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Tennessee’s “Smoke and Mirrors” Rural Broadband Initiatives Fail to Deliver

Rural Roane County, Tenn.

Earlier this month, a standing room only crowd packed the offices of Rockwood Electric Utility (REU) in Rockwood, Tenn., despite the fact the meeting was held at 10 a.m. on a Friday morning.

Local residents were there on a work day to listen to area providers and local officials discuss rural broadband access. Most wanted to know exactly when the local phone or cable company planned to expand to bring internet access to the far corners of the region between Knoxville and Chattanooga in east Tennessee.

Comcast, Charter, and AT&T told Roane County Commissioners Ron Berry and Darryl Meadows, State Sen. Ken Yager (R-Kingston), and the crowd they all had a long wait because the companies couldn’t profit offering rural broadband service to the county.

“That is what our shareholders expect and the way we operate in a capitalistic society,” declared Andy Macke, vice president of external affairs at Comcast.

“The biggest challenge for all of you in this room is what they call the last mile,” said Alan L. Hill, the regional director of external and legislative affairs at AT&T Tennessee. “It is a challenge. We all face these challenges.”

In short, nothing much had changed in Roane County, or other rural counties in southeastern Tennessee, to convince service providers to spend money to bring internet service to the region. Until that changed, AT&T, Comcast and others should not be expected to be on the front lines addressing rural internet access. Successive governors of Tennessee have long complained about the rural broadband problem, but the state legislature remains cool to the idea of the state government intervening to help resolve it.

Gov. Haslam

In 2017, Tennessee Gov. Bill Haslam noted Tennessee currently ranked 29th in the U.S. for broadband access, with 34 percent of rural Tennessee residents lacking access at recognized minimum standards. In splashy news releases and media events, Haslam sold his solution to the problem — the Broadband Accessibility Act, offering up to $45 million over three years to assist making broadband available to unserved homes and businesses.

In reality, the law authorized spending no more than $9.5 million annually on rural broadband grants over the next three years. It also slashed the FCC’s broadband standard from 25/3 Mbps to 10/1 Mbps, presumably a gift to the phone companies who prefer to offer less-capable DSL service in rural areas. In the first year of awards, 13 Tennessee counties, none in the southeastern region where Roane County lies, divided the money, diluting the impact to almost homeopathic strength.

Critics called Haslam’s broadband improvement program “The Smoke and Mirrors Act” for promising a lot and delivering little. At current funding levels, broadband service can only be expanded to 5,000 of the estimated 422,000 households that lack access to internet service, and then only with the award winner’s matching financial contribution.

The demand for rural broadband financial assistance is obvious from the $66 million in requests received from 71 different utilities, co-ops, and communications companies in the first year of the program, all seeking state funding to expand rural broadband. Only a small fraction of those requests were approved. AT&T applied for money targeting Roane County and was turned down. AT&T’s Hill expressed sympathy for the county’s school children who need to complete homework assignments by borrowing Wi-Fi access from fast food establishments, area businesses, and larger libraries. But AT&T’s sympathy will not solve Roane County’s broadband problems.

What might is Rockwood Electric Utility, the municipal power company that sponsored the broadband event.

REU is a not-for-profit, municipally owned utility that has successfully served portions of Roane, Cumberland, and Morgan counties since 1939. By itself, the community-owned utility is no threat to companies like Comcast, because it offers service in places the cable company won’t. But if REU partnered with other municipal providers and offered internet service in larger nearby towns and communities to achieve economy of scale and a more secure financial position, that is a competitive threat apparently so perilous that the telecom industry spent millions of lobbying dollars on state legislatures like the one in Tennessee to ghost-write legislation to discourage utilities like REU from getting into the broadband business, much less dare to compete directly with them. AT&T, Charter, and Comcast also fear how they will compete against municipal utilities that have successfully delivered electric service and maintained an excellent reputation in the community for decades.

