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Subsidies For Big Boys? Knoxville News Sentinel Op-Ed
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In January, Governor Bill Haslam announced that he and Senator Mark Norris would introduce legislation to provide grant funding and tax credits to private companies in order to expand rural connectivity in Tennessee. In a recent Knoxville News Sentinel, Christopher took another look at more subsidies to large private providers and how that strategy has worked out so far.
We've reprinted the op-ed here:
Christopher Mitchell: State needs better broadband, not subsidies
If you were tasked with improving the internet access across Tennessee, a good first start would be to examine what is working and what’s not. But when the General Assembly debates broadband, it frequently focuses on what AT&T and Comcast want rather than what is working.
Broadband expansion has turned into a perennial fight between Tennessee’s municipal broadband networks and advocates of better connectivity on one side and AT&T and Comcast on the other. On one side is a taxpayer-subsidized model, while the other depends solely on the revenues of those who choose to subscribe. But which is which?
AT&T has received billions of taxpayer dollars to build its networks, whereas Chattanooga, Tullahoma and Morristown, for example, financed their fiber-optic networks by selling revenue bonds to private investors and repaying them with revenues from their services. The big telephone companies are massively subsidized, whereas municipal networks have generally not used taxpayer dollars.
It is true that after it began building, Chattanooga received a Department of Energy one-time stimulus grant for $111 million, but that was actually less than AT&T is getting from just one federal program in Tennessee alone – over $125 million from the Connect America Fund. And most of the money to Chattanooga went into devices for its smart grid that have since led to massive job gains.
These community networks offer modern connectivity. Chattanooga offers 10,000 Mbps to anyone in its territory. AT&T is getting enormous checks from Uncle Sam to deliver 10 Mbps. Comcast will soon offer 1,000 Mbps, but only for downloads. If you are a small business trying to upload lots of data, Comcast won’t get you there.
According to a 2016 Consumer Reports study, Comcast and AT&T were among the most hated companies across the board. Chattanooga’s Electric Power Board was the most liked. Ask around. People love the service from these local companies.
But Tennessee law will not allow municipal networks to serve their neighbors – neighbors who have often been left high and dry by AT&T and Comcast. And in announced plans to improve internet access across the state, Gov. Bill Haslam declared he would rather give $45 million in taxpayer dollars to companies like AT&T than simply allow Chattanooga to go where it is invited.
A quirk of the law is that Chattanooga could actually offer telephone service anywhere in the state. But selling advanced broadband connections has been deemed too risky to let the most successful fiber network in the nation expand 1 mile outside its current footprint.
When the General Assembly considered this dispute last year, Comcast and AT&T worked overtime. You can bet they weren’t late for any of their appointments, unlike the last time you waited at home for them. The Times Free Press in Chattanooga reported that they had 27 lawyers working to kill a bill that died after a 5-3 vote in committee.
Municipal networks like Chattanooga's are not asking for taxpayer dollars to expand, unlike AT&T in Tennessee and Comcast in other states like Vermont and Massachusetts. Strange as it may seem, if you want to expand high-quality internet access across Tennessee, local governments offer a good option at lower costs to taxpayers than the big cable and telephone companies.
But without a large grassroots effort, AT&T and Comcast will win again because they have rigged the game. The governor and Legislature know that crossing AT&T and Comcast will make political advancement more difficult. The only way to break these monopolies is for people and local businesses to demand more from elected officials.
If next year you are wondering why more businesses are moving to Chattanooga while your taxpayer dollars are going to AT&T headquarters in Dallas and you still can’t get an affordable internet connection, you’ll know why.
Read the piece in the Knoxville New Sentinel here.
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