At the end of 2019, Congress passed the Revitalizing Underdeveloped Rural Areas and Lands (RURAL) Act, fixing a tax law change that threatened to raise rates and delay the expansion of broadband for rural cooperative members across the country.

Passage of the RURAL Act ensures that cooperatives can accept federal funds for broadband deployment, disaster relief, and other efforts without risking their nonprofit tax exempt status. A change in the 2017 tax law would have labeled these funds as revenue for the first time, potentially causing co-ops to exceed the allowable percentage of non-member income they must maintain to remain tax exempt.

After Senators Tina Smith (D-Minn.) and Rob Portman(R-Ohio) and Representatives Adrian Smith (R-) and Terri Sewell (D-Ala.) introduced the bipartisan bill in April, it attracted 55 additional cosponsors in the Senate and more than 300 in the House. It was eventually incorporated into the consolidated appropriations act and signed into law in December.

“Obstacles From the Federal Government”

We described the possible impact of the 2017 tax law change on rural cooperatives over a year ago, when Senator Smith first brought the issue to our attention.

Failure to remedy it would have forced some co-ops to choose between continuing with desperately needed broadband and disaster recovery projects and increasing their members’ rates. Northwestern Electric Cooperative CEO Tyson Littau described the difficulty of that decision to the National Rural Electric Cooperative Association (NRECA):

Do we rebuild and try to strengthen our distribution system and pay the taxes, or do we delay the mitigation project that would improve 1,200 miles of line throughout our territory? I think we have a responsibility to the membership to improve the system for the future.

Despite state laws requiring referenda and public reporting, Iowa is home to successful municipal networks, which have been undeterred by these potential stumbling blocks. A bill in the Iowa Senate, however, may present a new barrier discouraging new networks in places where Iowans need it the most. In communities where Internet access companies aren't offering the caliber of services residents and businesses need, the proposal would restrict the possibility of competition.

Sweeping Impact

Earlier this month, State Senator Dan Dawson, R-Council Bluffs, introduced Senate Study Bill 3009, which is supported by Mediacom, a national cable company that offers connectivity to nearly two-thirds of Iowans. The bill threatens cities’ access to financing for municipal broadband networks and challenges their ability to set competitive prices. This would impact cities with long established networks, like Cedar Falls and Coon Rapids, as well as communities that have recently decided to move forward with broadband plans, like Fort Dodge, Vinton, and Waterloo.

Tim Whipple, General Counsel for the Iowa Association of Municipal Utilities, which opposes SSB 3009, wrote in an email:

While community-owned broadband may not work for all communities, cities should have the opportunity to begin providing these services without having undue restrictions placed on them . . . especially in areas where incumbent providers aren’t properly investing.

Bill Brings New Barriers

Senator Dawson chairs the state Commerce Committee and introduced SSB 3009 as a proposed committee bill.

When Vermont passed legislation to establish "communications union districts" in 2015, funding options expanded for regional community network ECFiber. Since then, other states trying to expand access to broadband in rural areas have looked at the success of ECFiber as a possible model. Now, New Hampshire is considering establishing a similar option as a way for local communities to improve local connectivity.

Waiting for Session

Democratic State Senator Jeanne Dietsch from Peterborough has drafted legislation she intends to introduce in the 2020 session. The bill will allow communities to establish "communications districts" to develop broadband infrastructure, similar to the way they band together in order to create sewer districts for necessary infrastructure. The entities are able to finance projects by applying for grants, loans, issuing bonds, and charging user fees, but are not able to tax.

In a recent GovTech article, Dietsch said:

“We modeled it on New Hampshire sewer districts just because that is language that’s already familiar to our legislators, and it’ll be much easier for them to pass it that way than to try to make it look like Vermont.”

The lawmaker was reflecting on difficulties the legislature had passing Senate Bill 103, which allows municipalities to work together for "multi-town bonding projects." Special interest lobbyists, whose job it is to maintain ISP monopolies, leveled their efforts at the bill when it appeared fearing the competition it might bring. Dietsch wants to avoid a similar fight with the communications district proposal, so has carefully crafted the language of the bill.

