By Christopher Mitchell, Institute for Local Self-Reliance
Lobbyists for major cable and DSL companies (Comcast, Frontier, and others) already earned their pay in Washington state this year by killing a bill that would have allowed some public utility districts to offer retail services on broadband networks in rural areas that were unserved.
Unfortunately, the powerful incumbent cable and DSL companies have been able to kill bills like this in committee year after year even as they refuse to build the necessary networks throughout the state. Comcast is not about to start offering broadband in these low-density areas, but it also does not want to allow public utilities to embarrass them by offering faster connections at lower prices than Comcast offers in Seattle (where it faces no real competition).
Public Utility Districts can currently only offer wholesale services — meaning that they can only offer services by using private service providers in an open access arrangements. We are strong supporters of this approach where it works. However, in high-cost rural areas, the "middle man" kills the economics. There is not enough revenue to pay for the network.
Some of the public utility districts want the authority to offer retail services in order to bring high-speed connections to these rural areas and encourage economic development. Big companies like Frontier and CenturyLink serve some of the people in some of these areas — often with significant state and federal subsidies. We could phase out such subsidies by encouraging approaches that are not as massively inefficient as Frontier and CenturyLink — two of the worst DSL providers in the nation. Unfortunately, what they lack in capacity to invest in modern broadband, they make up for in lobbying prowess.
An article in the Omak-Okanogan County Chronicle offers some more background:
Erik Poulsen, government relations director at Washington Public Utility District Association, said PUDs have used the wholesale authority they were granted in 2000, building 4,500 miles of fiber-optic cable, investing $300 million in infrastructure and joining with 150 retail providers. He said such wholesaling isn’t possible in certain parts of the state.
“The idea was that PUDs would build critical infrastructure and private companies would come in and provide direct service,” Poulsen said. “This wholesale arrangement serves many of our PUDs well. Others believe they need expanded authority to overcome some of the barriers that still exist.”
Because the bill was not voted out of Committee by Jan 31, it is effectively dead. Way to go Comcast and other big companies, you have yet again delayed the expansion of broadband in rural areas to benefit your shareholders.
In fairness to those lobbying against expanding broadband to rural communities, it was not solely the big incumbents. Some of the smaller ISPs that operate on the existing PUD networks were also opposed to allowing greater local authority in determining the best business model for building networks because they feared for their own livelihood.
Until rural communities actually begin paying attention to these state-by-state broadband battles, the narrow interests of a few will win every battle because they show up and they make campaign contributions. We could at least start showing up…