Missouri Bill Helps Monopolies Limit Broadband Competition

Freshly proposed legislation in Missouri would prohibit towns and cities from using federal funds to improve broadband access in areas telecom monopolies already claim to serve. It’s just the latest attempt by incumbent telecom giants to ensure that an historic wave of federal broadband funding won’t harm their revenues by boosting local broadband competition.

Missouri SB 1074 - Sponsored by Sen. Dan Hegeman (R., District 12), proclaims that “no federal funds received by the state, political subdivision, city, town, or village shall be expended for the construction of retail broadband internet infrastructure unless the project to be constructed is located in an unserved area or underserved area.” It passed the Senate Commerce, Consumer Protection, Energy and the Environment Committee on April 13th.

According to the bill, the Missouri Office of Broadband Infrastructure would certify the project prior to a political subdivision receiving authorization. Before being authorized, the office would be mandated to check with incumbent broadband providers to ensure that they don’t offer service in the specified area. 

The bill prohibits federal funding for any projects in areas where a single provider already receives funding to deliver 100 Megabits per second (Mbps) download speeds. If it passes, it also allows Internet Service Providers (ISPs) to submit written challenges to grant applicants within 45 days. The Department of Economic Development would then be tasked with determining the truthfulness of each challenge. 

Only if applicants can prove they’re servicing an “unserved” or “underserved” area (which again is defined by flawed FCC Form 477 data that routinely overstates existing coverage and speeds using broadband definitions set at ankle height) will the applications be deemed valid. 

But the bill gives incumbent monopolies even greater leverage in the challenge process, by letting them challenge a deployment if an incumbent ISP has “taken affirmative steps to begin the process of construction to provide broadband,” or “has been designated funding through federal programs to support the deployment of broadband” in the targeted areas.

As such, it looks like the current version of the bill would allow incumbent ISPs  to block federal funding to competitors if they vaguely indicate they have eventual interest in upgrading an area. Historically, state and federal regulators in fealty to regional monopolies aren’t consistent about following up on fiber deployment promises, potentially perpetuating longstanding Internet access coverage gaps.

Conflicting Rules for Billions in Broadband Infrastructure Funding

Such restrictions fly in the face of the explicit intent of the Infrastructure Investment and Jobs Act (IIJA), which not only bars states from blocking funding to municipalities, cooperatives, and utilities, but mandates the delivery of gigabit-capable connections to anchor institutions, even if they exist in regions where 100 Mbps speeds are available.

SB 1074 also contravenes the rules of the BEAD program and its focus on MDUs, and flies in the face of the CCPF money and SLFRF money from the Rescue Plan, which say that projects can target areas where cost and reliability are a factor. The bill also says if an ISP has gotten federal funding, that area is forever ineligible, despite the fact that all the federal funding requirements say projects can use multiple pots of federal money. 

Having failed to prohibit community broadband networks from obtaining funds during the creation of the IIJA, telecom monopolies have turned their lobbying attention to the state level, where company executives and lobbyists routinely malign new competition in historically-neglected and uncompetitive markets as “duplicative” and unnecessary.

This is despite the fact that data routinely indicates that high prices due to limited competition is a major reason Americans lack broadband access. 20-40 million Americans still lack access to basic broadband, and ILSR estimates that 83 million Americans currently live under a broadband monopoly and as such bear the costs of slower speeds, higher prices, and worse customer service. Bridging this digital divide requires a focus on boosting coverage and competition alike. 

The new laws emerge as incumbents exploit substandard U.S. broadband maps to overstate existing coverage, then file baseless challenges against grant requests, driving up costs for applying communities. They’ve also lobbied against efforts to improve the FCC definition of broadband, ensuring a flimsy definition of the term “served” in the first place.

An Ignominious List

Missouri isn’t alone when it comes to implementing counterproductive restrictions on how federal broadband funding can be spent. 

The Illinois Broadband Deployment, Equity, Access, and Affordability Act (SB 3683), introduced by Illinois Democrats back in January, would not only prohibit community based broadband efforts from utilizing billions in IIJA funding, it would undermine the infrastructure’s goal of providing gigabit-capable fiber connections to key anchor institutions. 

Similar language has also emerged in looming Michigan legislation. New York lawmakers similarly inserted new restrictive language into the state’s budget that could greatly restrict community broadband access to federal infrastructure funding, though the final budget stripped it out and included a significant boon to municipalities in providing explicit permission to lease excess capacity from the New York Power Authority.

The goal for most of these bills and their myriad restrictions is usually the same: protect monopoly power by demanding all funding be applied to a very narrow definition of unserved regions, utilizing an FCC mapping process that overstates coverage, and an existing regulatory funding apparatus that historically turns a blind eye to rampant telecom monopoly fraud. All under the pretense of simply wanting to avoid funding “duplicative service.” 

The IIJA specifically prohibits states from excluding local government ISPs, cooperatives, nonprofits, or public utilities from receiving federal broadband funds. As such, industry observers warn that many states risk forfeiting access to federal grant funding entirely if they pass restrictive telecom backed legislation that conflicts with federal law.