Tennessee law is decidedly stacked in favor of AT&T, Charter, and Comcast and against municipal utilities. Although the state allows municipal providers to supply broadband, it can come only after satisfying a series of regulatory rules designed to protect commercial cable and phone companies. It also prohibits municipal providers from offering service outside of existing service areas. That leaves communities served by a for-profit, investor-owned utility out of luck, as well as residents in areas where a rural utility lacked adequate resources to supply broadband service on its own.

Haslam’s Broadband Accessibility Act cynically retained these restrictions and blockades, hampering the rural broadband expansion the law was supposed to address.

For several years, Sen. Janice Bowling (R-Coffee, Franklin, Grundy, Marion, Sequatchie, Van Buren and Warren Counties), has tried to cut one section of Tennessee’s broadband-related laws that prohibits municipal providers from offering service outside of their existing utility service area. Her proposed legislation would authorize municipalities to provide telecommunication service, including broadband service, either on its own or by joint venture or other business relationship with one or more third parties and in geographical areas that are inside and outside the electric plant’s service area.

In her sprawling State Senate District 16, a municipal provider already offers fiber broadband service, but Tennessee’s current protectionist laws prohibit LightTUBe from offering service to nearby towns where service is absent or severely lacking. That has left homes and businesses in her district at a major disadvantage economically.

Sen. Janice Bowling (R-Tenn.) discusses rural broadband challenges in her 16th district south of Nashville and her bill to help municipal utilities provide broadband service. (4:20)

“In rural Tennessee, if we have what is called an industrial park, and we have electricity, you have running water, you have some paved roads, but if you do not have access to fiber at this point, what you have is an electrified cow pasture with running water and walking trails. It is not an industrial park,” she complained, noting that the only reason her bill is prevented from becoming law is lobbying by the state’s cable and phone companies. “We can no longer leave the people of Tennessee hostage to profit margins of large corporations. We appreciate what they’re doing. We appreciate where they do it, but in rural Tennessee we will never meet their profit margins and so we can no longer be held hostage when we have the ability to help ourselves.”

Sen. Yager

Her sentiment in shared by many other Tennessee legislators who serve rural districts, and her Senate bill (and House companion bill) routinely receive little, if any, public opposition. But private lobbying by telecom industry lobbyists makes sure the bill never reaches the governor’s desk, usually dying in an obscure committee unlikely to attract media attention.

That reality is why residents of Roane County were meeting in a crowded room to get answers about why broadband still remained elusive after several years, despite the high-profile attention it seems to get in the legislature and governor’s office.

“‘It is a critical issue as I said. It is not a luxury. It is a necessity. I certainly understand your frustration,” responded Sen. Ken Yager. “This problem is so big I don’t think one person can do it alone, one entity. It’s going to have to have partnerships. One thing this bill encourages is for your co-ops to partner with one another to bring broadband in.”

The bill Sen. Yager refers to and endorsed at the meeting was written by Sen. Bowling. Sen. Yager must be very familiar with Bowling’s proposals, because she has appeared before the Senate Commerce & Labor Committee he belongs to year after year to promote it. On March 3, 2018, the bill failed again in a 4-3 vote. But unbeknownst to those in attendance at the public meeting, Sen. Yager himself delivered the fourth “no” vote that killed the bill.

Undeterred, Bowling promises to be back next year with the same bill language as before. Perhaps next time, voters will know who their friends are in the legislature, and who actually represents the interests of big corporate cable and phone companies.

Bipartisan Rural Broadband Bill Would Offer Tax Credits for the Broadband Bypassed

Rep. Stefanik

Waiting for broadband companies to wire rural America could take forever, so a new bipartisan bill would reward motivated businesses and neighborhoods with refundable tax credits if they cover the costs of connecting to nearby providers themselves.

The Broadband for All Act (copy not yet available) would create a new tax credit of up to 75% for groups of two or more homeowners or businesses who agree to cover the cost of infrastructure to extend broadband service from any available provider to their homes and businesses. The bill was jointly introduced by Rep. Elise Stefanik (R-N.Y.) and Derek Kilmer (D-Wash.), who both serve rural districts where broadband availability has been a challenge for years.

