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Minnesota Broadband Grant Program Gets Funded, Issues Remain

The Minnesota Legislature has just approved $35 million for the Border-to-Border Broadband Development Grant program for fiscal year 2017, the largest annual appropriation in the initiative’s two-year-old history.

But the Legislature’s action still falls short of dramatically helping bring universal, high-speed Internet connectivity to all non-metro Minnesotans. Try to find a Representative or Senator that doesn’t talk about how important rural Internet access is, but compare that list to those who are actually voting for solutions. The Blandin on Broadband website captured a glimpse of this dynamic in a recent post

Nice Gains And Noticeable Failures

The Legislature headed in the right direction this year to increase overall funding for broadband development. But we believe the Legislature’s action, which is moving at a snail’s pace, won’t help thousands of residents and businesses in Minnesota’s non-metro communities hurdle over the connectivity chasm. 

The state’s elected leaders also made changes to the program – some good and some bad – in the way projects are selected and the challenge process. 

Funding Fizzle? 

First, the funding fizzle. In its first two years, the state awarded about $30 million to 31 Border-to-Border projects. But that has been a miniscule appropriation compared with the Governor’s Task Force on Broadband’s estimate that Minnesota’s unmet broadband need is $900 million to $3.2 billion.

And the Legislature’s $35 million funding for the broadband grant program for the upcoming fiscal year seems particularly paltry given that the state has a projected $900 million budget surplus. 

“We are disappointed with the [broadband funding] number and the incredibly restrictive language” on eligibility for grants, said Dan Dorman, executive director of the Greater Minnesota Partnership, (GMNP), a non-metro economic development group established in 2013 that successfully lobbied for the creation of the Broadband Development Grant program. 

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During the 2016 legislative session, the GMNP supported Gov. Mark Dayton’s recommendation that the broadband program receive $100 million. The DFL-led state Senate favored $85 million for 2016-17 while the Republican controlled House supported spending $15 million. The House wanted to invest far less and argued for keeping most Greater Minnesota Cities ineligible for grant funds. GMNP’s support was contingent on language changes in the statute that would make grant eligibility easier for non-metro cities. 

“Without major reforms to the eligibility for funding we assumed it would be difficult to get to the $100 million that Gov. Dayton and Lt. Gov. [Tina] Smith wanted,” Dorman said in an end-of-the session update website post to his members. 

Language Issues

Second, the ongoing language challenges with the Border-to-Border Program. “With 85 percent of people living in cities not eligible for [Broadband Development Grant] funding, it’s hard to get people excited [about the program],” Dorman told us. The Partnership; a 90 member group of economic development authorities, foundations, cities, nonprofits, businesses, and Chambers of Commerce; maintains the broadband program’s rules and criteria inadvertently harm the very cities that conceived the program. 

Established in 2014, the Broadband Development Grant program was designed to “bring high-speed Internet access to unserved or underserved areas of the state” and help provide opportunities to help existing businesses and attract new ones. The Legislature, in its 2016 legislation, reaffirmed that an unserved area is one where households or businesses lack access to wireline broadband service at speeds that meet the FCC definition of broadband which is 25 Megabits per second (Mbps) download and 3 Mbps upload.

Because the grant program has focused heavily on unserved areas, it has largely ignored the majority of cities that are “underserved,” those that have some Internet service, albeit poor, Dorman said.

This has created what the Institute for Local Self-Reliance described in our policy paper “Minnesota’s Broadband Program: Getting The Rules Right” as “donut holes,” where a city has much poorer service than its surrounding rural areas.

Our fear is that towns with a moderate level of current business investment could lose that as businesses flock to more rural areas where the Internet infrastructure is better. Other investment would follow and the small cities in Greater Minnesota would find themselves at a disadvantage. It’s an unintended consequence that policy makers need to consider. 

Fortunately, lawmakers listened to the GMNP, the Star Tribune, and us as they established rules for funding this session.

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In our policy paper, we recommended that the Border-to-Border fund should set some portion – less than half – of its funds aside for applications that would target the underserved population centers and blend them in with nearby unserved areas. Those business and industry centers are the economic heart of many regions and they need modern connectivity for Minnesota to thrive. 

