadband. This topic that was once a far-off notion has quickly risen to the forefront of our economically-minded leaders – who are now struggling to make the smartest investments for our long-term sustainability.

“North Carolina’s General Assembly was ahead of this curve and established the e-NC Authority in 2000 (Session Law 2000-149) as the official state organization in charge of tracking telecommunications infrastructure and advocating for expansion of high-speed Internet in underserved communities. And for years, the e-NC Authority was able to fulfill that legislative mandate with little financial support from the public sector (thanks to a one-time donation from MCNC).

“But now – RIGHT at the moment when political and community leaders alike are ready to fully dive into the task of universal broadband access – the operational future of the e-NC Authority is at risk. With $7.2 billion at the federal level up for grabs to expand broadband into rural America, the very group that could assist in shepherding that funding for North Carolina’s underserved communities, businesses and schools may have to limit its operations.

“We’re asking for your support.

• Is broadband access important to you?
• Do you consider broadband as vital as water, sewer, roads and electricity?
• Would your business, community or school-aged child be more competitive with universal access to high-speed Internet services?
• Do you believe the state needs a broadband group such as the e-NC Authority?

“Pipe up. Send a quick note about it to your elected officials, and ask them to support the e-NC Authority via support of House Bill 532 and Senate Bill 697. North Carolina has a nationally-recognized state broadband authority right here, and we don’t want the state to lose this important resource for technical expertise and guidance.”

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