Rep. Kilmer

In practice, many unserved Americans live within a mile or two of a service provider, unserved because their homes and businesses failed to offer a suitable Return On Investment (ROI) to wire for service. Would-be cable customers are often quoted prices of $15,000-30,000 to extend service into their neighborhoods — a price too high for most. The new bill would reduce the sting of such upfront costs by offering tax credits to help offset the expense. But it is still a lot of money, and the bill would likely benefit those with deeper pockets the most.

The tax refund would apply to any available technology, so each group can choose the best option that bridges the “last-mile” gap between their homes and businesses and the existing broadband service network.

A copy of the bill was not yet available. If the bill does not disqualify municipal or public broadband providers, it could prove useful in areas where public broadband construction is underway. Many of those projects carry significant up front connection fees to help defray network construction costs. If such costs were largely covered by tax credits, it could provide a significant boost to broadband uptake in rural communities.

Lifting Co-Op Broadband Restrictions in Tennessee Triggers Major Fiber Expansion

While parts of rural Tennessee languish with little or no broadband service, the state’s electric cooperatives are jumping to deliver internet access over fiber optic cables after the governor eased restrictions written into state law on rural co-ops offering public broadband service.

After Gov. Bill Haslam (R) signed a bill in 2017 permitting not-for-profit electric co-ops to offer broadband service to their customer-members, at least seven of Tennessee’s 22 municipal co-ops almost immediately launched fiber to the home service projects that offer faster and more reliable service than many of the state’s phone companies that still offer DSL service (or nothing at all).

Offering broadband service is a win-win for small communities and the co-ops that serve them, because existing infrastructure already in place to provide electric service can be augmented with fiber optic cables to deliver phone, television, and internet service as well. Co-ops can also use the fiber infrastructure to manage smart electricity grids, which can better detect outages and offer useful power management tools.

Among some of the projects now underway:

  • Tri-County Fiber Communications  of Lafayette, Tenn., serves more than 50,000 customers in rural Tennessee and Kentucky. Its fiber project will serve part of its current service area and is enrolling customers now who want to commit themselves as future customers and avoid a $1,500 installation fee.
  • SVEConnect, providing electric service since 1939, will offer customers in seven counties starting internet speeds of 200 Mbps and up to 1 Gbps in 2018, along with phone and television service.
  • Gibson Connect, operated by the Gibson Electric Membership Corporation, offers service to 39,000 homes and businesses in eight west Tennessee counties (Crockett, Dyer, Gibson, Haywood, Lake, Lauderdale, Obion and Madison) and four west Kentucky counties (Carlisle, Fulton, Graves and Hickman). Fiber broadband is planned to roll out gradually in many of these areas, and the co-op has already signed up 6,000 customers before service is even available. Gibson Connect will sell 100 Mbps internet for $49.95 and 1,000 Mbps service for $69.95 a month. Some customers in its service area are already served by other providers, but Gibson promises faster speeds, no data caps, and more affordable pricing.

The conservative and industry-backed groups that coordinated with the telecom industry to push Tennessee to pass restrictive laws effectively banning municipal or public broadband competition are grudgingly tolerating co-ops entering the broadband marketplace, as long as they only service areas where they won’t compete with an established phone or cable company. They also must remain within their electric service area.

Those opposed to public broadband claim the networks offer unfair competition because they often receive subsidies or grants. But many municipalities are doubly frustrated because the same companies that are lobbying to keep them out of the broadband business also refuse to provide service in their towns and villages. Many communities are too small or sparsely populated to provide enough Return On Investment (ROI) to entice those providers to expand, they add.

In areas where residents are quick to complain about government spending, many are strongly in favor of broadband development. Local officials have been told by frustrated residents, “if you do not provide the service, nobody else will.”

Despite the flourishing of fiber-fast broadband in areas served by co-ops, other parts of Tennessee remain broadband dead zones because the current state law continues to frustrate local communities trying to build financially feasible broadband projects that have a chance of breaking even. Tennessee’s Rep. Marsha Blackburn, who is running for a Senate seat this year, is notoriously one of the country’s biggest allies of AT&T, Comcast, and other telecom companies and favors keeping public broadband in shackles. She is also among the top recipients of campaign contributions from the telecom industry.

