Virginia Is for Lovers, Not Lobbyists

by Christopher Mitchell

Pop quiz: Should the state create or remove barriers to broadband investment in rural Virginia? Trick question. The answer depends very much on who you are – an incumbent telephone company or someone living every day with poor connectivity.

If you happen to be a big telephone company like CenturyLink or Frontier, you have already taken action. You wrote a bill to effectively prevent competition, laundered it through the state telephone lobbying trade organization, and had it sponsored by Del. Byron, R-Forest, in the General Assembly. That was after securing tens of millions of dollars from the federal government to offer an Internet service so slow it isn’t even considered broadband anymore. Government is working pretty well for you.

If you are a business or resident in the year 2017 without high quality Internet access, you should be banging someone’s door down – maybe an elected official, telephone/electric co-op, or your neighbor to organize a solution. You need more investment, not more barriers. Government isn’t working quite as well for you.

Rural Virginia is not alone. Small towns and farming communities across America are recognizing that they have to take action. The big cable and telephone companies are not going to build the networks rural America needs to retain and attract businesses. The federal government was essential in bringing electricity and basic phone service to everyone. But when it came to broadband, the big telephone companies had a plan to obstruct and prevent and plenty of influence in D.C.

When the Federal Communications Commission set up the Connect America Fund, they began giving billions of dollars to the big telephone companies in return for practically nothing. By 2020, these companies have to deliver a connection doesn’t even qualify as broadband. CenturyLink advertises 1000/1000 Mbps in many urban areas but gets big subsidies to deliver 10/1 Mbps in rural areas. Rural America has been sold out.

If you are a big cable or telephone company, you have a lot of influence in the federal and state capitals. But at the local level, your elected officials are more accountable to you because their decisions have a more immediate impact on their constituents’ lives.

Remember that as the General Assembly considers a bill from the telephone company lobbyists to limit your local governments from building networks. Places like Danville, Martinsville, and the Roanoke Valley have thoroughly upset the big cable and telephone companies by investing in new fiber-optic networks and opening them to any Internet Service Provider that wanted to compete for subscribers.

Danville and Martinsville have been doing this for years, with incredible results. The job gains are remarkable, particularly in areas hard hit by the decline of tobacco and manufacturing. Consider Danville, where the network was started with a loan from the electric utility. The network has made money every year for the community while also enriching the tax base. Existing businesses have become more competitive, new businesses came to town, and the community attracted more foreign direct investment.

They also created something else – a good example for communities that need better access. But the big monopolies are striking back using their strongest asset – lobbying. Virginia is already one of the 20 states that limit local authority to build networks. Now the state could make it even harder or impossible for communities to make these investments.

Consider the shareholders of CenturyLink and Frontier. They demand a good return on their investment. In return for some federal subsidies, they will invest the bare minimum in Virginia’s small towns. They count on the lack of choice in the market (i.e. monopoly power) to protect them from the frustration of local businesses and residents.

Local governments also have to listen to their shareholders – the businesses and residents that demand better Internet access to do business, get a quality education, and even enjoy modern entertainment. Local leaders actually live in these communities, unlike the executives or shareholders from the big companies.

If all of Virginia is to thrive, local governments must be free to invest in the modern infrastructure that their local businesses and residents need. Where existing providers meet that need, the local businesses and residents aren’t going to demand a municipal solution. But that decision should be made locally, not by powerful lobbyists swaying the legislature.

Christopher Mitchell is the Director of the Community Broadband Networks Initiative at the Institute for Local Self-Reliance in Minneapolis. He is on Twitter @communitynets.

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22 responses to “Virginia Is for Lovers, Not Lobbyists

  1. Frontier Communications doesn’t even operate in Virginia as a local exchange carrier (i.e., a local telephone company). They do operate in most of West Virginia. Who is funding Mr. Mitchell’s organization? Why the discussion about Frontier not providing fast broadband in Virginia? I’m sure the Company president would agree since the Company has no Virginia customers.

  2. This is following the history of rural electricity and telephones and today – we have the vestiges – rural electric and phone cooperatives.

    We need to allow the rural counties to do the same with broadband that we have allowed with electricity and phone.

    • There are both co-ops, owned by membership, and municipal utilities. Which are you discussing Larry? As far as I know, both types are expanding broadband to their customers. Getting the central town covered is reasonably easy. It’s the people in the remote locations that are often incredibly expensive to serve.

      • I’m talking about these:

        I’m talking about ANY area where the for-profit folks don’t want to serve.

        • Subject to obtaining authorizations to operate as a competitive local exchange carrier (CLEC) from the FCC and the VSCC, an entity interested in providing telecom broadband services in Virginia can do so. They can compete with the incumbent LECs, including Verizon and CenturyLink, both of which operate in Virginia. Upon qualifying, such entity, which could be a co-op, would be eligible to receive Universal Service Funds from the FCC to help build out its network.

