Even as the Broadband Accessibility Act awaits a signature from Gov. Bill Haslam, industry leaders are already looking at opportunities the bill presents.
“There is a lot in this act for rural Tennesseans and Tennessee’s rural telcos to like,” said Levoy Knowles, executive director of TTA. “Our members, both the independent companies and the cooperatives, are optimistic about working with the electric co-ops to make broadband available to many more people in our state.”
The bill passed in the Senate on April 10 with 93 votes in favor and only four against.
“The governor’s legislation will now allow electric cooperatives to play a vital role in bringing broadband to these underserved areas,” said David Callis, executive vice president and general manager of Tennessee Electric Cooperative Association (TECA). “With our joint dedication and presence in these rural areas, electric and telephone cooperatives have a great opportunity to work together to meet this challenge.”
The act, which has been called a signature piece of Gov. Haslam’s 2017 legislative initiatives, allows electric cooperatives to provide broadband service separately from their electric power service. The legislation also creates a $30 million incentive grant program for any company that commits to build a broadband network to residents of the state who cannot currently receive download speeds of 10 Mbps. To apply for the grants, which award $10 million for three years, providers must commit to serving these new customers with speeds of at least 25 Mbps download and 3 Mbps upload.
Additionally, the act provides tax incentives of up to $5 million per year for three years for companies expanding broadband networks. Providers will be able to apply 6 percent of the cost of equipment purchased for certain economically depressed counties to their franchise and excise tax.
Upon the governor’s signature, electric cooperatives would also be permitted to provide video/cable TV service.
A TTA-supported amendment to the initial legislation put important rules on the electric cooperatives. For instance, under the amendment, electric cooperatives may not provide broadband outside of their service footprint and would be required to give telcos unrestricted access to poles if the electrics get into the broadband business. The amendment also requires electric cooperatives to create a subsidiary to handle the broadband in order to better track funds.
“TTA, TECA, the governor and many others have expressed their desire to see all Tennesseans have the opportunities a reliable high-speed broadband network can provide,” Knowles said. “Our lawmakers have done a good job finding a workable solution to help connect many of the rural residents who have the hardest time getting connected.”
Despite the support and the landslide Senate vote, critics have voiced concerns that large providers like AT&T or Comcast could seize the grant money and incentives while still not providing the service rural Tennesseans need. Christopher Mitchell, who is the the director of the Community Broadband Networks Initiative and operator of muninetworks.org, told vice.com that the state should have allowed municipal networks like EPB in Chattanooga to bring service to rural customers. “Tennessee taxpayers may subsidize AT&T to build DSL service to Chattanooga’s neighbors rather than letting [EPB] expand its fiber to neighbors at no cost to taxpayers,” Mitchell said in the article. “Tennessee will literally be paying AT&T to provide a service 1000 times slower than what Chattanooga could provide without subsidies.”
Knowles said the case against municipal broadband is well-established. “A city-owned utility providing broadband pits government and all of its competitive advantages against private business,” he says. “I believe our legislators were wise to keep the rules on municipal expansion in place. At the end of the day, no one knows how to keep rural Tennesseans connected better than TTA members and rural electric cooperatives.”