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VOL. 132 | NO. 14 | Thursday, January 19, 2017

Stockard

Sam Stockard

View From the Hill: Cooperatives Ready to Fill Broadband Void

BY SAM STOCKARD

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Rural broadband backers such as Misty O’Beirne in Rutherford County can take heart. Legislation to spread high-speed internet into cyberspace deserts is making the right connections.

When Misty and Peter O’Beirne moved to the Christiana community just outside Murfreesboro some five years ago to live with her parents, they didn’t realize their home would be too far from the nearest hook-ups for Comcast and AT&T.

If it were available, Misty would use the internet to run her babysitting service, and she and Peter could take online courses at home, while letting their son, P.J., a Christiana Elementary School kindergartner, log on to the ABCmouse learning application. 

Without the worldwide web via cable or fiber optics, they have to use cell-phone data, which can get expensive.

“It’s kind of affected our whole family, in a way,” Misty says.

The O’Beirnes might be in for relief, though. Middle Tennessee Electric Membership Corp. is studying the possibility of offering broadband to its customers in Rutherford, Wilson, Williamson and Cannon counties.

And, Gov. Bill Haslam could be on the verge of proposing a multi-pronged method for taking broadband internet service into unserved and under-served areas across Tennessee.

The Tennessee Advisory Commission on Intergovernmental Relations is set to make a report this week on deploying broadband internet across the state after a two-year study at the request of Senate Majority Leader Mark Norris, chairman of the commission. 

As majority leader, he would carry the Haslam administration bill, which could call for bolstering existing programs, offering tax incentives to private providers and changing state law to allow electric cooperatives such as MTEMC to sell retail broadband.

Using the mantra “better access not bigger government,” Norris says he hopes service is provided, eventually, to the entire state, including rural pockets, mountainous regions and areas tied up in debate over government services versus private providers.

“It’s a relatively discrete segment of society we ought to be able to serve, and there’s no single answer how best to do that,” says Norris, a Republican from Collierville in Shelby County.

The TACIR report and likely legislation is a crucial step forward, he adds.

One of the stumbling blocks is competition between government and the private sector, though the relationships between them are pretty blurred.

Consequently, bills enabling municipal utilities such as Chattanooga’s Electric Power Board to expand its service footprint to a small area in southwest Bradley County failed, as did efforts last year for legislation allowing people to petition electrical utilities and cooperatives for broadband service. 

But with the governor, Norris and TACIR using a methodical approach to patch this riddle, lawmakers could be friendlier to change this session.

“The governor believes broadband access is critical to economic development. He is continuing to study and analyze options to increase accessibility in our rural communities and looks forward to having a discussion with the General Assembly this year,” Haslam spokeswoman Jennifer Donnals says.

That non-committal verbiage aside, look for something to happen.

CHANGING TIDE

Two years ago, Haslam, House Speaker Beth Harwell, now-former Lt. Gov. Ron Ramsey and a host of legislators opposed a Federal Communications Commission decision favoring efforts by Chattanooga’s EPB to expand into areas such as southwest Bradley County, which has been trying to get high-speed access for years from private providers.

Republican state Rep. Glen Casada, now the House majority leader, disgraced former Rep. Jeremy Durham and conservative stalwart Rep. Andy Holt of Weakley County urged Attorney General Herbert Slatery to sue the feds. He won. 

They called it a “slippery slope” and bad precedent involving a state-chartered entity, one in which the FCC “usurped” state sovereignty with an “unconstitutional move.”

Opponents of municipal utilities going into the internet business also say it’s unfair to put a financial burden on the backs of ratepayers for expansion while competing with AT&T, Comcast and other smaller providers.

Casada, however, is changing his tune as far as service by electric cooperatives goes, though he says he has no idea what the governor is going to propose.

“But to me a cooperative makes sense because it buys its broadband from whoever gives it the best deal and it distributes it to its members,” Casada points out. 

“It doesn’t compete against anyone and it allows the free market to function. So I think the cooperative sounds like a logical thing, if that’s the way the governor would like to go. It’s the way I would like to go.”

DRAFT PROPOSAL

TACIR’s research shows several government and private initiatives already deal with broadband access and it wants better coordination of those efforts to fill service gaps. 