Australia’s National Broadband Network Looking for Scapegoats Over Maddening Slowdowns

Australia’s speed-challenged NBN is looking for scapegoats and finds video game players an easy target.

In 2009, Australia’s Labor Party proposed scrapping the country’s copper wire networks and replacing virtually all of it with a state-of-the-art, public fiber to the home service in cities from Perth to the west to Brisbane in the east, with the sparsely populated north and central portions of the country served by satellite-based or wireless internet.

It was a revolutionary transformation of the country’s challenged broadband networks, which had been heavily usage capped and speed throttled for years, and for large sections of the country stuck using Telstra’s DSL service, terribly slow.

The National Broadband Network concept was immediately attacked by the political opposition as too expensive and unnecessary. Conservative demagogues in the media and in Parliament dismissed the concept as a Cadillac network delivering unnecessarily fast 100 Mbps connections to 90% of Australians that would, in reality, mostly benefit internet addicts while leaving older taxpayers to foot the estimated $43AUS billion dollar bill for the network.

The leaders of the center-right Liberal Party of Australia promised in 2010 to “demolish” the NBN if elected, claiming the network was too costly and would take too long to build. As network construction got underway, the organized attacks on the NBN intensified, and it was a significant issue in the 2013 election that defeated the Labor government and put the conservative government of Tony Abbott into power. Almost immediately, most of the governing board of the NBN was asked to resign and in a series of cost-saving maneuvers, the government canceled plans for a nationwide fiber-to-the-home network. In its place, Abbott and his colleagues promoted a cheaper fiber to the neighborhood network similar to AT&T’s U-verse. Fiber would be run to neighborhood cabinets, where it would connect with the country’s existing copper wire telephone service to each customer’s home.

Abbott

Unfortunately, the revised NBN implemented by the Abbott government appears to be delivering a network that is already increasingly obsolete. Long gone is the goal for ubiquitous 100 Mbps. For Senator Mitch Fifield, who also happens to be the minister for communications in the Liberal government, 25 Mbps is all the speed Australians will ever need.

“Given the choice, Australians have shown that 100 Mbps speeds are not as important to them as keeping monthly internet bills affordable, when the services they are using typically don’t require those speeds,” Fifield wrote in an opinion piece in response to an American journalist complaining about how slow Australian broadband was while reporting from the country.

The standard of “fast enough” for Senator Fifield also seems to be the minimum speed at which Netflix performs well, an important distinction for the growing number of Australians watching streaming television shows and movies.

Unfortunately for Fifield, network speeds are declining as Australians use the NBN as it was intended. While perhaps adequate for a network designed and built for 2010 internet users, data usage has grown considerably over the last eight years, and the government’s effort to keep the network’s costs down are coming back to haunt all involved. Several design changes have erased much of the savings the Abbott government envisioned would come from dumping a straight fiber network in favor of cheaper alternatives.

Right now, depending on one’s address, urban Australians will get one of four different fiber flavors the revised NBN depends on to deliver service:

  • Fiber to the Home (FTTH): the most capable network that delivers a fiber connection straight into your home.
  • Fiber to the Neighborhood (FTTN): a less capable network using fiber into neighborhoods which connects with your existing copper wire phone line to deliver service to your home.
  • Fiber to the Basement (FTTB): Fiber is installed in multi-dwelling units like apartments or condos, which connects to the building’s existing copper wire or ethernet network to your unit.
  • Fiber to the Distribution Point (FTTDP): Fiber is strung all the way to your front or back yard, where it connects with the existing copper wire drop line into your home.

In suburban and rural areas, the NBN is depending on tremendously over-hyped satellite internet access or fixed wireless internet. Customers were told wireless speeds from either technology would be comparable to some flavors of fiber, which turned out to be true assuming only one or two users were connected at a time. Instead, speeds dramatically drop in the evenings and on weekends when customers attempt to share the neighborhood’s wireless internet connection.

Instead of improving the wireless network, or scrapping it in favor of a wired/fiber alternative, the government has set on so-called “heavy users” and blamed them for effectively sabotaging the network.