          Local governments can also start a CLEC. Their authority to operate is also governed by state law. A number of states restrict municipalities from using tax dollars to compete with for-profit businesses, while others do not. Some states allow the municipality to operate only within corporate boundaries; others don’t. The FCC preempted state law that restricted a municipality from serving customers outside city boundaries, but a federal court of appeals reversed, holding the FCC lacked statutory authority to preempt state law in this area.

    • ” … allow the rural counties to do the same … ”

      Allow?

      You mean overcharge those in populated areas to undercharge people in rural areas? The same people who say “We ain’t paying for NoVa roads?” Now they want NoVa to pay for their broadband?

      If people in rural areas want to build their own networks with their own money – great! If they want subsidies from elsewhere – too bad.

  3. DJ – is that what you think the Rural Electric Coops are?

    “subsidies” ? the heck you say – what do you think NoVa is getting when taxpayers from all over Virginia are paying for those Federal bureaucrat jobs in NoVA?

    you’d not have near as many of those jobs if it were not for taxpayers beyond NoVa! How about rural Va tax dollars go for their own needs and not NoVa?

    • I doubt many rural areas provide income tax dollars to support NoVA. If you look at the instructions for the Virginia Individual Income Tax, you may note residents of larger, more urban/suburban municipalities send their return and payments to Richmond, while in rural and small town jurisdictions, people send their tax information and cash to the locality. I assume this save some double processing and strongly suggests their is no net export of state income taxes to Richmond and NoVA.

      • That’s just to give under-worked local constitutional officers something to do. All the dollars find their way to Richmond (which after all has what was withheld already). Send the return straight to the state….

  4. I think you’d want broadband in the rural areas for the same reason you’d want electricity and phones…

    education, commerce, productivity – more economic activity, jobs, kids going to college – and less people getting entitlements and needing MedicAid.

    it benefits Virginia AND NoVA to provide 21st century infrastructure throughout the state.

  5. Mr. Mitchell, the largest and strongest army of lobbyists in Richmond works for the local governments. Their retained and employed lobbyists outnumber the famed Dominion platoon by a factor of about 15. If you count the local officials who clearly have lots of free time to come to Richmond when called, it swells into the hundreds. When a raise for deputies is on the docket, see how many uniforms fill the building…..

    So your whining about the telecom industry lobbyists is classic “fake news.” I have not paid very close attention to this particular turf battle between private and public, but it is clearly about money. Not service to the under served, but money. The revenue potential for a local government is substantial. As noted, I have not read these bills or listened closely to debate but when I see that many suits standing near the podium in a General Assembly committee room, there is money on the table. I suspect your motive, Mr. Mitchell, is the same as everybody else’s.

    Sending this on a very weak connection from rural VA….4/1 I think.

    • OK – so let’s be clear about the logic. Those proposing these restrictions claim that munis lose tons of money on these -that they mostly fail. And yet you believe that local governments will find a gold mine? I don’t think that works.

      In reality, most munis operate these as break even – they want to pay the costs but are focused on indirect benefits rather than maximizing revenues. They want jobs and high property values.

  6. A few years back, our electric cooperative was making noises that they might offer internet to those it served electricity to – that did not have cable service.

    it was a Godsend to folks in the rural parts who did not have internet.

    Alas, it never came to be and all mention of it was removed.

    it’s hard to imagine that if the electric cooperative offered internet – unsubsidized, that it would cost more than what the cable companies are charging!

    So I don’t know what happened but suspect cable company lobbyists as having a hand in it as few if any rural electric cooperative seem to be offering internet and it would seem to be a natural add-on for their existing pole/wire infrastructure.

    discussion about cable-provided internet – the lack of for rural – in front of the BOS has revolved around the “right” of the provider to not have to provide cable where it is not economically feasible.

    so I smell a proverbial rat… and despite that “army” of local govt lobby folk, apparently on this, the “fix” is in…

    I see the lack of internet as instrumental in the evolution of a second class of citizen and especially so – young folks in their schooling and education but also simple commerce… The emergence of the internet cell phones has ameliorated this somewhat where there are towers but there are still significant pockets of “dead” space.

    One obvious way for localities to help is to run fiber-optic to the schools, fire stations, and community buildings and from there provide wi-fi and cell tower connectivity – with help from the electric cooperatives and other partnerships – with or without the “help” of the cable companies themselves.

    • One of the biggest problems bringing high-speed Internet to rural areas is the cost of back haul. Connecting rural America to backbone networks is not inexpensive.

      • Then perhaps that should be no less a priority than pipelines, high voltage powerlines, microwave towers, highways and rail.

        We need to accept the reality that the internet is an integral need of civilization just as these other things are.

        This is how, for instance, you get workforce training to those in economically-depressed regions.. as well as getting the K-12 kids educated to 21st century standards so they can successfully compete for jobs and go on to higher education.