Dorman said one significant victory in the newly-passed state broadband grant law is that $5 million of the $35 million appropriation will be set aside for areas that currently have speeds greater than 25 Mbps down and 3 Mbps up but less than 100 Mbps down and 20 Mbps up. That $5 million will be available to communities that need better broadband service to boost economic development.  

In a statement to MuniNetworks.org, officials from state Department of Employment and Economic Development (DEED) said:

“Given the increased interest in the [grant] program, we expect to see a very competitive pool of applications this round, and using the results of previous rounds, expect to see over 12,000 homes and businesses served with wired service as well as increased wireless coverage in some areas of the state.” 

"Still," DEED officials admitted, “It is difficult to estimate how many will be left unserved after this round, given that there is private and federal investments also being made across the state. DEED continues to gather data from the providers and federal sources and will have an updated estimate of the gap in July, 2016.”

The federal “investments” are largely from the Connect America Fund, which has is effectively wasting billions of dollars on antiquated DSL service.

Disappointing “Challenge Process”

On the downside, the Partnership was disappointed in a provision in the broadband law pertaining to a “challenge process” that allows a telecom company to stop a project from receiving a grant if that company currently provides or even promises to provide service at the low state speed goals, Dorman said. This legislative language is a slight reform of the previous “right of first refusal” language, which had been included in the House broadband bill.

“This [challenge language] provision in the bill could make it difficult, if not impossible, for projects seeking to upgrade existing broadband service to receive a grant,” Dorman said. “We will have to see how this all plays out.”

Dorman sees the “challenge process” language as a tool protecting telecom companies “that don’t want to invest” in their Internet networks. 

“Any broadband provider in the area can object” to an applicant’s request for grant funding, Dorman said. This is potentially more open-ended than the old language that gave this challenge authority only to incumbent providers in an area, he said.

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In a statement, DEED officials told us: 

“The current challenge language was introduced to more accurately reflect the process that is already part of the program and to clarify that it is the state that will determine whether or not a challenge to an application is valid, not a provider.  This process was modeled after a federal system that was used in the distribution of the ARRA [American Recovery and Reinvestment Act] broadband stimulus funds to address the desire to avoid making public investments where private investments are already being made that meet or exceed the goals of the program. The new aspect that has been added to the process is the allowance of near-term construction plans that meet state standards as a valid basis for a challenge. This is to account for the added presence of CAF (Connect America Fund) II investments. Added protections were also introduced so that if construction commitments aren't met as outlined in the challenge, the provider may be barred from issuing future challenges. DEED retains the authority to determine the validity of any challenge.”

Whatever the reasons for the legislative changes, Dorman decried the lack of opportunity for public comment on the “challenge” language.  

“It is a major change from current law and people had very little time to react interpret and comment on the House bill and no opportunity to comment on the agreed-upon language that made it into the final bill.” 

Meanwhile, Dorman blamed industry telecom lobbyists for convincing state lawmakers not to support the language changes sought by Partnership. “This [new Broadband Development Grant law] was written with the help of the [telecommunications] industry," he said. 

Speed Goals Lagging 

In another area, GMNP leaders also believe the state’s connectivity speeds goals are not aggressive enough. Under the law, the state’s goal is that “no later than 2022,” all Minnesota businesses and homes have access to minimum speeds of 25 Mbps down and 3 Mbps up and the minimum service goals in 2026 should be 100 Mbps down and 20 Mbps up.

“To say 25 Mbps / 3 Mbps is an acceptable standard is ridiculous,” Dorman told us. “This is equivalent of 1990s dial up service.  We need to step this up.”

That position resonates with us. In our policy paper we said:

“When it comes to its goal, Minnesota should recall the danger of aiming low: you might hit the target. Minnesota should establish a stronger goal and then actually fund the program to achieve it. 100 Mbps symmetrical by 2022 would be both ambitious and worthwhile.”

Moving forward, Dorman said his organization may have to re-evaluate if there is a better and faster way to get high-speed Internet connectivity to greater Minnesota if dramatic improvements don’t come soon to the Border-to-Border Broadband Development Grant program.