Morrow

NBN CEO Bill Morrow recently appeared before a parliamentary committee to discuss reported problems with how the NBN was being rolled out in regional Australia. Morrow blamed increasing data usage for the wireless network’s difficulties, singling out slacker video game addicts for most of the trouble, and was considering implementing speed throttles on “extreme users” during peak usage periods.

Stephen Jones, Labor’s spokesperson for regional communications, questioned Morrow on what exactly an “extreme user” was.

“It’s gamers predominantly, on fixed wireless,” said Morrow. “While people are gaming it is a high bandwidth requirement that is a steady streaming process,” he said.

Morrow suggested a “fair-use policy” of speed throttles might be effective at stopping the gamers from allegedly hogging the network.

“I said there were super-users out there consuming terabytes of data and the question is should we actually groom those down? It’s a consideration,” he said. “This is where you can do things, to where you can traffic shape – where you say, ‘no, no, no, we can only offer you service when you’re not impacting somebody else’.”

The NBN itself has regularly dismissed claims that online gamers are data hogs. In an article written by the NBN itself, it stressed gameplay was not a significant stress on broadband networks.

“Believe it or not, some of the biggest online games use very little data while you’re playing compared to streaming HD video or even high-fidelity audio,” the article stated. “Where streaming 4K video can use as much as 7 gigabytes per hour and high-quality audio streaming gets up to around 125 megabytes per hour, (but usually sits at around half that) certain online games use as little as 10MB per hour.”

The article admits a very small percentage of games are exceptions, capable of chewing through up to 1 GB per hour, but that is still seven times less than a typical 4K streaming video.

In fact, the NBN’s own data acknowledged in March 2017 that high-definition streaming video was solely responsible for the biggest spike in demand. NBN data showed the average household connected to the NBN used 32% more data than the year before. When Netflix Australia premiered in March 2015, overall usage grew 22% in the first month.

So why did Morrow scapegoat gamers for network slowdowns? It’s politically palatable.

“They always have someone to blame for why the NBN doesn’t deliver, they have every excuse except the one that really matters, which is the flawed technology,” said the former CEO of Internet Australia Laurie Patton. “In this case for some reason shooting from the hip [Bill Morrow] had a go at gamers and gamers are not the problem.”

As long as Australia continues to embrace a network platform that is not adequate robust to cope with increasing demands from users, slow speeds and internet traffic jams will only increase over time. In retrospect, the decision to scrap the original fiber to the home network to save money appears to be penny wise, pound foolish.

Conn. Regulator Bans Public Broadband to Protect Comcast, Frontier, and Altice from Competition

Connecticut’s telecommunications regulator has effectively banned public broadband in the state, ruling that municipalities cannot use their reserved space on utility poles if it means competing with the state’s dominant telecom companies — Comcast, Altice, and Frontier Communications.

The ruling by Connecticut’s Public Utilities Regulatory Authority (PURA) is a death-blow for municipalities seeking to build gigabit fiber networks to offer residents the broadband speeds and services that incumbent phone and cable companies either refuse to provide or offer at unaffordable prices.

Among the petitioners appealing to PURA to protect them from competition is Frontier Communications, which owns a large number of utility poles across the state acquired from AT&T. The company was unhappy that municipalities were planning to use reserved space on state utility poles to construct fiber to the home networks that are generally superior to what Frontier offers consumers and businesses in the state. Other providers, like Frontier, said little about the early 1900s Connecticut statute that guarantees municipalities “right of use space” on poles until it became clear some communities were planning to threaten their monopoly/duopoly profits.

The law was originally written to deal with the dynamic telecommunications marketplace that was common in the U.S. during the late 1800s and early 1900s. Utility pole owners were confronted with a myriad of companies selling telegraph and telephone service — all seeking a place on increasingly crowded poles. Local governments could have been crowded out, were it not for the “Act Concerning the Use of Telegraph and Telephone Poles,” approved on July 19, 1905. It was one sentence long:

Every town, city, or borough shall have the right to occupy and use for municipal purposes, without payment therefor, the top gain of every pole now or hereafter erected by any telephone or telegraph company within the limits of any such town, city, or borough.

