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Listen to the Lawyers: Audio of Oral Arguments Now Available in TN/NC vs FCC

Attorneys argued before the Sixth Circuit Court of Appeals on March 17th in the case of Tennessee and North Carolina vs the FCC. The attorneys presented their arguments before the court as it considered the FCC's decision to peel back state barriers that prevent local authority to expand munis.

A little over a year ago, the FCC struck down state barriers in Tennessee and North Carolina limiting expansion of publicly own networks. Soon after, both states filed appeals and the cases were combined.

You can listen to the entire oral argument below - a little less than 43 minutes - which includes presentations from both sides and vigorous questions from the Judges.

To review other resources from the case, be sure to check out the other resources, available here, including party and amicus briefs.

Chattanooga's EPB Sparks Local Entrepreneurial Ecosystem

Chattanooga's EPB Fiber Optics continues to stand out as a model for the municipal broadband movement, demonstrating the extraordinary impact that fast, affordable, reliable Internet access can have on economic development efforts. 

Now, a new research report from the Ewing Marion Kauffman Foundation highlights the network’s vital role in kick starting the development of what has become a thriving “entrepreneurial ecosystem” in this city of about 174,000.

Collaboration, Public Private Partnerships

The report, titled "Little Town, Layered Ecosystem: A Case Study of Chattanooga," credits the EPB network as the “spark” for an explosion of economic development since the network's launch in 2010. As the article notes, the EPB estimates that since the launch, Chattanooga has seen an influx of ninety-one new companies with approximately $50 million in venture capital contributions from six firms. 

According to the report, the network has also encouraged an entrepreneurial climate in this city that had a “long history of collaboration and public-private partnerships” even prior to the network launch. The report cites examples of the city's collaborative spirit in several non-profit entities, city officials, local anchor companies and universities, and the city’s recently opened Innovation District.

Yasuyuki Motoyama, director of Research and Policy at the Kauffman Foundation and one of the paper's authors, explains the lessons that other cities might take away from Chattanooga’s example:

"Chattanooga organized and mobilized its assets to orient itself to entrepreneurial initiatives. This demonstrates what a small-size city can do when factions from different sectors focus on a common goal and collaborate to achieve that goal. This case of Chattanooga provides lessons for other cities to leverage their own unique assets and to create equally successful ecosystems."

AT&T Celebrates, Tennessee Families Go Another Year Without Internet Hope

As I write this, I suspect the "platoon" of lobbyists from AT&T and Comcast in Nashville are waking up with hangovers from celebrations last night after they once again defeated a bill to restore local authority in Tennessee. After a grassroots uprising, we thought the state would finally allow communities to decide for themselves if networks like Chattanooga's famed gigabit EPB would be able to expand.

Color me extremely disappointed - not because AT&T won, but because I fooled myself into thinking this grassroots mobilization might matter.

From the Times Free Press,

On Tuesday at the state Capitol in Nashville, a platoon of lobbyists and executives, including AT&T Tennessee President Joelle Phillips, were present in the House hearing room or watching on a video screen as Brooks presented the bill and the amendment.

...

It failed on the 5-3 [committee] vote with Rep. Marc Gravitt, R-East Ridge, voting for Brooks' amendment and Rep. Patsy Hazlewood, R-Signal Mountain, a one-time AT&T executive, voting against it.

Eight people voted on the bill. AT&T and Comcast formed the majority of the 27 lobbyists fighting against the bill according to Karl Bode.

People in Bradley County have either no service or poor access from companies like AT&T - but Chattanooga's EPB is not allowed to expand due to a state law pushed by the cable and telephone companies nearly 20 years ago to prevent competition.

These are people whose children have to go to libraries or fast food restaurants every day to do their homework. These are businesses that can barely compete in the digital age because AT&T doesn't view modern connectivity in the region an investment that would garner a fat return.

But alas, money and corporate influence again ruled the day in Nashville, where the Governor and others have continued to refuse to admit there is any problem worth fixing. This lede from Times Free Press answers the question of why companies like AT&T "donate" so much to political campaigns:

Gov. Bill Haslam says efforts by EPB and other municipal electric services to expand high-speed Internet to rural areas won't fully solve Tennessee's broadband accessibility issues and doesn't fairly treat for-profit servers like AT&T and Comcast.