Missouri HB 2078 Fails: Post Mortem Play-By-Play

Since we alerted our audience to the shenanigans surrounding Missouri’s HB 2078, a couple of other news medias have picked up the story and reported on the dramatic end of session climax. As we rest in the glow of the denouement, we want to provide a follow up for those who may have missed the final outcome and offer some words from Jim Baller, who was deep in the trenches.

Here's What Happened...

If you have not yet heard, the language from HB 2078 was ultimately not adopted by the Missouri State Legislature. Whew. Readers probably recall that, when HB 2078 stalled on its own, the author of HB 2078, Rep. Lyndall Fraker slipped some of the more damaging language into SB 765, a traffic ticket bill that had nothing to do with municipal networks.

Fortunately, advocates of municipal networks had been able to educate Members who were part of the appropriate conference committee. Those elected officials decided to remove the language from SB 765 before final passage. Anti-muni Members also attempted to amend the language into a third bill, HB 1912, which concerned county buildings. The sponsor of the amendment then turned around and chose to strip out the language that began in HB 2078 from his amendment, once he learned that its inclusion would have sparked a filibuster and killed the entire amendment.

A Tough Fight That Isn't Over

Jim Baller, the nation’s leading telecommunications attorney who was directly involved with defeating the bill told Communications Daily:

“This was one of the toughest state battles that we’ve fought in years. It took months of constant vigilance, quick and effective reactions to ever-changing language, and hard daily work with key members of the legislature. The most important part was getting across the message that this is not a matter of the public sector competing with the private sector, but of communities retaining the ability to work with willing incumbents, create public-private partnerships, develop their own networks, or do whatever else they believe necessary to acquire affordable access to the advanced broadband networks on which their futures will depend.”

Jim went on to tell us that a number of people dedicated their time and energy to stopping the harmful language of HB 2078.

“Many Missouri communities and national organizations contributed to this victory, but special kudos go to Ewell Lawson, the Manager of Government Relations of the Municipal Public Utility Alliance, and Richard Brownlee, Google’s legislative representative for Missouri.” 

The battle this year in Missouri was yet another chapter in what is becoming an annual occurrence. This year's events underscore how changes to bill language and procedural process can change the course of legislation up until the gavel comes down sine die. Along with Jim, Ewell, Richard, the MPUA, and the other folks who believe that local communities in Missouri should make their own decisions, we will continue to watch the state legislature and keep you in the loop.

AL Legislators Don't Wanna Hear It: Local Authority Bill Stalls In Committee

Alabama Republican State Senator Tom Whatley tried again this session to convince his colleagues that municipal utilities need the ability to expand beyond current coverage areas. Once again, his appeal to common sense for better connectivity fell on deaf ears.

Deja Vu

Whatley, representing the Auburn region, held fast to his promise to bring back a proposal like 2015’s SB 438. Early in February, he introduced SB 56, which stalled in the Senate Transportation and Energy Committee, unable to get a hearing. The bill eliminated limitations on both services offered and where municipal systems can offer those services.

In a January OANow article, Whatley explained that, once again, he was driven by the desire to improve economic development in Auburn:

On the local level, Sen. Tom Whatley, R-Auburn, is sponsoring two bills that he hopes will drive industry to and create jobs in Auburn and Opelika. An Internet availability bill would allow municipalities that offer their own high-speed [gigabit] Internet service, such as the city of Opelika, to expand and offer it in other areas, such as in Auburn and Russell or Tallapoosa counties, which are not eligible for [gigabit] service through private Internet companies.

“The [gigabit] service is something that businesses look for,” Whatley said, adding industries look at [gigabit] Internet the way they do school systems and water and sewer before moving their business into a city. “It’s an economic development tool.”

To Spread The Wealth

Opelika is proof positive in Alabama that municipal networks spur economic growth. Since deploying their Gigabit per second (Gbps) Fiber-to-the-Home (FTTH) network, the community has experienced significant growth, a number of awards, and local subscribers love the service they get from Opelika Power Services (OPS).