A 2016 study by the Tennessee Department of Economic and Community Development found 87 percent of Tennessee’s 6.3 million population has access to broadband internet meeting the Federal Communication Commission’s definition, with a download speed of 25 megabits per second and upload speed of 3 megabits per second.

Some 366,115 households, about 835,000 people, don’t have access, and the vast majority of those stumbling through a broadband wasteland live in rural areas. 

The state study also found the existing broadband infrastructure in Tennessee isn’t fully used because 69 percent of businesses and 76 percent of households had speeds below the 25 mbps download speed.

About 5 percent of those responding to the state study reported having no internet at home, either, and more than half of those cited lack of availability.

Affordability followed. And TACIR found less than half of Tennesseans with access to broadband service subscribe to it. The bet is most don’t have the money to pay for it.

Recommendations likely to flow from the commission are:

Increase funding so all libraries meet Tennessee State Library and Archives guidelines for improving access to digital literacy (the cost is $144,640 per year). Some libraries already lend hot-spot devices to patrons so they can access wireless broadband, and providers offer hot spots to libraries at no cost. Monthly broadband costs about $32 per device.

The Department of Education and State Library and Archives should work with schools and libraries to get the most out of the E-Rate funding, federal money subsidizing broadband service.

The state, through several departments, should help local governments set up broadband programs combining training and financial help.

The state should use its broadband deployment fund (still waiting for dollars) to offer competitive grants in areas not targeted by Connect America Fund grants provided to private companies. (Make note, the feds give private providers money to expand, a total of $210 million over seven years.) Catching about 111,000 households not up for the grants could cost $122 million to $544 million, though some of those homes could be served by further federal money, the draft report says.

Tennessee could offer credits against franchise and excise taxes for broadband infrastructure investment in unserved and underserved areas. Similarly to a low-income housing tax credit, credits could be capped and use a competitive application process.

“Broadband ready communities” could be designated where permitting and zoning rules are adopted to remove regulatory barriers to broadband investment.

Electric cooperatives could build and maintain networks inside their service areas and become retail internet providers. But TACIR encourages them to work with existing providers such as municipal utilities to set up the infrastructure, though those city-owned utilities would be prohibited from issuing bonds for construction.

To avoid creating a new bureaucracy, the state would coordinate broadband efforts through a “standing working group” of state officials, service provider reps and nonprofits.

In light of those pending proposals, MTEMC President Chris Jones says, “Right now, even if we wanted to we couldn’t offer internet service on the retail level. We can’t do that by state law. At least having the option to do so is something we’re going to be for.”

Mike Knotts of the Tennessee Electric Cooperative Association says nobody is arguing the fact that limited broadband is hurting rural Tennessee. He also says he believes cooperatives are “uniquely positioned” to fill in the gaps left by commercial providers.

“It sure feels good right now,” Knotts says of TACIR’s pending recommendations. But as with anything in the Legislature, until the words are put on legislation and make their way through the General Assembly, he isn’t celebrating.

THE ANALYSIS

Anyone who has dealt with telephone, cable or internet providers over the years understands how much of a headache it can be to cope with a massive company.

For the average ratepayer, it’s hard to understand how those fees keep climbing.

At the same time, it’s tough to see how folks just outside a highly populated area such as Murfreesboro can’t get fiber optics strung a mile or three down the road from areas that have service.

Meanwhile, in 2015 AT&T and other providers touted their expansion to more than 81,000 rural homes and businesses using $29 million in federal grant money annually over the next six years.

No doubt, people such as the O’Beirnes are happy to hear private companies have their hands out for federal money as they still wait for service.

And while EPB took the jump and made Chattanooga a “gig-city,” turning it into a Silicon Valley of sorts in Tennessee, the utility was punished, more or less, and prohibited from expanding its footprint because of a philosophical, yet impractical, argument.

If the O’Beirnes and Chattanooga sat around waiting for the free market to do its job, they’d look like Rip Van Winkle. Why else would MTEMC be undertaking its study before the Legislature passes a law letting it guide people out of an internet wilderness?

Except for a very small minority, Tennesseans are telling Haslam: What’re you waiting for? Hook us up.

Sam Stockard can be reached at sstockard44@gmail.com.

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