If passed, the new authority will allow cities to develop the infrastructure in order to work with private sector partners. ECFiber offers fast, affordable, reliable Internet access directly to the public, rather than providing fiber optic infrastructure for Internet access companies to use.

ECFiber

Clarksville, Arkansas, began their journey toward better local connectivity to enhance electric utility efficiencies. Four years after making the choice to deploy fiber, the town has chosen to use that fiber to offer Internet access to the community. Gigabit connectivity is on the way to every premise in Clarksville.

Kicking it Off

On June 1st, about 400 people gathered for an event to celebrate three achievements for Clarksville: a new high school campus, re-branding of the municipal utilities, and a fiber splicing to kick-off their upcoming citywide Fiber-to-the-Home (FTTH) deployment. They enjoyed free food, tours of the new facility, and learned more about the new infrastructure that will bring fast, affordable, reliable connectivity to residents and businesses. John Lester, General Manager of Clarksville Connected Utilities, told us about the event and the new project.

Re-branding 

As CCU has worked to update connectivity for the town of around 10,000, Lester and other leaders at the utility have recognized that it's also time for a re-branding. After more than 100 years, the Clarksville Light & Water municipal utility retired “The Waterdrip Guy” and adopted a new name and a new logo. In order to reflect the city’s transition to a more forward thinking and competitive attitude, they transitioned to Clarksville Connected Utilities (CCU); the utility Commission approved the change in March. Their new logo uses the utility locate colors. 

From Light to Light-Speed

Legislative changes are helping electric cooperatives continue to expand high-quality Internet access in rural parts of America. At least three state governments have bills in the works that empower cooperatives to provide high-speed Internet service in their service territories.

Georgia, Maryland, Alabama

Georgia Governor Brian Kemp recently signed into law SB 2 and SB 17, which clarify that both electric and telephone cooperatives are able to provide broadband service. This change allows the electric cooperatives to use their easements which have been used for electric service to extend those easements so they also apply to equipment and lines needed in order to supply broadband service. Electric cooperatives have already been at work on providing Internet service in Georgia: Habersham Electric Cooperative operates Trailwave Network, and the Pineland Telephone and Jefferson Energy Cooperatives have partnered to bring Internet service to their communities.

In Maryland, Governor Larry Hogan has just approved SB 634 which similarly underscores how electric cooperatives can use their easements to provide broadband. Meanwhile in Alabama, HB 400 will codify in existing law that electric cooperatives have the ability to offer broadband service and that their easements are valid for that use. Alabama HB 400 has passed in the House and is now working its way through the Senate. Alabama cooperatives North Alabama Electric and Tom Bigbee Electric already provides high-speed Internet service in their service territories. 

Cooperatives Bring New Tech to Rural Areas

If you believe that publicly owned Internet networks are one of the tools that can help in efforts to expand fast, affordable, reliable connectivity to people in your state, and you want to share your thoughts with elected officials, use this language to get started. There may not be a project being developed in your area or a specific bill that you support, but you know that you want decision makers to vote favorably on measures that advance policies and financially support local authority and communities’ efforts to improve local connectivity through publicly owned broadband infrastructure. We’ve created a brief constituent letter/email that you can use to get started in drafting correspondence to state and federal lawmakers that convey your support for publicly owned Internet networks and local authority.

Keep It Simple, Keep It Effective

State and federal legislators typically serve on multiple committees and, as a result, their time spent on each issue is often limited. In order to encourage them to digest your full letter, stating your thoughts in a brief letter or email is often the most effective. Being direct, polite, and supportive goes along way with Representatives, Senators, and their staff.

You can include examples from your own state or from other places to help politicians and their staff learn more about the advantages of community broadband networks. Large national Internet access companies spend millions each year to employ lobbyists who spread negative misinformation about publicly owned broadband networks. You can help balance those efforts by sharing some of the positive results. Use our Municipal FTTH Networks page, the Economic Development page, search a specific state on MuniNetworks.org, or click on one of the pins on the Community Network Map to find a sample network.