OPS would like to offer the same fast, affordable, reliable high-quality Gigabit connectivity to nearby Auburn, but the state’s restrictions prevent expansion. From a February OANow article on SB 56:

“We have an obligation to serve our citizens, but we can’t go across the street into Auburn. We can’t go across the street into the county. You’ve got some folks in the county who are literally in a digital desert,” [Opelika Mayor Gary] Fuller said. “The Opelika City Schools have a gig of Internet speed. Auburn does not have a gig of speed. We’d love to serve not only Auburn City Schools, but also Auburn University with ultra high-speed Internet.”…

“[The network is] owned by the citizens, just like the power company. The power company has been owned by the citizens for over 100 years,” Fuller said…

“We just want to offer our service to folks who don’t have service or inadequate service or less-than-ideal service…Sen. Whatley has been our champion on this.”

Mayor Fuller told OANow that he was ready to testify before the Transportation and Energy Committee but no hearing was ever scheduled before the session ended on May 4th.

An Easy Fix

With the Appellate Court considering the FCC’s reversal of state limitations in Tennessee and North Carolina, there is a chance that Sen. Whatley may not need to continue to press his colleagues for changes in state law. Rather than depending on federal intervention to set things right, however, state leaders have the opportunity to restore local authority now.

Sen. Whatley has the right idea - let communities make their own connectivity decisions by removing state barriers.

MO Fight Not Over 'Til It's Over: Time To Call

The direct assault stalled but now anti-muni legislators in Missouri are going for the flank.

If The Bill Ain't No Good...

In February we learned about Missouri bill HB 2078, the latest legislative attack on municipal networks. Since our story, it has passed through the House committees on Utility Infrastructure and the Select Committee on Utilities. The bill seems to have lost momentum since mid-March but its sponsor, Rep. Lyndall Fraker, is taking another approach to make sure his bill gets passed, come hell or high water. Session ends May 13th, so he is now banking on procedural tricks, rather than the substance of his legislation.

On May 2nd, when a bill relating to traffic citations, SB 765, came before the body, Fracker proposed to amend it with language from HB 2078. Some of the amended language is even more destructive than the original proposal in HB 2078. 

SB 765 had already passed the Senate with a 32 - 0 vote.

Advocates in Missouri report that, even though a number of Democrats wanted to strike the language as not germane to the substance of the bill, the Republican leadership presiding over the session would not recognize them so they could not move to strike the amendments. Fraker’s amendments were passed by only four votes, even though the House is controlled by an overwhelming majority of Republican Representatives. 

Now, SB 765 goes back to the Senate for further approval after the Fraker amendments. Considering the outcome in the House, it's possible that an expression from voters can influence the ultimate outcome of this bill. This is the time when a phone call to your elected official can change the course of connectivity.

Express Yourself

If you don’t know who represents you in the Senate or House, you can use the Missouri Legislator Lookup to obtain names, phone numbers, and email addresses. You can also contact the sponsors of SB 765 and explain how you feel about amendments that do not relate to the substance of their bill and urge them to clean up their legislation by striking the amendments themselves.

The Missouri Public Utilities Alliance (MPUA), has been following the progress of this bill from the beginning and would like to hear from local government officials who want to share their perspective on possible consequences of the bill. You can contact Ewell Lawson, Manager of Government Relations, at elawson(at)mpua.org.

Change.org Petition: CA Lawmakers, Vote for Greater Local Authority, Don't Abandon Copper Yet

The California State Assembly will soon vote on three bills that have significant implications for rural Internet access initiatives in the Golden State. An online Change.org petition is asking you to urge lawmakers to give local communities the authority to determine their own Internet access needs.

On April 20th, 2016, the State Assembly will vote on a bill to provide state funding for community-based efforts aimed at improving broadband access in rural areas. And during the current session this week, California Represenatives will vote on two additional bills, drafted by lobbying groups working for the telecom industry, which seek to give incumbent providers even greater power to control the quality and price of Internet access options that are available in these rural communities.

From the petition:

Bill AB1758 was drafted by rural broadband activists and sponsored by assemblymen Mark Stone, Eduardo Garcia, Marc Levine, and Mike McGuire. It extends state funding and grant programs to local agencies and consortiums to plan and build community based internet solutions in communities throughout the state that have been ignored by big telcom. The bill requires a super majority to move from committee to vote. Committee members need to hear from people around the state to move this bill forward. If it dies in committee, funding will cease, and rural communities around the state will be at the mercy of AT&T, Comcast, Time Warner, etc. AB1758 comes to discussion on April 20th, 2016.