The law stood as written until 2013, when the legislature clarified exactly who could benefit from the use of “municipal gain.” Where the original law effectively protected reserved pole space for “municipal” use, the language was broadened in 2013 to read “for any purpose.”

Observers said the law was modified because of ongoing disputes with pole owners relating to planned municipal broadband projects. Frontier, in particular, has sought restrictive pole attachment agreements with communities trying to build out their broadband networks. In addition to accusations of foot-dragging over issues like “make ready” — when existing pole users move wiring closer together to make room for new providers, Frontier has tried to impose restrictive language on communities that would permanently restrict their ability to offer service. The most common restriction is to compel towns to agree to use their pole space exclusively “for government use,” which would restrict third-party providers hired to manage a community’s municipal broadband service.

PURA’s decision surprised many, because it completely ignored the 2013 language changes and relied instead on its perception of a conflict between state and federal laws. PURA ruled “municipal gain” establishes “preferential access” for towns and communities, and could be in conflict with the federal Communications Act, which mandates “non-discriminatory access” to utility poles, and prohibits local governments from blocking companies from providing telecommunications services.

“Providing municipal entities free access to the communications gain for the purpose of offering competitive telecommunications services … appears to be inconsistent with these principals and other aspects of federal law,” the decision reads.

In the early 20th century, vibrant competition meant a lot of utility poles were crowded with wires.

Except communities are not seeking to block providers looking to offer broadband service. These communities are seeking to become a provider. Pole attachment controversies typically relate to unreasonable limits on access to poles and allegations of price gouging pole attachment fees, not “preferential access.”

The end effect of PURA’s ruling: communities can use their pole space for government or institutional purposes only, such as building closed fiber networks available only in public buildings like libraries, schools, town halls, and police and fire departments. It also means any community seeking to build a fiber broadband network serving homes and businesses will either have to pay market rates for pole space, give up on the project, or place all the project’s wiring exclusively underground — a potentially costly alternative to aerial cable and one likely to cost taxpayers millions.

“We are very disappointed in the decision,” Consumer Counsel Elin Katz told Hartford Business. Katz is a strong supporter of municipal broadband. “It ignores the plain language of the statute, and by deciding that [municipal gain] cannot be used by our cities and towns to provide broadband to those affected by the digital divide, denies our municipalities a tool provided by the legislature for just that purpose.”

Frontier and the state’s cable and wireless companies, however, are delighted PURA has come to their rescue, calling its decision “fully consistent with the law.”

“Frontier Communications continues to support efforts to expand broadband access in Connecticut,” said spokesman Andy Malinowski. “PURA reached the correct result. This decision helps ensure the continuation of robust broadband competition in our state.”

The New England Cable & Telecommunications Association (NECTA), the cable industry’s regional lobbying group in the region, was also happy to see an end to unchecked municipal broadband growth and the competition it will bring.

“Our members, who pay millions of dollars annually to rent space on utility poles, offer competitive broadband services with speeds ranging up to 1 gigabit-per-second for residential Connecticut customers, in addition to offering speeds up to 10 gigabits for business customers,” noted NECTA CEO Paul Cianelli.

Other supporters of PURA’s decision include the wireless industry lobbying group CTIA and the Communications Workers of America — unionized employees at Frontier Communications who fear their jobs may be at risk if a municipal provider gives Connecticut customers an additional option for broadband service.

PURA’s decision leaves little room for municipal broadband expansion efforts that have been underway in the state for a decade. Most projects that cannot afford to pay for space on utility poles or the cost to switch to underground cable burial will probably not survive unless a court overturns the regulator’s decision or the state legislature clarifies state law in a way that makes PURA’s current interpretation untenable.

A number of groups are considering suing PURA to overturn its decision, noting the regulator completely ignored the very clear and understandable 2013 language that allows municipalities to use their allotted space on utility poles “for any purpose.” That purpose includes giving the state’s telecom duopoly some competition.

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