In the face of this injustice, the Governor's first concern remains with what is fair to AT&T and Comcast, not what is best for the millions of Tennesseeans struggling with no connectivity or last generation slow Internet access.

To cover any charges they are doing nothing, they have announced an official "kick the can down the road strategy." Consider the Facebook post from AT&T executive turned state Legislator Patsy Hazlewood:

The state has invested $250,000 for a comprehensive study of broadband in TN. The report will be presented in June and will do a number of things. It will define broadband--which has a wide variety of definitions by both providers and customers across the state. The report will outline options for deployment and penetration on a statewide basis.

Great - one hopes that as parents drive their children to do homework while parked in front of closed libraries with active Wi-Fi access points that the state will soon decide how to define broadband.

This is why the FCC ruling to restore local Internet choice to communities is so important and oral arguments for the appeal are this week.

What remains to be done is a greater grassroots mobilization to demand that Nashville allow communities to solve their own problems. Republicans regularly critize Democrats for trying to enact a "nanny" state where the government refuses to let people make their own decisions. But when those same Republicans are in power, we see them restricting local governments from solving their own problems locally.

Bradley County and the local governments therein should be free to work with EPB if that is their choice. All this nonsense about fairness to AT&T and studying the definition of broadband in the year 2016 are a direct result of AT&T's power in Nashville and the dependency of elected officials on powerful companies for political donations and favors.

TN and NC vs. FCC: Oral Arguments Scheduled for Thursday, March 17th

This Thursday, March 17th, attorneys for the FCC and the states of Tennessee and North Carolina will present arguments to the Sixth Circuit Court of Appeals on a case that could define parameters for publicly owned Internet networks. The proceedings begin at 9 a.m. eastern. Each side has 15 minutes to present.

As we reported a year ago, the FCC ruled that state barriers in Tennessee and North Carolina limiting expansion of publicly own networks are too restrictive and threaten the U.S. goal of expanding ubiquitous access. The FCC overruled the harmful state laws but soon after, both states filed appeals.

The cases were consolidated in the Sixth Circuit and a number of organizations, including ILSR, offered Amicus briefs. We have collected all the briefs and made them available for you here. As most of our readers will recall, the case focused on Chattanooga and Wilson, two communities that know the many benefits of publicly owned networks.

So, when you raise your glass of green beer on Thursday to celebrate St. Paddy's, send some luck to our friends in Wilson, Chattanooga, and the FCC!

Pulaski, Tennessee: "A Community Investing In Itself" With Better Connectivity

Pulaski, located in the area Tennesseans describe as the southern middle region of the state, has a fiber network other communities covet. When we contacted Wes Kelley, one of the people instrumental in establishing the network, he told us that the community always wanted to be more than "just Mayberry." Rather than settle for the sleepy, quaint, character of the fictional TV town, local leaders in Pulaski chose to invest in fiber infrastructure for businesses and residents.

A Legacy That Lives On

The county seat of Giles County, Pulaski has a long history of municipal utility service. The electric system was founded in 1891, and is the oldest in the state. The city also provides municipal water, sewer, and natural gas service. The electric utility, Pulaski Electric System (PES), serves most of Giles County, which amounts to approximately 15,000 customers. PES receives power from the Tennessee Valley Authority (TVA) and then distributes it throughout the county.

Pulaski is now known for its Fiber-to-the-Home (FTTH) network, PES Energize, but the city's first adventure in providing municipal Internet access began in 1993. The city developed dial-up service and within five years, 1,500 homes were using the service. The city abandoned the dial-up service to offer Wi-Fi but then sold that system to a private company.

Preparing PES

Leaders in Pulaski had their sights on connectivity beyond the limits of Wi-Fi. In 2002, Mayor Dan Speer and Dan Holcomb, the New CEO of PES, began exploring a publicly owned fiber network. Holcomb had previously lead a Michigan utility that offered cable TV and so used his experience to help establish the PES Energize network. AT&T (BellSouth at the time) provided DSL service and Charter offered cable Internet access but neither company performed to the satisfaction of the community. In fact, Pulaski had always suffered through poor quality service from its incumbents.