The petition describes two other bills up for consideration, AB2130 and AB2395, which will greatly influence the use of California Advanced Services Funds, allowing large corporate cable and telecom incumbents access to those funds. Local communities will have very little opportunities to obtain those same grants under the proposed changes.

One of these bills will allow AT&T to retire copper lines; rural areas are not ready for such an abrupt change. We've covered how AT&T and other big incumbents have pressed state legislatures for the ability to abandon copper in favor for cheaper technology.

Check out the online petition for more detail.

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.

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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.

Colorado Bill Aims To Hinder Opt-Out, Restrict Local Authority Even More

When local elected officials in Colorado put the issue before constituents last fall, voters in almost 50 communities chose overwhelmingly to reclaim local telecommunications authority. Colorado's state law that strips away local authority, SB 152, permits opt-out through referendum. Referendums are expensive for local communities, but at least they are a way to reclaim the power to decide their own future. 

That ability to opt out will get more expensive and more burdensome if a new bill becomes law. Even though the state removed local authority with SB 152, this bill demonstrates that the legislature can still find a way to strip away more local control when big corporate providers feel threatened.

Local Leaders Concerned

SB 136, sponsored by Kerry Donovan, was introduced on March 4th under the guise of "modernizing" the dreaded SB 152. The bill is now waiting for a hearing in the Senate State, Veterans, and Military Affairs Committee. According to the Aspen Daily News, Pitkin County Commissioners are wary of the bill's consequences. So are we. Ninety-two percent of Pitkin County voters approved the opt-out of SB 152 last November, thereby reclaiming authority. The county has already completed a needs assessment and is obtaining bids for telecommunications infrastructure; they don't want this bill to derail their efforts.

Kara Sillbernagel, Pitkin County analyst, shared her interpretation with the Board of County Commissioners (BOCC):

...[A] concern is SB 136 could open the door to potential litigation in the opt-out process.

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Silbernagel added that, in her opinion, the language complicates the issue away from the simple opt-out solution, and introduces terms which have left governments that opted out “feeling vulnerable.”

“[Concerns are that] it actually seems to be more restrictive for counties moving forward,” she said.

"Modernized" Language = "Modernized" Barriers

Among other changes, the proposed bill requires local governments to give a 60-day notice to private providers if an SB 152 opt-out question will be on the ballot. Local governments are already required to provide notice when a new measure is to be included on a ballot; this creates an additional requirement for measures related to broadband.

The bill also mandates that, prior to the election, a local community must develop and publicize a detailed plan as to what types of services it intends to offer, where the services would be offered, projected revenues, projected expenses, and why the municipality or its partner is seeking to offer those services. If a municipality seeks to work with a private sector partner, the requirement that they release this type of information will make any potential partner think twice. Competitors that have access to such data have an edge before the project has permission to commence.

There also appears to be considerable confusion in the bill's language regarding the term "services." Fiber, wireless, direct, indirect, video, voice? The ambiguity is off-putting for any community and potential partner hoping to offer connectivity where the big corporate providers won't go while also avoiding legal challenges. How can a community create a plan that does not run afoul of the law if the details of the law are clouded in mystery?

This section of the bill will increase the burden it places on local government. It will increase costs to communities early in the process, extend the timetable for proposed projects, and make local governments and their partners vulnerable to litigation from deep-pocketed incumbent providers. A legal challenge can stop a proposed project in its tracks simply by asserting that a business plan is ill-defined.

From the Aspen Daily News artice:

Commissioner Patti Clapper said the bill sounded like blowback from industry due to so many jurisdictions voting to opt-out of SB-152.

“It almost seems like … a way for industry to come in from the back door and nail us the other way around,” she said.

A Simple Solution

The bill attempts to remove barriers that prevent communities from entering into public private partnerships. The only barriers in Colorado are those put in place by SB 152. Rather than toying with unnecessary changes that make the barrier more restrictive, the best option is to repeal SB 152 and let local communities decide for themselves how best to solve their connectivity needs.

Missouri's HB 2078 Advances

Dear Readers: Since I first wrote this story with my attempt to analyze this bill, I have revisited my earlier interpretation. If you read this bill analysis before, you will notice some changes.

