Electric Co-Op Broadband Bills Catch On in Rural, Red States

Georgia’s House Energy, Utilities and Telecom Committee supported by voice vote SB-2, which passed the Senate earlier this month 53-1. Texas' SB-14 appeared to get support at its first Senate panel hearing Tuesday. Oklahoma’s SB-1002 got a first reading Monday in the House after clearing the Senate 40-7 last week.

The Senate sponsor resisted the House panel's amendment to restrict cooperatives to unserved areas and keep them within their territories unless they reach agreement with an adjacent cooperative. The edit would define those unserved areas as places where at least 20 percent of a census block lacks speeds of 25 Mbps down and 3 Mbps up. “The idea of telling a company you can only sell your product to certain customers that [don’t] have it today goes against every principle in my body as a Republican and as an American,” state Sen. Steve Gooch (R) said before the panel voted Wednesday. Gooch asked who would measure whether an area is unserved; FCC broadband maps are inaccurate, he said. The senator supported moving the bill through committee, but if the unserved requirement remains at final passage, it’s “not a bill I would like to see the governor put his signature to.”

Electric co-ops cover the “good majority” of Georgia, including wide swaths of underserved rural land, Gooch said at the committee’s hearing a day before voting. It would let them apply for U.S. Department of Agriculture grants this spring, he said. Windstream, with more than 1 million customers in Georgia, recently filed for bankruptcy, so “more providers in the marketplace is a good option,” the state senator said. Gooch stressed his bill would restrict cross-subsidization between a co-op’s electric and broadband businesses and require nondiscriminatory pole attachment rates.

What venue should handle dispute resolutions sparked some debate at Tuesday’s hearing. The Senate-passed version would assign the Public Service Commission, but the House committee amended the bill to give courts that job -- either new business courts under consideration in the legislature or Georgia superior courts. The judiciary has a heavy load and the PSC would have subject-matter expertise, argued Rep. Derrick Jackson (D). Complaining to the agency might easier for consumers than going to court, added Rep. Beth Moore (D).

Some committee members asked what incentives a co-op would have to provide broadband in high-cost unserved areas, rather than compete in more profitable metropolitan areas that have service. ISPs “go where there’s money to be made” rather than rural areas; the bill could let co-ops “do the exact same thing,” said Chairman Don Parsons (R). Local control makes co-ops different; members will demand broadband service where they live, replied Steve Minor, a Tisinger Vance attorney for Georgia EMC, the state cooperative association.

Cable companies are “not afraid to compete” as long as electric entities have no unfair advantage, said Georgia Cable Association Executive Director Stephen Loftin. GCA was neutral on the Senate-passed bill. The PSC should preapprove cooperatives’ cost allocation manuals and handle any disputes, he said. Georgia EMC supports courts handling disputes and disagrees the PSC should regulate a co-op’s broadband entity because the commission doesn’t regulate broadband, said Vice President-Government Relations Jason Bragg.

The similar bill in Texas would bring broadband to the underserved without increasing regulation or state appropriations or subsidies, said sponsor Sen. Robert Nichols (R) at a livestreamed Senate Business and Commerce Subcommittee hearing. Nichols, who chairs the Transportation Committee, said he edited the bill to ensure co-ops separate electric and broadband businesses and require the company to charge pole attachment fees for the broadband entity comparable to what it charges broadband competitors.

“We welcome the competition,” testified Texas Telephone Association Executive Director Lyn Kamerman. Phone companies want to be sure co-ops compete on an “open and equal playing field,” including through nondiscriminatory pole-attachment rates and by banning cross-subsidization, he said. Not only rates, but also terms and conditions should be the same for all providers, said Texas Cable Association President Walt Baum. “Our concerns are being resolved.”

Rural electric co-op customers “desperately want” broadband, said Texas Electric Cooperatives President Mike Williams. “The challenge in rural Texas has been economics, just like it was 80 years ago with rural electricity.”

Co-Op Appeal

“Co-ops are seen as being a private organization rather than a form of state coercion,” emailed Institute for Local Self-Reliance Community Broadband Networks Director Christopher Mitchell. “I'm fine with that distinction but still think of co-ops as being a form of public ownership so long as they are reasonably small scale.” Mitchell, who supports municipal and co-op broadband, said muni broadband opponents aren’t “likely to change their minds because co-ops succeed.”

Co-ops and municipalities are different, emailed Phoenix Center Chief Economist George Ford, a critic of muni broadband who sees no “problem with co-ops giving it a try.” Electric co-operatives “are private entities and must be concerned about the spread between revenues and costs,” he said. “Cities do not as they have coercive taxing power and are playing with other people’s money.”

Co-op broadband without appropriate protections also could have dangers, cautioned Ford. “Cross-subsidizing broadband operations using captive electric customers is fraught with problems.” People who can’t afford the internet could “end up subsidizing the rich’s broadband habits” through electric or gas bills, he said. Unlike private broadband providers, utilities are allowed to be monopolies, he said. “The mere threat of such entry will deter private investment, making the deployment problem worse.”

Policymakers should prohibit co-ops from cross-subsidizing electric and broadband businesses and require them to follow pole attachment regulations using the FCC formula, Ford said. Establish a venue for pole-attachment dispute resolution, such as the FCC or a state regulator, he said.