When Holcomb arrived, the community engaged a consultant for a feasibility study to examine in detail the idea of a publicly owned fiber network; Holcomb, Speer, and the rest of the city's leadership were not confident about the results. Before the community moved forward, Holcomb felt it was important they carry out a customer survey and a second feasibility study. In the spring of 2003, the organization undertook a survey and used the results to ready the utility to step into its approaching role as a municipal network utility.

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Ready For The Next Step

Two years later, city and utility leadership felt that they were ready and completed a second feasibility study. This time, the results suggested a better outcome if Pulaski decided to invest in a publicly owned fiber network. In the spring of 2005, Pulaski developed a business plan that was approved in March by Tennessee's State Comptroller, as required by state law. In May, the city council voted to issue $8.5 million in General Obligation (GO) bonds to finance FTTH deployment and a data center.

Kelley had worked on a similar project in Hillsdale, Michigan, and even though Holcomb had asked him to work on the Pulaski project, Kelley was reluctant. Hillsdale had not pursued a network and Kelley did not want another disappointment. Once Pulaski's utility board and city council backed the plan, he knew the project had the support to move forward. Kelley accepted a position as Chief Marketing Officer for the utility. (Kelley talks more about his experience in Pulaski, Hillsdale, and his current role in Columbia, Tennessee, in episode 189 of the Community Broadband Bits podcast. Check it out to learn more.)

GO bonds are not one of the three most used types of financing for municipal networks but Kelley explained why they worked well for Pulaski. When a community chooses to fund any project with GO bonds, investors have an added measure of safety because the project and the loan are backed by the full faith and credit of the community. In other words, the issuing jurisdiction can use its taxing authority to pay back the debt, if necessary. As a result, the municipality, county, or other government entity issuing the bonds obtain very low interest rates. GO bonds require that the project developed be owned by the community and funds are typically used for projects that will be used by the entire community.

People Grow The Asset

Construction started in 2006, with fiber following the path of the existing power lines - when the lines were aerial, the fiber was installed on poles and when lines went underground, the new network followed suit. PES took the same approach with street lines and drops to homes. Line construction was completed in September 2006; the utility finished its Network Operations Center in November, and began testing right away. 

PES Energize began offering residential triple-play of cable TV, phone, and high-speed Internet services in January 2007 but its formal launch was not until the spring of 2007. When the network launched, it offered services at download speeds of 5 Megabits per second (Mbps), 10 Mbps, and 20 Mbps. Since then, speeds have increased. High-speed Internet access, video, and telephone are available in a variety of bundles or subscribers can purchase stand-alone Internet access for $35.95 (25 Mbps download / 5 Mbps upload), $75.95 (50 Mbps download / 7 Mbps upload), or $100.00 (100 Mbps download / 10 Mbps upload) per month.

By the time Wes Kelley left for his new position as Executive Director of Columbia Power and Water in 2012, PES Energize had achieved a 45 percent take rate. According to Mike Hollis, in charge of sales for PES Energize, the utility expands the network incrementally every year. By the end of January 2016, the network passed 5,609 homes and businesses. The utility's take rate is just under 49 percent in total with 2,729 of those properties passed subscribing to PES Energize.

According to Hollis, customers in rural areas are speeding up the expansions by footing the bill themselves. In PES' electric service area beyond the current network footprint, residents and business owners have approached the utility to ask for an estimate on the cost of expansion to their neighborhood. PES provides a figure for materials and pole attachment costs. Increasingly, these small pockets of rural neighborhoods, with nothing but dial-up or satellite, will chip in to pay for the construction. The neighborhood group cuts a check and the utility expands the network to that area.

Hollis noted that a local realtor is organizing the most recent example of a would-be subscriber funded expansion. He can't sell houses in his neighborhood where there is no high quality Internet access; homebuyers don't want houses with dial-up or satellite. He and his neighbors see the move as a necessary investment so he is leading the effort to obtain contributions from people in the neighborhood to pay for the fiber expansion.