It is starting to become an annual pilgrimage to Jefferson City. Each year, House and Senate leaders on the telecom industry dole, introduce the same anti-competition bill.

This year the bill we are watching is HB 2078 in the House, yet another AT&T bill. We briefly introduced you to it in January when we requested you call Republican Representative Lyndall Fraker and the other Members of the House Utility Infrastructure Committee. Fraker is Chair of the Committee, often an indication that the committee will hear the bill.

AT&T donated $20,000 to the House Republican Campaign Committee, reports Ars Technica. Even though the check was deposited on February 15, 2016, Ars learned it was actually donated in September 2015, before session began. Regardless of when the money was donated, it is notable that AT&T contributed a total of $62,500 to political committees in Missouri, a place where the incumbent does not shy away from flexing its lobbying influence.

Last year, HB 437 was introduced and, after opposition from a number of private entities and public sector representatives, stalled in the House. Many of HB 437's anti-competitive characteristics are resurrected this year in HB 2078.

There are many things we don't like about this bill because it forces local governments to hold expensive referendums, dictates how they spend local revenue, and decrees cryptic rules that discourage partnerships with private providers.

"Competitive Services"

The bill would allow a municipality to offer "competitive services" as defined by the bill only if less than 50 percent of addresses in town are not being offered services "by any combination of service providers." We are not the only ones to document the overstatement of coverage of NTIA maps, which rely on self-reporting from the very companies that seek to limit municipal networks.

The bill goes on to provide various definitions of "competitive services," one of which is "communication service," which is an  ambiguous and confusing term that will have the effect of triggering the referendum requirement in the bill. Such an onerous requirement slows down local communities when they are trying to hasten economic development opportunities. 

The bill's backers attempt to put limits on what is "competitive" by preventing innovation from municipal networks. They use the words "substantially similar" to describe the types of services offered - another ambiguous term that can be conveniently reinterpreted later. 

"Exception"...Ya

HB 2078 creates a lip service "exception," as these bills always do, with a bar set so high no municipality could invoke it. We chose to highlight just a few aspects of a worthless section of a bill clearly and carefully drafted to prevent competition for the incumbents.

After a weekend reviewing the language of the bill, I see this as the correct interpretation :  that in order for a municipality to offer services by taking advantage of the exception, they must both double the speeds offered by incumbents and serve half the residences.

The most debilitating factor for any municipality that is subject to this law is that they would have to offer service to at least 50 percent of the addresses in the municipality from the first day. In other words, the community would have to wait until they have deployed a network to at least 50 percent of their community before they could begin providing service. Such a requirement would hobble any municipality that wanted to access revenues from one portion of a buildout to fund later expansions.

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A Word About Dark Fiber

The bill used the broad term "communications service" and "competitive service" which called into question whether or not it applied to dark fiber providers. Recently, Google Fiber announced it will lease dark fiber from Huntsville, Ting leases dark fiber from Westminster and has stated that it seeks similar partnerships elsewhere. There are other communities that have unique arrangements with private entities. HB 2078 inserts Missouri state law into potential partnerships between public and private entities that rest on dark fiber. It requires the same terms and conditions be made available to "all service providers." 

This section interferes with a municipalities ability to forge partnerships with private industry leaders. For example, the agreement between Westminster and Ting might have triggered the negative impacts of this bill because the two agreed on 5 years exclusivity for the provider. 

The Next Step for HB 2078

HB 2078 passed through the House Utility Infrastructure committee 16 - 2 on February 18th and next heads for the Select Committee on Utilities. If it passes there, it will move the the House Floor for approval.

Last year the same measure did not advance because it was a bad bill. Missouri already has restrictions in place but this bill will make it even harder for residents and businesses to ever have access to more choices and the better service that come with competition. The legislation is written and backed by elected officials who hold the distinction of being darlings of AT&T, CenturyLink, and Comcast. Until we put this issue to rest permanently by allowing local authority in Missouri, the pilgrimage to Jefferson City will get tougher every year.

