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Growing Frustration

Pandemic Stirs Up Broadband Regulation Debate in States

Internet gaps exposed by COVID-19 are fueling calls by state policymakers to treat broadband like a utility. With federal preemption issues, the California Public Utilities Commission plans to “push the question,” said Commissioner Martha Guzman Aceves in an interview last week. Washington state’s net neutrality law author said he will seek to fully allow municipal broadband next year. A Michigan regulation bill might also return in 2021.

Governors and legislatures are increasingly showing frustration with gaps and taking action, state researchers said in interviews this month. Broadband is “the critical infrastructure of the 21st century,” said the bipartisan Western Governors' Association in an August resolution. Industry and free-market advocates oppose utility and muni broadband. The FCC didn’t comment.

State and federal deregulating based on the IP transition from copper meant losing carrier-of-last-resort and Lifeline protections on a “basic utility service,” said Guzman Aceves, who recently said federal competition policy failed to adequately spread broadband (see 2009100063). She sought a “safety net,” not rate cases. “Competition would be great” for spreading broadband “if we actually had it,” but many Californians have at most two options, said Guzman Aceves. She cited a photo of two children sitting outside a Taco Bell in Salinas to get Wi-Fi for distance learning: “This is an urban city. Plenty of infrastructure there. There’s no reason why we can’t figure it out -- it’s a matter of ... our social contract with these providers.”

The “big prohibition” for states is "at the federal level and the Trump FCC calling the internet an information service,” said Guzman Aceves, who sees California law as less of a hurdle. A CPUC rulemaking opened this month in docket R.20-09-001 to explore options won’t be a “silver bullet,” but “we want to stop waiting for the FCC,” she said. Guzman Aceves expected multiple rulings over the next two years, with the first possible by year-end on any obvious, immediate steps, and more systemic changes later: One possible model is Utah, where state and local governments formed a public entity that’s building infrastructure and leasing it to private providers.

The pandemic has made “even more clear” that “broadband is an essential, public utility that is not widely available or affordable in this country,” said Washington state Rep. Drew Hansen. The Democrat said he’s writing a bill to kill all broadband restrictions on cities, sovereign tribes, rural utility districts and other government entities. It would provide “full retail authority” and “make it unmistakably clear that public broadband by any government entity ... is permitted,” he said.

Hansen had a positive talk with industry about the measure, which he plans to introduce in the January session if he’s reelected, he said. “A lobbyist for a large telecommunications company said, ‘I do believe there is a role for government in providing essential services, and I believe broadband is one of them,’” said Hansen. “I about fell out of my chair because ... that was not my understanding of what industry’s view had been for some time previous.” Muni broadband “has historically been a third rail.”

Lumen supports public-private partnerships with existing ISPs, said a spokesperson for the former CenturyLink, an incumbent in Hansen’s state. Such arrangements “can bring the technologies communities need and the expertise to run a network ... while limiting the financial risk to citizens.” Comcast declined to comment.

Michigan state Rep. Darrin Camilleri (D) proposed authorizing broadband regulation by the Public Service Commission (see 2007230046). HB-5949 went nowhere under a GOP-controlled House this year, and state reps are up for election in November. “There are of course a lot of variables in the legislative universe right now, but my expectation right now is that this legislation will make a return in 2021,” emailed Camilleri aide Ian McKnight.

Utility Debate

The broadband-as-utility debate is “absolutely happening” in states, said National Conference of State Legislatures Fiscal Affairs Program Principal Heather Morton. “COVID has definitely shined a much brighter light on the issue of whether or not people have access to broadband,” and “all options are on the table.”

NCSL tracked about 400 state broadband bills in 2019 and 500 this year, said Morton, predicting hundreds next year as well. Many address funding, either through state money or public-private partnerships, while others encourage electric cooperative participation and dig-once policies, she said. “However the elections turn out, this issue is not going away.”

California “definitely takes a more active regulatory approach,” though sentiment that the broadband problem isn’t “solving itself ... is reflected across multiple states,” said Anna Read, Pew Charitable Trusts broadband researcher. More than half the states now have funds, and there haven’t been many new restrictions on muni broadband, Read said.

Instead of chasing false solutions that have a spotty track record, state officials can improve access to broadband by removing artificial barriers,” emailed an NCTA spokesperson. Broadband performed well during and before the pandemic, she said. “While other public utilities are crumbling ... broadband is thriving and continues to receive billions of dollars in investment annually.”

USTelecom President Jonathan Spalter acknowledges that “we’ve been hearing some voices that have unwisely been suggesting that the lesson of this pandemic is that broadband should be treated as a utility and regulated as such.” That would be “misguided and counterproductive,” he said July 20 at NARUC’s virtual conference. USTelecom referred us to his remarks when we sought comment. CTIA declined to comment.

WGA's calling broadband “critical infrastructure” was “very intentional by the governors,” said Policy Adviser Kevin Moss in an interview. Some Western governors would be intrigued by the idea of treating broadband as a utility, but others “would be very opposed,” he said. Governors from both parties increasingly recognize that broadband “underpins all aspects of healthy economies and communities,” and the pandemic has been a “big motivator,” he said.

The virus “decimated” state and local budgets, meaning less capacity to support infrastructure projects, said Moss, so many Western states are focusing on reducing infrastructure costs for private providers by opening rights of way and streamlining permitting processes. WGA considered the impact of reducing restrictions for rural electric and telephone cooperatives to spread faster internet but didn’t look closely at muni broadband, which remains “a little bit controversial,” he said.

Muni Broadband

Counties in states without municipal or cooperative restrictions had 2 to 3 percentage points more broadband availability by population compared with those from states with such limits, while counties with state funding programs had 1 to 2 points higher availability, said a paper in the October issue of Telecommunications Policy. The study considered connections with 25 Mbps download and 3 Mbps upload.

Easing electric co-op rules without lifting muni restrictions probably isn’t enough, said the report’s co-writer, Oklahoma State University professor Brian Whitacre, in an interview. About 20 states still have muni broadband limits, he said. Problems exposed by the pandemic will drive broadband actions and may create more openness to muni broadband, he said. Frustration with gaps drove state actions even before COVID-19, noted Whitacre, citing the study’s finding that from 2012 to 2018, states with broadband funds increased to 18 from four, and the state broadband offices multiplied to 25 from five.

A Virginia bill to remove restrictions failed this year (see 2002060024). Muni broadband advocates now believe they don’t need to change state law, emailed ArlFiber’s Tim Dempsey. The Virginia State Corporation Commission upheld localities’ right to form broadband authorities last year, he noted. ArlFiber now seeks to persuade the Arlington County board to establish a broadband authority, possibly with adjacent counties and cities, he said. North Carolina sees bills each year to ease state muni restrictions, “but they generally go nowhere or get modified by lobbyists to remove all the teeth,” emailed CCG Consulting President Doug Dawson. “We’ll have to see if the issues of the pandemic make any difference this year.”

Broadband policy is a top partisan issue and, consequently, it will get done poorly,” emailed Phoenix Center Chief Economist George Ford. “I’m encouraged that California wants to take on the responsibility of providing broadband to uneconomic areas. It will learn how difficult a problem this is to solve, and that knowledge will make for better public policy.” Ford, who co-wrote a Federal Communications Law Journal paper this month condemning muni broadband’s economics, slammed Whitacre’s study for using FCC Form 477 data and merging cooperatives and municipal limits.