In 2010, two counties in South Carolina, Orangeburg and Oconee, received federal funding to deliver broadband Internet to residents without access.

The projects were the first of their kind in South Carolina.

Now, they may also be the last.

Last week, South Carolina passed a law that imposes new regulations on communities that want to build next-generation broadband networks.

The law's supporters say it ensures local governments don't have an unfair advantage over private companies in the local broadband market. But critics say the law saddles local governments with financial and legal barriers that block them from deploying high-speed Internet access to rural communities in the future.

At least 18 other states have passed similar laws restricting publicly owned broadband networks, according to Christopher Mitchell, director of the Telecommunications as Commons Initiative at the Institute for Local Self-Reliance.

The laws, and the lawmakers who support them, are backed by major Internet providers trying to limit competition, even though they don't serve rural areas with high-speed Internet, said Mitchell. "The only threat of competition they face comes from local governments deciding to build their own networks, so they’re trying to stop that," he said.

The debate highlights the digital divide in rural America. About 26 million people have no access to broadband, which has become a vital platform for finding jobs, attracting businesses, securing health care and acquiring an education.

Many live in rural areas: About 60 percent of rural households, compared with 70 percent of urban households have high-speed internet connections, according to the U.S. Department of Commerce.

Large Internet service providers say they don't deliver high-speed wired Internet to many rural areas because it's not as profitable. In response, more than 150 communities have built their own networks, taking a page from communities who built municipal power systems a century ago to ensure residents had access to affordable electricity. Some deliver fiber-optic cables directly to residents' homes with Internet speeds faster than DSL or cable.

The need for broadband access is particularly great in South Carolina, which has one of the lowest Internet adoption rates in the country, according to the Federal Communications Commission.

Tangee Brice Jacobs, the chairman of the Democratic Party in Fairfield County, S.C., said about two-thirds of residents in her community have no access to affordable high-speed Internet. Most are left to choose between dial-up, which is too slow, and satellite service, which is too expensive, she said.

Local schoolchildren face the greatest consequences, she said, because they don't have Internet access at home to complete their homework. "How can these children compete in the world we have now without Internet access?" she said.

Under South Carolina's new law, local governments must prove to state regulators that an area is not being served already. Without the law, supporters say communities would have an unfair advantage over corporations such as AT&T because they say local governments receive special benefits and subsidies.

"What this law does is level the playing field,” Mike Gambrell, a state lawmaker who sponsored the legislation, said in an interview.

But critics say AT&T, the major telecom company in the state, does not serve broadband to many rural areas where local governments could provide their own networks. In addition, they say the law leaves rural communities with sluggish Internet speeds because it defines a "served" area as one that can access internet speeds of least 190 kilobits per second, which is slower than the FCC's definition of broadband.

AT&T declined to comment. Last fall, the company announced it spent $125 million in the first half of 2011 improving its mobile broadband network.

Critics note that lawmakers who have supported restrictions on community broadband projects have received political contributions from large Internet service providers.

In South Carolina, AT&T, CenturyLink, and Time Warner contributed more than $146,000 to state lawmakers since last January who supported the bill, according to an analysis by The New Republic.

Last year, North Carolina also passed a law restricting local governments from building publicly owned broadband networks. Lawmakers who voted in favor of the bill received on average 76 percent more in donations from major cable and telecom companies than those who voted against it, according to the National Institute on Money in State Politics.

Orangeburg County Administrator Bill Clark said South Carolina's new law would not prevent his county from completing its initial broadband project, which will use $18 million in federal stimulus funding to deliver broadband access to one quarter of the county.

But he said the law would jeopardize future plans to deliver broadband to the remaining residents, many of whom are low income. Of the county's 90,000 residents, more than 20 percent live in poverty, Clark said.

Without widespread broadband access in Orangeburg County, it would be difficult for them to find jobs because fewer businesses want to locate in the area, he said. "If we don't have the ability to deliver high-speed broadband, the jobs will go elsewhere," Clark said.

He said he understood that private companies are unlikely to invest in rural areas, but said he couldn't understand why local governments should face obstacles when trying to serve those same areas with high-speed Internet.

"Unless a public entity can fill the void left by the private sector, rural areas are going to be left out in the cold," he said.