Rural Broadband Expansion Ignores Economic Development Potential in Minnesota - Community Broadband Bits Podcast 190

For years, many rural communities suffered from a broadband donut hole problem - the investment in better-than-dial-up was in the population center, leaving a donut of poor access around it. Now policy to reverse that in places like Minnesota is perversely creating the opposite problem, to the detriment of the entire community.

This week on the Community Broadband Bits podcast we welcome back Dan Dorman, Executive Director of the Greater Minnesota Partnership. He is also a former legislator and current small business owner in Greater Minnesota.

We discuss how this problem developed and where we see it happening before our very eyes. Though we focus on Minnesota, this issue is broadly applicable to all states. We also talk about how Comcast lobbyists have cynically manipulated the program to prevent economic development or possible competition, despite the fact that Comcast serves practically no one outside of the metro region.

Lisa Gonzalez and I predicted this problem in our paper from 2014, All Hands On Deck: Minnesota Local Government Models for Expanding Fiber Internet Access. Listen to Dan Dorman's last appearance, episode 136.

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 25 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."

Sale of OptiNet: BVU Caught Between Virginia's Rock And A Hard Place

For more than a decade, the people of Bristol, Virginia have enjoyed what most of us can only dream about - fast affordable, reliable, connectivity.  In recent days, we learned that Bristol Virginia Utilities Authority (BVU) has entered into a deal to sell its OptiNet triple-play fiber network to a private provider. The deal is contingent on approval by several entities.

As we dig deeper into the situation, we understand that troubles in southwestern Virginia and Bristol have led to this decision. Nevertheless, we urge the Bristol community to weigh the long-term consequences before they sacrifice OptiNet. Once you give up control, you won’t get it back.

"...A Few Bad Apples..."

If the people of Bristol surrender this valuable public asset to the private market, they run the risk of undoing 15 years of great work. None of this is a commentary on the private provider, Sunset Digital Communications, which may be a wonderful company. The problem is that Sunset will be making the decisions in the future, not the community. 

OptiNet has helped the community retain and create jobs, attracting and retaining more than 1,220 well-paying positions from Northrup Grumman, CGI, DirecTV, and Alpha Natural Resources. Businesses have cut Internet access and telecommunications costs. Officials estimate around $50 million in new private investment and $36 million in new annual payroll have come to the community since the development of OptiNet. The network allowed public schools to drastically reduce telecommunications expenses and introduce gigabit capacity long before such speeds were the goal among educators.

Schools and local government saved approximately $1 million from 2003 - 2008. Subscribers have saved considerably as well, which explains OptiNet's high take rate of over 70 percent. Incumbent telephone provider Sprint (now CenturyLink) charged phone rates 25 percent higher than OptiNet in 2003. The benefits are too numerous to mention in one short story.

However, BVU is emerging from a dark period marked by corrupt management. This sad reality actually makes its considerable achievements all the more remarkable. Last summer, several officials from BVU's OptiNet utility were indicted and found guilty of a number of federal charges including falsifying invoices, taking kickbacks, and misusing funds all for personal gain. Four people were fined and sentenced to prison. One other official is still being tried for her involvement in misuse of funds and tax offenses.

When this small number of officials violated the trust in Bristol that accompanies a locally managed utility, their actions negatively impacted the entire community. The actions of a few bad apples may have put the entire barrel at risk.

An Unsolicited Offer

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A few months later, Sunset Digital Communications approached BVU with an offer to purchase OptiNet. Sunset had its financing in place prior to making the offer.

Sunset worked with the LENOWISCO Planning District Commission on its 2001 Fiber-to-the-Home (FTTH) project in Lee and Wise Counties in southern Virginia and Tennessee.

The company, based in Duffield, Virginia, serves 80,0000 residents and businesses. They also provide services to anchor institutions, and other Internet service providers. Sunset wants to use the OptiNet infrastructure to start an expansion into rural areas. In a recent Herald Courier article, Sunset President and CEO Paul Elswick described the relationship between OptiNet and Sunset as "friendly competitors."

Virginia Doesn’t Care About Rural People

BVU has been effectively prevented from expanding into nearby rural communities by Virginia law, which limits which business models BVU can use despite an utter lack of interest from existing providers improving their services in that region. 