Businesses In Mind

When PES launched, it also offered dark fiber leasing for organizations that wished to manage their own data needs. Most businesses in Pulaski purchase lit services and/or use the utility's data center. The facility housed a colocation facility, hosting services, and offsite data storage and was designed to withstand an F5 tornado.

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In 2011, Speers, who had transitioned from Mayor to Executive Director of the Pualski-Giles County Economic Development Council, discussed how the network had improved functionality for local businesses in an interview with Craig Settles. Whether a local printer sending artwork to Los Angeles or a graphic artist sending catalogue material to Canada, Pulaski businesses heaved a sigh of relief when they tapped into PES Energize. Businesses today overwhelmingly choose PES Energize - 82 percent of those passed subscribe.

From the interview:

"The golden rule of economic development is, take care of what you got. Take care of your existing industry first. There’s no question they will use it. If you’re lucky enough to get an industry to come in because they need the broadband, then that’s gravy.

During this current economic downturn, we’ve focused a lot of attention on our existing retail base and entrepreneur development. We’re teaching businesses how to maximize their use of the network so they can broaden their customer base nationally through the Internet. Our philosophy is to tie in the use of technology to help the businesses we have."

Looking At The Long Term

Pulaski has not experienced significant population growth since investing in PES Energize, but it has managed to avoid decline, a problem gripping similarly sized communities in the region. Tullahoma is a little over an hour away, Columbia is less than 45 minutes north; both communities offer potential employers municipal fiber connectivity. Pulaski made the investment first and can still compete for economic development opportunities in a peaceful setting.

When new businesses look for a location to open a facility where high-speed connectivity is a must, and search for a "Mayberry" to attract a quality workforce, Pulaski is on the short list because of its municipal fiber network.

Wes Kelley recognizes the long-term value of Pulaski's decision to create Internet network infrastructure. When we spoke with him for this article he reinforced what local officials and their constituents all over tell us - that the people of Pulaski knew the best course for themselves:

"It's a community investing in itself. Pulaski spent $8.5 million. They could have spent $8.5 million building a new rec center and a new pool but they didn't. They decided to put it in the air and in the ground to provide telecommunications infrastructure for the next 40 years. I think that's a powerful decision but it is a local decision…local control is critically important."

Muni Fiber Tennessee Twofer: Columbia and Pulaski - Community Broadband Bits Podcast 189

We cover a lot of Tennessee ground in this week's Community Broadband Bits podcast - episode 189 - from a cable network to muni Fiber-to-the-Home; Columbia to Pulaski. Wes Kelley, the Executive Director of the Columbia Power and Water Systems is our guest to talk about Columbia's cable and Pulaski's fiber.

He cut his teeth working with a Michigan community's public utility that ultimately decided not to get involved in telecommunications. But he moved on to build out a citywide fiber network in Pulaski before ultimately moving to Columbia, which was the last community in the United States to build a cable system (since then it has been all fiber).

He shares some of his lessons along the way, tips for customer service, and Columbia's plans for the future with their cable system. He also has some choice words for the big content owners that make the cable television business all but impossible for any reasonably sized cable operation.

The transcript from this episode is available here.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below.

This show is 30 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

You can can download this Mp3 file directly from here. Listen to other episodes here or view all episodes in our index.

Thanks to Kathleen Martin for the music, licensed using Creative Commons. The song is "Player vs. Player."

Local Communities Appeal to State Leaders: Change State Anti-Muni Law

Some of us remember it - not so fondly - as a discarded relic of an early era of the Internet. But it’s not a relic for people in some parts of rural Tennessee: the awful sound of a dial-up modem.

There are approximately 28,000 people living in the county and as Marion County Mayor David Jackson tells it, he knows residents with no Internet access at all. Some of Marion County residents with nothing better than dial-up can actually look across the Tennessee River and see buildings and houses served by Chattanooga's EPB’s gigabit Fiber-to-the-Home (FTTH) network.

Given this stark contrast, it’s no wonder the push is intensifying for more access to publicly owned Internet networks in Tennessee.

