Broadband threatens local providers | Mclean County
Developing trends among some local governments do not necessarily match Washington’s expectations that the portion of the $ 900 million federal coronavirus funds earmarked for local governments to spend on infrastructure projects will reach those with the most. need.
Local governments using American Rescue Plan Act (ARPA) infrastructure dollars for broadband-related projects are expected to use these resources to bridge the digital divide in their regions by providing high-speed internet. quality to unserved residents and strengthening service to underserved areas. conditions both highlighted and exacerbated by the pandemic.
This would reflect the 2020 General Assembly’s policy funded by a $ 250 million credit by this year’s legislature that limited funding to projects reaching unserved areas, included a 50/50 match with suppliers – a decision smart to expand the impact of dollars – and prohibits overbuilding and duplication of public money invested in areas already served.
However, some local governments issue a Request for Proposal (RFP) that includes neighborhoods already served by private providers or local utilities.
The Daviess County Tax Court, which received $ 20 million from these ARPA funds, included 22,000 addresses under the “eligible project area” in its recent tender for broadband projects, although the major private providers have already built services to thousands of these locations without relying on government grants.
In addition, Conexon has created its own Internet service provider which has received millions of federal dollars to extend service to more than 2,500 of these Daviess County addresses.
Why does Daviess County want to use taxpayer dollars to subsidize another competitor to create a high quality Internet service where private capital has already been invested and even federal dollars have been allocated?
Is there cronyism here?
Do some Daviess executives want to run an easy, profitable broadband business to a politically connected player?
Whatever the ultimate reason, this approach creates a level playing field and a level playing field by forcing other entities already providing services but not receiving assistance to compete with a government-sponsored operation.
This is no different than what happened with Kentucky Wired, sold to taxpayers seven years ago as a 3,200-mile state-owned fiber network that would extend broadband to missing residents. geographically difficult to access areas, including mountainous terrain in the east.
But the statewide boondoggle has uncovered what private providers have long known – it’s a difficult and largely unprofitable proposition to foray into some of these areas.
Instead, it would be much easier and more profitable, they apparently thought, to simply poach existing paying customers from their current broadband provider to pay for this juggernaut.
Dave Flessas, CEO of OpenFiber Kentucky doing business as Accelecom, testified under oath at a state budget subcommittee hearing that his company, which controls access to the Kentucky Wired network, does not select its clients.
“The concept of targeting a single customer because it generates high income is too expensive,” Flassas told lawmakers.
But Tony Thompson, general manager of Murray Electric System, testified just the day before before the Interim Joint Committee on Tourism, Small Business and Technology that he had an email targeting one of Murray’s fiber customers with a solicitation to switch service to Accelecom, although it “repeatedly assured that Kentucky Wired would not compete with our member cities for our customers.”
Tyler Campbell, executive director of the Kentucky Telecom Association, wrote a letter to the Interim Joint Committee on Tourism, Small Business and Technology saying that Accelecom’s successful prosecution of customers of its member groups “will wipe out revenue from our networks. rural fiber and will make it even more difficult to deploy broadband in the most expensive areas of the state.
Such tactics discourage private companies from increasing their investments in areas where more – not less – such engagement is needed if Kentucky is to empower the underserved, reach the unserved, and bridge its digital divide.
Jim Waters is President and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free market think tank. Read the previous columns on www.bipps.org. He can be contacted at [email protected] and @bipps on Twitter.