When it comes to high-quality Internet access, the big corporate ISPs have failed rural Mississippi. Other states with similar digital divide issues are starting to see rural electric cooperatives make efforts to connect members. In some places, legislatures have adjusted state laws that complicated co-ops' ability to deploy fiber optic infrastructure. Now, the Public Service Commission (PSC) in Mississippi has formally requested that state lawmakers update an antiquated statute to allow rural electric cooperatives to expand high-quality Internet access.

Waiting for Action

When Magnolia's State Legislators convene in January, they’ll have a unanimous resolution waiting for them from the state’s PSC. The resolution requests that lawmakers take action to adjust Miss. Code 77-5-205 to allow electric cooperatives the authority to offer Internet access. 

James Richardson, Policy Director and Counsel from the Office of Commissioner Brandon Presley, explained that the law currently only allows electric cooperatives the authority to form “…for the purpose of promoting and encouraging the fullest possible use of electric energy…” — electric cooperative are precluded from operating for any other purpose. The law was passed in the 1930s when cooperatives formed across the state to bring electricity to the many farmers in rural Mississippi. The matter has been tested and confirmed at the state Supreme Court. 

The PSC asks that the State Legislature create an exception in statute in order to allow rural electric cooperatives the the ability to also offer Internet access. Earlier this month, the three Commissioners on the PSC approved the resolution requesting the law change.

The Grant County Digital Network Coalition is moving forward with plans to expand connectivity and close the digital divide in Grant County, Oregon.

We first reported on the creation of the coalition, which includes Grant County and the cities of John Day and Seneca, last year. Since then, the group has held three Board of Directors meetings and is making progress toward deploying a fiber optic network in Grant County. The coalition plans to build the network in phases, and once completed, it will connect public facilities, homes, and businesses along the fiber route. To offer Internet access to subscribers, the Grant County Digital Network Coalition will partner with local company Oregon Telephone Corporation (Ortelco).

Working Together to Solve Connectivity Woes

The local governments, led by John Day, established the Grant County Digital Network Coalition to improve the region's inadequate Internet access. Out of all Oregon counties, Grant County ranks second highest on the Digital Divide Index, a measurement of broadband access disparities, according to a presentation prepared by John Day City Manager Nick Green. In 2017, Green told the Blue Mountain Eagle that average Internet download speeds in Grant County are around 10 Megabits per second (Mbps) and that some people don’t have any access at all to the Internet.

Though the county desperately needs better connectivity, the region’s rugged hills make deploying a broadband network to the small communities difficult. Grant County is also home to Malheur National Forest and other federally owned land, further complicating network construction.

For many rural Americans, the local electric or telephone cooperative is their best hope for finally obtaining modern-day connectivity. With the support of government funding, rural cooperatives have brought electricity, telephone service, and more recently broadband access to some of the most rugged and sparsely populated places in the country.

However, recent tax code changes might prevent co-ops from connecting more rural communities. Cooperatives could potentially lose their tax exempt status if they accept government grants for broadband expansion and disaster recovery — an unintended yet foreseeable consequence of the Republican “Tax Cuts and Jobs Act” passed late last year. In a press release, Senator Tina Smith called attention to the oversight, noting, “This uncertainty has caused cooperatives significant concern and frozen some of their grant applications.”

Who’s Ready for Some Tax Policy?

As nonprofit membership corporations, rural electric and telephone cooperatives are exempted from paying taxes under section 501(c)(12) of the Internal Revenue Code (IRC). To maintain this tax exempt status, cooperatives must derive at least 85 percent of their income from members (e.g., from selling electricity). This is sometimes referred to as the the member income test or the income source test.

As Election Day draws near, voters in 36 states and three territories are set to choose governors. In Maine, gubernatorial candidates are making rural broadband a key issue. All four candidates agree that the state needs to be involved in some way, and each recently gave the Press Herald a summary of their plan to expand high-quality connectivity to constituents, if elected.

Different Approaches

Both Independent candidates, Terry Hayes and Alan Caron have suggested state investment. Hayes would like to earmark $100 million annually for four years to deploy fiber networks and capitalize on public-private partnerships. Caron suggests a statewide network, funded by $100 million in bonding his first term and a second term if he were re-elected, to connect every city and town.

The Republican candidate stresses public-private partnerships with an emphasis on encouraging private companies to invest in rural areas. The candidate, Shawn Moody, believes that using federal and state funds as the carrot for private sector Internet access companies will be enough to bring rural connectivity up to speed.

Janet Mills, running as the Democratic candidate, has a plan that seems consistent with some of the current activity in Maine. She wants to create Broadband Expansion Districts, that will allow rural communities to band together to expand and administer their own broadband connectivity. She goes on to state that those districts would be eligible for grants. Mills also sees a particular need to address coastal areas where national providers see not profit in upgrading services. She wants to look into establishing “broadband regional hubs.”

Mills’s approach appears a little more consistent with the regional efforts in Baileyville and Calais, the Downeast Broadband Utility. The two rural communities joined forces to create their own dark fiber utility when incumbents wouldn’t bring the services they needed. Recently Cumberland County released an RFP for a similar regional approach.

Once again, restrictive state laws designed to help big ISPs maintain their monopolies have helped push a publicly owned network to privatization. Opelika, Alabama, recently announced that they will sell their OPS One fiber optic network to Point Broadband, headquartered in West Point, Georgia. They expect the deal to be finalized in early November.