Marion County Wants Local Authority

Elected officials from the Marion County Commission and the town of Kimball are the latest communities to vote on resolutions asking state leaders to change Tennessee’s state anti-muni law. The legal barrier prevents existing municipal utilities from expanding their fiber network footprints to provide telecommunications services to neighboring communities. 

In fact, city leaders in every Marion county municipality have plans to vote on their own resolutions asking the same thing: give us the local authority to decide for ourselves.

While the U.S. Court of Appeals considers whether or not to reverse the FCC decision to roll back the state barrier, communities are calling on the legislature to solve the problem by restoring local authority.

As Communities Succeed, the Municipal Fiber Movement Grows

These communities hope that changing the law will enable Chattanooga to extend its much celebrated EPB network to serve the people of Kimball and other communities in Marion County. The efforts come in the wake of similar requests out of Bradley County.

"There's a movement, pretty well statewide now, to expand broadband and fiber optic networks throughout rural areas of the state," Marion County Attorney Billy Gouger said. "In order to do that, there has to be a change in the state law."

The Marion County officials are forwarding their resolutions to Tennessee Governor Bill Haslam, Lieutenant Governor Ron Ramsey, and Marion County’s state delegates. While state leaders have not signaled an intent to change the law and some county officials tried unsuccessfully to get the law changed in 2014, Marion County Attorney Billy Gouger believes things are different now: 

“‘They're going to try it again,’ he said. ‘There are some other concessions being made that will [give it] a better chance of passing this time.’”


Holding Their Breath in Bradley

Cleveland Utilities (CU), serving Bradley County, is carefully searching for the best way to improve connectivity for its southeast Tennessee customers. After exploring a number of possibilities, CU sees a partnership with Chattanooga's EPB as the brightest opportunity but their collaboration rests on lawmakers in Nashville or the U.S. Court of Appeals.

The Need Is There, The Neighbors Are Close

CU President, Ken Webb knows the community needs and wants something better than AT&T for Internet access or cable TV from Charter Spectrum, especially in rural areas. Residents and business owners have gathered at community meetings. Local community leaders have passed resolutions asking the state to roll back restrictions and contacted CU directly but the utility's hands are tied as long as state barriers remain in place.

For over 7 decades, CU has served residents and businesses, providing electricity, water, and sewer. After a 2015 feasibility study revealed a $45 million estimate to build out a triple-play fiber to the entire county, CU began considering a limited pilot project.

They have been talking with their neighbors, EPB, about the possibility of partnering for some time Webb told the Times Free Press:

"We don't want to reinvent the wheel," Webb said Tuesday. "We continue to study our options (for adding telecommunications services), but we would prefer for the state to allow us to have the option of working with EPB."

Waiting...Waiting...Waiting

Right now, the prospect of fiber in Bradley County appears to hinge on two possible outcomes. First, if last year's FCC decision to roll back state barriers is affirmed by the U.S. Court of Appeals for the Ninth Circuit and legal review stops there, the EPB will not need to worry about a legal challenge. 

Bradley County residents and businesses may also have a chance at fiber if the state legislature adopts legislation introduced last year by Cleveland's Representative Kevin Brooks. Senator Janice Bowling sponsored the Senate version last year and the two vowed to carry on advancing the bill this year. The bill, that would restore local authority to invest in Internet networks, received backing from a number of organizations and local communities.

Hamilton County, home to Chattanooga and its world famous gigabit municipal fiber, is located immediately west of Bradley County and ready to expand to the communities that want access to the EPB gigabit. Due to Tennessee's restrictive state laws, EPB cannot serve beyond its current electric service footprint:

DePriest, who is also chairman of the Tennessee Fiber Optic Communities, said the Chattanooga utility is eager to expand into the parts of Hamilton County it doesn't currently serve, which includes about 9,000 homes in east Hamilton County, and into all of Bradley County, which has more than 50,000 homes and businesses.

"We have developed some plans and we will develop more," DePriest said. "We've already had more than a thousand people from that area write us, email or call us asking when they can get our (broadband service)."

"We think we have the expertise and the infrastructure already in place so that expanding into these areas would help them and help us," he said. "We would have to work out the arrangement with Cleveland Utilities and Volunteer Electric because this is their territory and we're not going to go anywhere where we are not invited and where it doesn't make good business sense."