BVU Authority Board Chair Jim Clifton told WCYB:

"We have peaked in our ability to compete, and again, if we can't get grants, and even with the grants, we can only go into certain areas. We can only go into a 75 mile radius of our footprint," Clifton said. He said as a public utility, they have reached the peak for providing those types of services.

Bristol's neighbors want OptiNet because of the great things it has accomplished for Bristol but state legislators will not allow the city to share the wealth. The pressure to expand through privatization is testament to OptiNet's success in a harsh, anti-muni environment.

In Steps Richmond

Rather than allowing BVU to bring its high capacity connections to those who desperately want it, legislators are using the actions of a few corrupt officials to further harm one of the few sources of economic growth in southwest Virginia.

While Sunset was pursuing BVU, State Senator Bill Carrico (R-Galax) was preparing a bill the Bristol Herald Courier described as a "wrecking ball for a job better suited to a hammer." The bill, a knee jerk reaction to the federal indictments, would reduce the size of the BVU authority and effectively transfer broad decision-making to state leadership by appointment. The editorial board described it as a way for the state to revoke local authority from Bristol for more than just OptiNet. From the Herald:

At the same time, Carrico wants to reduce to just two board members the representation from Bristol, Virginia, where the customer base represents 46 percent of OptiNet, 86 percent of wastewater, 98 percent of water, and 53 percent of electricity service business. 

We believe stronger oversight is required — and new blood on the board is essential — but not necessarily appointed from the governor’s office.

The City Council also opposed the bill but managed to get an amendment that allowed more Bristol representation on any new Board. Those members would only vote on water and sewer issures. SB 329 has passed through the Committee on Local Governments and now awaits a vote by the full body. It is not clear what will become of the bill if the sale of OptiNet is finalized.

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A Tempting Offer But At What Price?

Sunset has offered $50 million to purchase OptiNet, which now carries approximately $24.4 million in long-term debt, reports the Herald Courier. A portion of that includes interdepartmental loans from the electric division to OptiNet. The electric system, water and sewer systems carry about $20.9 million combined, the bulk of which belongs to the electric system. BVU CEO Dan Bowman told the Herald Courier that the sale of OptiNet "would enable BVU to pay off all its $48 million in long-term indebtedness in all four divisions." There is some debate about whether or not this is possible, according to the agreement between the city and the BVU Authority.

The idea of becoming debt free is intrinsically appealing, but at what cost? BVU generates the necessary revenues to service its debt. Should Sunset decide to sell to one of the big corporate providers like Comcast, subscribers will be subject to the same price hikes and sub-par customer service like the rest of us. The purchase agreement has not been made public yet, but unless Sunset agrees to retain ownership or BVU is allowed a right of first refusal if Sunset decides to sell OptiNet, the risk is real.

Moving Along

On Tuesday, the Bristol City Council quickly approved a 2009 agreement between the city and BVU to clean up loose ends so the purchase can move forward. The agreement ensures that after debts are paid, half of all proceeds from a sale of OptiNet will go to the city. The City Council seems poised to approve the purchase, which must also be approved by the Cumberland Plateau Company (CPC), U.S. Department of Commerce Economic Development Administration, National Telecom and Information Administration and Virginia Tobacco Commission. 

CPC is part of the Cumberland Plateau Planning District Commission, an entity established by the state legislature to improve economic development. CPC has the right of first refusal to purchase OptiNet because it was a partner in its deployment and its infrastructure is located in the CPC service area. If CPC and the other entities approve the transaction, the sale is expected to be finalized in May or June.

Rocks Carefully Placed For Maximum Effect

The deal is not over but momentum is moving toward the sale. No one can deny that BVU is under intense amount of pressure from several fronts. Virginia legislated a hostile environment that pushed OptiNet to privatize if it wanted to continue expanding to meet the needs of neighbors. The only interests served by this policy have been the big cable and telephone companies that maintain lobbyists in Richmond so they can pay less attention to the rest of the state.

When legislators are too cozy with big corporate Internet access providers, the only choice for expansion may be privatization. If the Virginia State Legislators were considering their constituents first, they would do what it takes to grow more networks like OptiNet. In other words, remove all barriers in the form of onerous requirements that limit expansion and discourage public investment in Internet networks.

The actions of a few corrupt BVU officials have played right into the hands of those that want to limit local Internet choice.