Editor’s Corner—Tennessee, Virginia municipal broadband proposals reignite debate

Broadband photo
In both Tennessee and Virginia, incumbent telcos and cable MSOs like AT&T, CenturyLink and Comcast would like to retain their upper hand.
Sean Buckley, FierceTelecom

Municipal broadband continues to be a hotbed of debate, one that's coming to a head again in Tennessee and Virginia. Each of these states has proposed changes in the laws that govern municipal-run networks.

But the question is whether their proposals are a step forward or just another way to protect incumbent telco and cable companies' hold on the broadband market.

In both of these states, incumbent telcos and cable MSOs like AT&T, CenturyLink and Comcast would like to retain their upper hand. Incumbents continually make two main arguments about municipal broadband: Government-run companies get an unfair advantage and other municipal provider efforts have failed.

While there’s no shortage of failed municipal broadband providers like Bristol Virginia Utilities (BVU), there are a number of success stories like Danville, Virginia, Longmont, Colorado, and the emerging Roanoke Valley Authority.

The new debates that have emerged in Tennessee and Virginia aren’t just about giving consumers the highest speed, but providing connectivity for day-to-day activities like doing school work.

Robert Arnold, Campbell County Public Schools assistant superintendent, told The News & Advance that schoolchildren in his district suffer from a “homework gap.” As a result, students that don’t have an internet connection at home are unable to complete assignments, for example.

Tennessee’s electric co-op idea

Republican Tennessee Governor Bill Halsam announced legislation last month that will permit electric cooperatives to offer broadband.

At first blush, such a concept makes sense as electric co-ops have some characteristics that even the most aggressive insurgent providers like Google Fiber don’t have. For one, electric cooperatives have access to their own utility poles and rights-of-way.

Lower power cooperatives have established customer relationships so local consumers could see broadband service as another service they can get from a company they already know. Cooperative could use a FTTH broadband network for internal applications like smart grid to monitor and maintain the power grid.

However, there’s a catch with Halsam’s proposal. A bill summary (PDF) said his plan would still "prevent electric cooperatives from using electric system assets to subsidize broadband services."

Chattanooga, Tennessee-based EPB, which has been hailed as the posterchild of 1 Gbps FTTH services, would still be barred from expanding their service into neighboring cities.

“The governor came into this year with a bill that said we’re going to take handcuffs off of the co-ops and take some of the handcuffs off the municipalities,” said Craig Settles, an independent analyst focused on the municipal broadband market. “If the municipality wants to be a wholesaler, you can do it by combining efforts with a co-op.”

What’s ironic about EPB’s fight is that the towns it wants to serve are areas where the local incumbents refuse to upgrade to offer any broadband. Chattanooga lost a major battle in the municipal broadband race last year when a district court overturned an FCC decision to overturn local laws that prohibited municipal providers from being able to expand service outside of their territory.

Virginia’s new fight

Over in Virginia, another David versus Goliath story is brewing between state legislators and municipal providers. Earlier this month, a new bill introduced by the State House proposed putting limits on municipal broadband initiatives in Virginia.

Del. Kathy Byron, R-Campbell, according to a report in The Roanoke Times, said that the proposed bill is focused on reducing how much tax money is used to fund public sector subsidized broadband service in areas where an incumbent telco or cable operator is present.

But Byron maintained the goal was not to thwart efforts to build a government-owned network.

What makes her proposal all the more controversial is that Byron has continued to receive donations from a number of incumbent service providers, including Verizon, AT&T, CenturyLink and Comcast. 

Not surprisingly, this proposal has caused worries among municipal broadband providers like the Roanoke Valley Authority.

The group is building a 47-mile middle mile network with points in Roanoke, Salem and parts of Botetourt and Roanoke counties. As an open access network, the service provider will offer various wholesale services to local service providers. 

Settles, the analyst focused on the municipal broadband market, told FierceTelecom that in states like Virginia, plenty of providers have built a solid business.

“In some states there are only one or two cities that have success stories in a state, but there are not a whole lot of them,” Settles said. “In Virginia there’s over a dozen.”

It will take time to see how the new government proposals play out, but what is clear is that in Virginia and Tennessee it’s another battle for service provider broadband power.

What’s also true of these developments is that municipal-run broadband networks have created an atmosphere of broadband envy. Restrictive laws that prohibit broadband expansion of municipal providers are making other nearby communities ask why they can’t get the same service as their neighbors.

As the need for broadband services rises in communities where incumbents have either refused to build or upgrade infrastructure for higher speeds, the debate on municipal broadband will continue rise amongst a larger amount of states in 2017. - Sean, @FierceTelecom