Community broadband advocates butt heads with North Carolina officials on best path forward


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North Carolina lawmakers could soon help close the divide in high-quality broadband access between the state’s urban and rural areas.

By reversing policies restricting cooperatives, and local governments from offering internet service, citizens could gain new broadband options, according to a new study from the Institute for Local Self-Reliance, a group that advocates for municipal networks.

In an Oct. 11 report titled North Carolina Connectivity: The Good, The Bad, and The Ugly, broadband researchers H.R. Trostle and Christopher Mitchell argued that Internet providers have failed citizens in rural areas by missing an opportunity to expand high-speed offerings.

The Country Life

Trostle and Mitchell pointed to Federal Communications Commission (FCC) data that shows roughly 20 percent of the state’s rural residents lack access to internet connectivity meeting the federal definition of broadband — 25 Mbps download, 3 Mbps upload — while just 1 percent of urban residents can’t get access to that sort of connectivity. Additionally, the analysts found that just 12 percent of people in rural areas have a choice in high-speed providers, an obstacle that drives up service prices.

Further, researchers identified more than two dozen urban areas where private providers announced plans to offer “fiber to the home” service, yet they couldn’t find evidence of a company working to do so in a single rural community.

Among rural communities that have high-speed internet access, the common denominator is the presence of cooperatives, the report concludes. Each of the state’s eight telephone cooperatives are investing in fiber networks, with three even announcing plans to offer gigabit speed broadband, while a handful of the state’s 26 electric cooperatives are also investing in broadband.

But existing cooperative investment isn’t enough. State law limits how much funding those cooperatives can dedicate to telecommunication services, a policy the researchers want to change.

“It’s not as if these communities have a choice as to what they’re able to do to improve their internet service,” Mitchell said in a statement. “There’s a demonstrated need for high-quality internet service in rural North Carolina, but the state literally refuses to let people help themselves.”

All Hands on Deck

But the state has a solution. Gov. Pat McCrory’s State Broadband Plan aims to provide statewide broadband access by June 2021 through a wide array of policy changes, competition incentives and strategies to eliminate adoption barriers like gaps in digital literacy. The plan focuses strongly on the idea that “increased competition drives innovation, affordability, and the deployment of future-proof infrastructure.”

But Trostle and Mitchell aren’t convinced, calling the governor’s plan a “one-hand-on-deck policy that naively pins the future of the state on the big telephone and cable companies.”
“North Carolina should adopt an ‘all hands on deck’ approach that recognizes the need for a mix of business models in providing essential infrastructure across the state,” the analysts wrote. “Local leaders are better equipped to solve their problems than micro-managers from Raleigh.”

The state’s Broadband Infrastructure Office replied in a statement that Trostle and Mitchell’s report contains “several factual errors and presumptions about the impacts of current state laws on broadband deployment,” and contested that the state adequately highlighted the role of co-ops and community networks in their plan.

Indeed, one of the main bullet points of the state’s plan notes that “community-based adoption and utilization programs help drive demand,” while one of the plan’s recommendations is to offer communities several support vehicles for public-private partnerships.

But Trostle and Mitchell argue that the state is putting most of its eggs in the private sector basket, and point to the millions of dollars in federal funds telecommunications companies have accepted to build out broadband service in the state as evidence that North Carolina can’t rely on the private sector for broadband equity. From January 2012 to July 2015, AT&T accepted nearly $15 million in federal funds to subsidize “high cost service” and CenturyLink received nearly $40 million during the same period, yet the rural gap persists.

“Fortunately, North Carolina’s rural communities have options beyond relying solely on the big companies that have shown so little interest in connecting them,” Mitchell and Trostle wrote.

Despite the report’s criticism, the state reported agreement with the group on some points.

“Where competition won’t occur, communities need to be active and engaged,” said Jeff Sural, director of the North Carolina Broadband Infrastructure Office, in an email to StateScoop. “They need to do several things, including looking to co-ops or small providers or start-ups or other technologies, like fixed wireless, to serve their communities.”

Sural defended the state’s plan further, explaining that it includes case studies in which rural communities have partnered with private companies to deliver fiber to the home, and that there have been instances of of rural North Carolina communities have benefited from both state-based companies and coopertives.

“Belying this group’s accusation of a ‘one hand on the deck policy,’ we promote county ownership of broadband infrastructure to create open access networks available to any provider interested,” Sural said. “This group only promotes municipal-owned broadband. We didn’t do that in the plan and that is why they are critical of our plan. We believe in the power of local leadership, and we can’t be prescriptive in an approach from our level. There is no such thing as a one-size-fits-all approach to solving the issues that communities are facing. That is why our technical assistance team is on the ground and actively working with local community leaders to develop plans that work to solve the problems they are facing.”

Legal Barriers

The researchers are particularly enthusiastic about the potential for cooperatives to step into the void. They note that six of the state’s eight telephone cooperatives are “replacing their copper networks entirely with fiber,” with most able to offer speeds between 20 Mbps and 30 Mbps for costs ranging from $35 to $65 per month.

The researchers also found that three of the state’s 26 electric cooperatives are also starting to offer high-speed internet service, and all have begun offering fiber to the home. However, they predicted that more cooperatives would join in if not for a 1999 state law that prevents them from financing broadband subsidiaries with grants or loans from the federal Rural Utilities Service program or the Department of Agriculture.

“These are the main sources of funding for co-ops and rural infrastructure more generally,” the researchers wrote. “The electric membership cooperative is also not able to pledge more than 10 percent of its assets to back its telecommunications projects.”

In all, the authors found that these co-ops serve roughly 2.5 million people in the state, so changing the law would mean that “rural electric co-ops could provide future-proof fiber infrastructure throughout much of rural North Carolina.”
The researchers also lamented that a 2011 state law — and subsequent federal court ruling in August overturning the FCC’s preemption of that statute — is preventing communities from expanding their own networks. Cities like Wilson and Salisbury have managed to offer gigabit speeds by setting up their own broadband service, but the researchers note that the law prevents them from offering that service to neighboring communities.

Wilson even began working to build out the network to the nearby small town of Pinetops, but had to cease those efforts following the court’s ruling. The authors called for state lawmakers to repeal the statute in question to “allow communities to decide for themselves if a municipal investment is appropriate.”

The analysts are even hopeful that co-ops and local governments can start working together on connectivity projects.

“[Cooperatives] can expand outside their traditional service areas in order to broaden connectivity — partnering with local governments to lease publicly owned conduit and/or fiber would facilitate rapidly improved access,” the authors wrote. “Some electric cooperatives may be hesitant to become a telecommunications service provider. Instead, they can install the fiber while partnering with nearby telecommunications firms to deliver the service.”

State government has a small role to play in the expansion of rural broadband access, the report states. While North Carolina’s current plan recommends that the Legislature set up a “small grant program” to fund tech companies hoping to experiment with creative connectivity projects, the researchers would rather that lawmakers devote funds for communities use on their own broadband access efforts.

“Matching grant or loan programs ensure that communities are invested in the outcome of the project,” the analysts wrote, “and that dollars are stretched farther (sic) to make a larger impact for connectivity throughout the state.”

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