Washington Law Could Unleash the Power of Utility Districts to Offer Retail Broadband Services

In our year-end roundup and prediction show on the Community Broadband Bits podcast last month, the more optimistic members of the team predicted that 2021 would see some states remove barriers to municipal broadband. 

It looks like in a few places momentum might be headed in that direction. Last week we wrote about a bill in Arkansas that would remove almost all barriers in the state, allowing political subdivisions and consolidated utility districts to pursue projects on their own and without external grants. 

New legislation in Washington looks similarly promising. On Thursday, January 21st, House Bill 1336 was introduced [pdf], removing specific barriers which currently prevent Public Utility Districts (PUDs) from delivering broadband service on a retail basis. Currently, PUDs are only able to offer unrestricted broadband on a wholesale basis through a dark fiber or open access network. Under certain conditions PUDs can offer retail service, but only if an existing Internet Service Provider (ISP) leasing that PUD infrastructure ceases operations, and even then, they are only allowed to do so as long as no other private ISP steps up to offer retail service. In the interim, PUDs can provide service for a maximum of five months and must, within thirty days, begin the process of finding a replacement.

The new law removes that barrier, and not only allows PUDs to construct and operate retail broadband networks inside their existing territory, but outside as well. In addition, it establishes that PUDs can work with federally recognized tribes to construct infrastructure. 

Bipartisan Approach

The co-sponsors of the bill have staked out different rationales for removing the restrictions, with Drew Hansen calling for broadband to operate as a public utility and Alex Ybarra more concerned with the unconnected pockets of Washingtonians left by the private ISPs. Bill co-sponsor Alex Ybarra told the Washington State Wire:

We knew prior to covid that most rural areas are in need of broadband. It’s just a matter of how you get it out there. For years and years, we’ve been hoping that the Comcasts of the world would get it out there, but it wasn’t feasible for them to do that . . . For me, I just want to bring broadband out here. If that means we [let PUDs] do retail, then that’s what we do. 

The state’s PUDs serve as the natural vehicle for broadband expansion, having played a critical role in electrifying the state by harnessing the region’s rivers starting in the 1934. Today, they serve more than a million households across half the state. It was a 2000 law which allowed PUDs to begin offering broadband on a wholesale basis. In 2018, restrictions on ports were removed, but the retail restriction on PUDs remains. 

There are a number of utility districts across the state that seem likely to take advantage of the law, if it passes. Grays Harbor PUD finished its school and industrial park network in the middle of 2019, and Douglas County PUD operates more than 700 miles of fiber throughout the county.

The bill was referred to Community and Economic Development last Thursday, and is scheduled for a public hearing in the House Committee on Community and Economic Development at 10:00am on Wednesday, January 27th. Bill author Drew Hansen announced on Twitter this weekend that the Washington State PTA will be testifying in favor of it at that time.

Passing HB 1336 would, of course, only be part of the puzzle. Even for utility districts with infrastructure throughout their footprint, finding funding for last-mile connections in rural counties can be difficult. It seems from Ybarra’s position that he expects any external funding to help those projects along to come from federal sources, and very little from state coffers: 

I don’t think the capital budget will be an issue when trying to bring broadband to the masses. This bill is still in its infancy and needs work but the way this bill is structured at the moment, if some of the utilities decide to bring broadband to their areas, there is federal funding to build out that infrastructure. 

Read the full text of the legislation here [pdf].