        We had to fight these same battles for electricity and phones.. it’s ironic we did not learn that lesson and now must fight the same battles again.

        we want a country that can successfully get our share of jobs in the world instead of worrying about others coming to take our jobs while we make excuses for why we can’t or won’t invest in the things that equips us to compete.

        • In Iowa, Aureon provides a fiber backbone network that connects all the small towns with each other and Internet backbone networks. AT&T is effectively trying to shut it down by arguing to the FCC that it’s too expensive to use.

  7. This is a classic issue and has been around with much resolution for years.

    The big Net providers like Verizon and Comcast, want a perfect mix so they can make the most profits. These factors high density, so it is cheaper to rig wires, and bundling (maneuvering to make you agree to Net and cable with 50 zillion channels that you will never watch). Try to get them to carve down on their offerings and they balk.

    Their model is now being challenged by other forms of Internet access but the poor people in rural areas and inner cities are still getting screwed.

    In Virginia’s case, it is another example of how the supposed “Mother of Presidents” is anything but a democracy as its legislature is for hire.

  8. In some respects this is similar to how Dominion got it’s service area and the rural cooperatives got theirs and going forward from there where some of the “rural” cooperatives have become much more dense than when they were initially formed – but they maintain their service areas instead of turning it over to Dominion.

    So we’re now encountering a similar dynamic for cable/internet where, right now, the cable companies don’t want to serve areas that are not dense (profitable) “enough” but they don’t want to forever forfeit those areas if in the future, they will end up dense enough to be profitable.

    In other words – the Cable companies want to retain future rights to currently unprofitable areas to serve.

    The honest question is – what best serves the public?

    I note that in Bath County – BARC – the rural electric cooperative wants to get into the internet business – for what they characterize as the “last mile” for rural areas now served by electric but not internet even though the backbone is on the major highways.

    I cannot tell if any/all rural electric cooperatives could do what BARC is trying to do – unfettered by Va regulation or if they have a legislative waiver or what.

    BARC is surveying potential customers to see how many sign-ups they can get and I suppose to then determine what the cost of providing service would be – and the resulting price to the consumers.

    They ARE apparently partially funded by a Federal Grant for broadband.

    What would be GOOD here in BR is to develop more information about what rural cooperatives can (and cannot do) right now – and what the proposed legislation does to help – or hinder.

    The local Free Lance Start editorial folks see that legislation as not helpful and instead obstructive..

    Editorial: Senate should reject bill limiting broadband

    http://www.fredericksburg.com/opinion/editorials/editorial-senate-should-reject-bill-limiting-broadband/article_909021a3-26db-5c2b-8a86-bc647485f217.html

    if that’ what this really is – bad on the GA – AGAIN!

    DO YOUR JOB!

    • LG, you say, “What would be GOOD here in BR is to develop more information about what rural cooperatives can (and cannot do) right now – and what the proposed legislation does to help – or hinder.” Yes, yes! But it’s not easy information to come by. Staking out a local franchise, then raising rates to the max and doing the absolute minimum to hold onto the exclusive right to serve so as to exclude any competition, is the classic response of any monopoly provider without effective regulators, and cable providers have played that game for years now thanks to the federal law that shields them from effective State regulation by the SCC. There is one source of competition: it’s called DishTV! But two-way internet by satellite has big latency (time delay) issues. Municipal internet service is a difficult end run around the absence of State regulation of private franchisees, but when the private providers abuse their privilege and you’ve got no alternative but satellite service, it’s far better than nothing. And now the GA wants to step in and block that, too! This situation really is just as bad as Jim describes it.

  9. There are also WISPs (wireless internet service providers) offering broadband in rural markets. http://www.thewisp.net/about.asp Rural Illinois.

    http://wisponline.ca/about-us/ Rural Ontario http://www.mountaininet.com/ Rural Wyoming
    http://totalhighspeed.com/ Rural Missouri
    http://www.wispa.org/ Trade Association A search of members shows 17 WISPs operating in Virginia.

  10. In Virginia – http://www.vabb.com/about-vabb/

    but they still have to connect to a backbone… usually owned by the cable providers….

    this may well be the way to “wire” the rural areas but my impression of these operations is that they are not robust competitors.. but more like nich players.

    I still think rural broadband most obvious path is extending the backbone on rural electric co-operatives existing lines and right-of-ways infrastructure.

    rural-internet should not be some cat-fight between would-be cable providers – it should be an imperative that govt explicitly seeks to make happen. We’re seeing the creation of a digital divide that will adversely affect not only the have-nots but the haves who will end up with the subsidies to economically depressed and educationally limited rural areas.

    This is like we’d be arguing whether or not we should extend electricity to rural.. that the vast rural areas of RoVa would not have electricity… because it’s “unaffordable” and a “profit” cannot be made in providing it.

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