The Road to Now

The city of Opelika installed the network to overcome poor services from Charter and to improve municipal electric services with smart grid applications. In 2010, Charter’s astroturf campaign to stop the network failed when local voters supported the ballot initiative to build the broadband infrastructure to allow the city to provide services. By 2014, Opelika Power Services (OPS) was making Fiber-to-the-Home (FTTH) available for residents and businesses; folks in the community were loving the service from Alabama’s “Gig City.”

Nearby communities still stuck with poor Internet access wanted OPS to serve them also and OPS wanted to add more subscribers, but state law prevents Opelika from expanding beyond their current coverage area. As in the case of Bristol, Virginia, when a state prevents a municipal network from growing and increasing revenue, the state makes it difficult for the network to remain sustainable.

Mayor Gary Fuller recently told WLTZ:

“We attempted on three occasions to get the legislature to [allow us to] expand beyond our city limits, into North Auburn and rural Lee County, Beauregard, and we could never do that because we couldn’t get the law changed.”

The people of Egremont have had it with Charter Spectrum and their shenanigans. After the latest issue pushed them too far, the town’s Select Board voted to give the company the boot.

How Much?

Charter Spectrum had proposed connecting 96 percent of Egremont’s households for approximately $1.185 million, the lion’s share to be funded by a Massachusetts Broadband Institute (MBI) last mile grant. The company, however, had not calculated make-ready costs correctly until after making their proposal. After examining the situation in Egremont, Charter Spectrum has almost doubled the estimate for the project to $2.285 million.

The difference Charter Spectrum says, is due to the need to replace 150 poles, which they say are not tall enough to accommodate their infrastructure. Charter Spectrum puts the blame on local company Fiber Connect, which has been deploying fiber in Egremont and other Berkshire towns. The national company says that Fiber Connect’s fiber optic cable has filled any room on the poles for Charter Spectrum cables.

MBI isn’t willing to fill the $1.1 million gap created by Charter Spectrum and neither is the company. Peter Larkin from MBI attended the October 15th meeting and presented an MBI proposal, in which the town would pay for half of the gap and MBI would cover the remaining $600,000. Locals at the meeting were less than thrilled.

Unexplained Deal

With a population of only around 1,200 people, the news from MBI topped off an already long and frustrating process to bring high-quality Internet access to the rural town. Egremont had planned to joined Wired West, the broadband cooperative of western Massachusetts towns, but later opted to work with the national cable provider. Ever since the decision, they’ve experienced delays in negotiations, often because Charter Spectrum has remained elusive about where exactly they plan to deploy and which premises would be left out.

Located only 30 miles east of Houston, it’s hard to believe that Mont Belvieu, Texas, ever had poor Internet access. Faced with complaints from residents and businesses, city officials decided to deploy fiber and bring fast, affordable, reliable gigabit connectivity directly to the community via MB Link.

How to Fix the Problem

While it’s not far from the center of a large metro area, Mont Belvieu still maintains a rural character. The town’s history is based in the oil and natural gas industry, which began in the early 1900s. As City Manager Nathan Watkins told Christopher Mitchell in episode 326 of our podcast, approximately 85 percent of natural gas liquids in the U.S. travel to Mont Belvieu for processing. With more than 10,000 miles of pipeline within their salt domes, the town of 8,000 has become a centerpiece of oil and natural gas processing.

Before MB Link, the community dealt with a patchwork of services offered by several different providers. Even though more than one provider operated in town, they didn’t compete with each other. Without competition, ISPs had no impetus to improve services. Residents complained about DSL download speeds of 1.5 Megabits per second (Mbps) and cable Internet access download speeds topping out at 5 Mbps. There were even premises that could not obtain Internet access because ISPs reported saturated networks and were not willing to make investments to serve more subscribers.

In 2016, a feasibility study in Mont Belvieu revealed that 60 percent of residents and 79 percent of businesses felt that local Internet access wasn’t adequate for their needs. In the same survey, 90 percent of residents and 100 percent of business respondents opined that high-speed Internet access is an essential service in the same manner as electricity and water.

City Officials in Fort Scott, Kansas, located about 95 miles south of Kansas City, say that they haven’t been able to entice national providers to bring high-quality Internet access to their town of about 8,000 people. That may be a good thing — Craw-Kan Telephone Cooperative is building out fiber in Fort Scott as early as 2019.

Working With the City

Planning for the network has involved collaboration between Fort Scott and the cooperative. Before bringing connectivity to residents, the cooperative has been deploying to a local industrial part, the airport, and the golf course. 

The plan has included an Exchange Agreement between the city and Craw-Kan which allows the co-op to use vacant conduit to connect Fort Scott’s Water Treatment Plant to the golf course and the airport. Fort Scott will also provide an easement for a fiber node at the golf course. Craw-Kan will provide six fibers for the city to use along this part of the route, and will also install vacant conduit for the city during construction at another location. The additional conduit will be earmarked exclusively for the city’s use.

City officials and representatives from Craw-Kan have been working on the deal and the project since the fall of 2017. At a recent City Commission meeting, City Manager Dave Martin said that Fort Scott was excited that the cooperative was bringing gigabit Fiber-to-the-Home (FTTH) connectivity to town, noting that they’d tried to attract ISPs that would offer better services. Suddenlink offers services in parts of town and AT&T’s DSL is also available. 

Craw-Kan will provide $70 per month symmetrical gigabit connections  with no data caps in addition to 10/10 and 50/50 for $50 per month and $60 per month respectively. Installation is free and a Wi-Fi router is included in the monthly rate.

Working With Other Communities