Pennsylvania Snubs Community Broadband, Small ISPs In Latest Broadband Grant Round

PA State Capitol & green water fountain

Telecom monopolies have hoovered up the lion’s share of $214 million recently doled out by the Pennsylvania state Broadband Infrastructure Program (BIP), with cooperatives, smaller ISPs, and community-owned networks left largely out in the cold.

It’s not a surprising move for a state long considered politically hostile to community-owned and operated broadband networks, though industry experts say this latest round of awards was particularly egregious when it comes to dodgy politics and its total lack of any real transparency.

According to an announcement by the Pennsylvania Broadband Development Authority (PBDA), this $204 million in Broadband Infrastructure Program (BIP) grant awards will help fund 53 projects in 42 counties across Pennsylvania, connecting 40,000 homes and businesses, bringing high-speed Internet to over 100,000 Pennsylvanians.

PA Broadband Development Authority logo

The awards were funded with the state’s Capital Projects Fund allocation. After matching funds by winning bidders are included, the total broadband investment is expected to exceed $407 million. A complete breakdown of all grant award winners can be found here.

Verizon was the biggest grant award winner, nabbing $78.3 million. Other big grant award winners were Comcast ($61.7 million), Windstream ($12 million) Frontier ($3.5 million) and Brightspeed ($782,000). A few small private ISPs also won awards including Adams Cable ($387,969) Upward Broadband ($1,476,288) and Alleghenies Broadband ($1,809,524).

Pennsylvania state leaders say that project applications were evaluated based on the size of the project, the “experience and ability of the applicant to successfully deploy high-speed broadband service,” and “affordability standards that include a low-cost option.” Project rules require that funded projects must be completed by the end of 2026.

Small ISPs, Community Broadband Gets The Cold Shoulder

But while nonprofit, cooperatives, and community-owned broadband networks were allowed to apply, almost none were able to win state funding – despite being sector leaders when it comes to the consistent delivery of affordable access. Meanwhile, many of the companies selected, such as Frontier, have rich histories of actively defrauding state subsidy programs.

“They’ve boxed out almost all of the local ISPs,” Penn State Telecommunications Professor Sascha Meinrath told ILSR.

“There's no munis. There's only one nonprofit, which is the nonprofit that the head of the broadband authority ran prior to being the head of the broadband authority.”

Meinrath said the entire grant award determination process lacked transparency.

He noted how the state twisted itself into knots to ensure that the bulk deployment funds, not only went to regional monopolies, but to constituent areas of the politicians involved in grant award decision process.

Monopoly Mr Money Bags street art

“You've got Comcast and Verizon each hoovering up basically a third of the entire plot. So over two thirds of the funds went to just those two mega corporations,” Meinrath pointed out.

In some cases, like Comcast’s $1.36 million award to deploy broadband access to Chester County, he noted, the state took multiple applications and merged them together to ensure eligibility for Comcast deployment efforts that might have not been eligible for awards. This, despite the fact that numerous local Pennsylvania ISPs, which proposed bids that often involved significantly lower costs per passing, were ignored entirely.

“I've now talked to multiple ISPs that offered a faster, cheaper service but got turned down,” he said. “And I'm like, so wait a second…what criteria were they using to decide on these two companies? There's just a real lack of clarity as to what's transpired here, frankly.”

Verizon’s big win is particularly ironic given that the company has a long history of taking various subsidies, tax breaks, and regulator favors from the state of Pennsylvania, then failing to deliver. From early scandals in the 90s to complaints about unfinished fiber deployments in 2016, Pennsylvania history is pockmarked by examples of Verizon’s failure to uniformly deploy.

PA BIP Awards Areas Map

As is so often the case, Meinrath said that lobbying influence and politics appears to have dominated the grant determination process, with numerous grants conveniently winding up in districts overseen by PDBA board members like Republican Senator Gene Yaw.

“All four of the board members have projects in their own very small districts, which statistically speaking is an incredible occurrence, because only one tenth to one twentieth of the state is covered by these grants,” he said.

The determinations not only raise questions about ethics, but legal questions as well, he noted. The PDBA did not respond to a request for comment.

Hostile To Community Broadband From The Start

Pennsylvania is one of 17 states that have counterproductive state laws – lobbied for and even ghost written by incumbent telecom providers – hampering the deployment or financing of municipal broadband networks.

Pennsylvania’s law, passed in 2004 after ample lobbying by Time Warner Cable and Verizon, prohibits municipalities from providing broadband service to residents for a fee, unless no such services are provided by private telecom companies – and no private telecom companies are willing to provide such services within 14 months of being requested to do so.

The structure of the restrictions – combined with widespread state regulatory capture – allow regional telecom monopolies to bog down in bureaucracy (often permanently) any competitive threats to their regional dominance.

hostile environment sign

Despite the restrictive segment of the law being literally entitled “prohibition against political subdivision advanced and broadband services deployment,” Meinrath noted that state officials routinely try to insist that no such restrictions actually exist during policy conversations.

“They have a right at first refusal for muni networks, but also for public private partnerships, which again, this is not even acknowledged by the state,” Meinrath said. “You can imagine if there is a law that is on the books – Title 66, paragraph 3014, subpart H – but declared to not exist, officially – it makes it very awkward.”

COVID lockdowns, and the boom in home education and telecommuting, not only highlighted the essential need for affordable, reliable broadband access, but the harmful nature of legislation that hampers the deployment of creative, community-owned alternatives.

But Pennsylvania’s law remains intact, and, according to Meinrath, has been hugely effective in “scaring municipalities out of this space,” ensuring that the state sees very little in the way of creative, community-owned alternatives to concentrated, regional monopoly power.

“The law not only prohibits municipalities, but it prohibits any entity created by municipalities,” Meinrath noted. “So all those public private partnerships that everyone – including the broadband authority – is declaring that people should set up, would be an illegal provider, if municipalities did that.”

Much More Money On The Way

Pennsylvania is poised to soon receive another $1.2 billion for broadband expansion courtesy of the 2021 Infrastructure Act’s $42.5 billion Broadband Equity, Access and Deployment program.

PA Five Year BEAD plan

Pennsylvania’s state broadband office says it will begin accepting challenges to its broadband coverage data starting this spring, with the door opening to BEAD grant applications at an unspecified point later in 2024. (An interactive map of the state’s served, unserved, and underserved locations can be found here).

There have been concerns that Pennsylvania’s restrictions on municipal broadband could conflict with NTIA guidance on BEAD grant delivery. But state officials issued statements last December insisting that all applicants will be considered.

“PBDA anticipates engaging with a variety of entities, including for-profit internet service providers, nonprofits, cooperatives, and local governments to achieve affordable, high-speed internet for all Pennsylvanians,” said PBDA Executive Director Brandon Carson.

But history has made it abundantly clear that the state’s solution to costly, expensive, broadband caused by monopoly consolidation is to throw the lion’s share of state and federal funds at the very monopolies responsible for the problem – all while boxing out popular, creative, community-owned alternatives with a proven track record of delivering affordable access.

Unlike Pennsylvania’s state awards, the BEAD process legally requires transparent public insight into how grant award locations and winners were determined. But given the state’s behavior to date, community broadband advocates will maintain an arched eyebrow as they wait to see if they’ll be included in a massive, once-in-a-lifetime broadband funding opportunity.

*Disclosure: ILSR assisted in an application for a small ISP that did not receive funding under this program.

Header image of Pennsylvania State Capitol & green water fountain courtesy of Craig M. Fildes, CC BY-NC-ND 2.0 DEED Attribution-NonCommercial-NoDerivs 2.0 Generic

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