Are You From Tennessee? Your Opinion Matters!

For the past several months, we have covered the plight of North Carolina and Tennessee. These states have passed laws that prohibit local governments from expanding beyond their municipal electric utility service area to bring better connectivity to neighboring communities. Even though nearby towns ask places like Chattanooga or Tullahoma to provide services, they are prevented from doing so.

Today we bring to you this news story from Anderson County, Tennessee. Local officials are encouraging residents to tell the state about their horrible connectivity. With a bill in the state legislature to remove the restriction and the state embroiled in a court case to challenge the FCC's decision to roll back the state barrier, local governments are using the survey to connect people with lawmakers.

In Anderson County, some local government agencies have hardcopies of the state’s survey for those without Internet access. Any Tennessee resident with Internet access can take the survey online here

"It's the slow circle of death that you see wheeling around there, and it's waiting and waiting and waiting," -- Steve Heatherly, Anderson County Chamber of Commerce Chairman

Op-ed: Next-Generation Networks Needed

The Knoxville News Sentinel published this op-ed about Tennessee's restrictive broadband law on January 9, 2016.

Christopher Mitchell: Next-Generation Networks Needed

Four words in Tennessee law are denying an important element of Tennessee's proud heritage and restricting choices for Internet access across the state.

When private firms would not electrify Tennessee, public power came to the rescue. In the same spirit, some local governments have built their own next-generation Internet access networks because companies like AT&T refused to invest in modern technology. These municipal networks have created competition, dramatic consumer savings and a better business climate in each of their communities.

The four words at issue prevent municipal electric utilities from expanding their successful fiber optic Internet networks to their neighbors, a rejection of the public investment that built the modern economy Tennessee relies upon.

Current law allows a municipal utility to offer telephone service anywhere in the state, but Internet access is available only "within its service area." This limit on local authority protects big firms like AT&T and Comcast from needed competition, and they have long lobbied to protect their de facto monopolies. To thrive, Tennessee should encourage both public and private investment in needed infrastructure.

These municipal systems have already shown they can bring the highest-quality Internet services to their communities. Chattanooga's utility agency, EPB, built one of the best Internet networks in the nation. Municipal fiber networks in Tullahoma, Morristown and more have delivered benefits far in excess of their costs while giving residents and local businesses a real choice in providers.

Many of these networks are willing to connect their neighbors — people and businesses living just outside the electric utility boundary. If Chattanooga wants to expand its incredible EPB Fiber into Bradley County with the consent of all parties, why should the state get in the way?

Consider that Tennessee metro areas almost always have at least one high-speed Internet option. Those with municipal networks have a real choice in providers. Nashville is slated for Google Fiber. But there is no such hope on the horizon in rural areas, despite the billions of dollars that have been spent on subsidies to providers like AT&T.

While AT&T's lobbyists scheme to prevent competition, the federal government subsidizes AT&T operations with more than $500,000 per month in Tennessee alone. So much for the "private" sector.

When it comes to municipal networks, taxpayer dollars are rarely used. Private investors often finance municipal networks by purchasing long-term bonds and are repaid by the revenues from the network. The Tennessee Valley Authority strictly oversees municipal utilities to ensure they are not cross-subsidizing telecom services with electrical ratepayer revenues.

To the extent municipal networks affect taxpayers, the taxpayers benefit. EPB just announced that in 2015 alone, its payments in lieu of taxes exceeded $19 million to the 17 jurisdictions in which it operates.

When local businesses connect to municipal fiber, more of their money stays in the community. Compare that to how much communities without a real choice send to AT&T and Comcast headquarters in distant states. And thanks to the competition, residents and businesses pay less. Morristown estimates a $3.4 million annual aggregate savings from lower bills.

The state should encourage communities to be more self-reliant and to build resilient regions rather than taking the side of distantly-owned monopolies. The state should be focused on how to encourage investment in next-generation Internet networks, not limit it.

 

Christopher Mitchell is the director of the Community Broadband Networks Initiative at the Institute for Local Self-Reliance. He is on Twitter: @CommunityNets.