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Tax Change Deters Rural Co-ops From Expanding Internet Access
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.
Senate Considers Network Neutrality Today; Maps Show Millions At Risk
It’s May 16th and today is the day the Senate will vote on whether or not to reverse last December’s repeal of network neutrality rules by FCC Chairman Ajit Pai and other Republican FCC Commissioners. As a reminder, we thought this was a good day to pull out the maps we created that illustrate how that decision to repeal the federal policy put at least 177 million Americans at risk. Without network neutrality protections in place, these folks are limited to obtaining broadband Internet access only from providers that have violated network neutrality or have admitted that they plan to violate network neutrality tenets in the future.
Visualizing the Risks
Back in December 2017 when the current FCC made it’s misguided decision, we decided to take a look at the data and create visualizations to paint a picture of what they had done. We used Form 477 data, which tends to overstate coverage, so the problem in the field is likely more severe than the maps indicate. The results aren’t pretty.
At least 129 million people have only a single provider from which they can subscribe to broadband Internet access. The FCC defines broadband as 25 Mbps download and 3 Mbps upload. Out of those 129 million Americans, about 52 million must turn to a company that has violated network neutrality protections in the past and continues to do so.
In some places, the situation is a little better. There are 146 million Americans with the ability to choose between two providers, but 48 million of those Americans must choose between two companies that have a record of violating network neutrality.
For a larger image, download this version [18 MB png].
Business Leaders, Sign This Letter Before May 2nd To Save Network Neutrality!
At the Institute for Local Self-Reliance, we recognize the power of small businesses in local communities. As federal lawmakers consider where they stand on the issue of network neutrality protections, small businesses can join forces to let Congress know that they need network neutrality to stay strong. Fight For The Future (FFTF) has launched a campaign that takes advantage of “Small Business Week” and its proximity to a crucial vote involving the Congressional Review Act (CRA).
Sign, Host, Deliver, Speak
FFTF encourages business owners to express their support for network neutrality by signing a short letter they’ve prepared that succinctly addresses the issue for small businesses:
Dear Member of Congress,
We are companies who rely on the open Internet to grow our business and reach customers online. We are asking Congress to issue a “Resolution of Disapproval” to restore net neutrality and the other consumer protections that were lost when the Federal Communications Commission (FCC) voted to repeal the 2015 Open Internet Order in December 2017.
Users and businesses need certainty that they will not be blocked, throttled or charged extra fees by Internet service providers. We cannot afford to be left unprotected while Congress deliberates.
We will accept nothing less than the protections embodied in the 2015 order. Please ensure the FCC keeps its tools to protect consumers and business like ours.
Thank you for considering our views.
Fight for the Future
Thousands of businesses have already signed on to the letter to be delivered to members of Congress on May 2nd, the high point of “Small Business Week.”
FFTF also offers suggestions, resources, and media materials for local folks who want to attend an event happening in their area or who want to organize a local event. If you want to organize a letter delivery, FFTF offers a package of resources that includes steps to take, graphics and media for outreach, recruitment ideas, and points to consider when talking to the press. It’s all you need in one place — you add the energy.
Vermont Takes Net Neutrality Action
Maple syrup, the Green Mountains, and network neutrality. On February 15th, Vermont Governor Phil Scott signed Executive Order No. 2-18, the Internet Neutrality in State Procurement, following closely the actions of four other Governors over the past few weeks. You can read the E.O. here.
States Take A Stand
Like similar actions in Montana, New York, Hawaii, and New Jersey, Vermont’s executive order applies to contracts between ISPs and state agencies. The order directs the state Agency of Administration to change its procedures so that any ISP it contracts with doesn't throttle, engage in paid prioritization, or block content. The Agency of Administration has until April 1st to make the changes to Vermont’s procedures.
If a state agency cannot obtain services from an ISP that agrees to comport with network neutrality policy, the state agency can apply for a waiver. The E.O. is silent as to what would allow a waiver; presumably the Agency of Administration would need to establish criteria.
Action In The State Chambers
In early February, the State Senate passed S.289 with only 5 nays and 23 yeas. The executive order Scott recently signed reflected the intention behind the language of S.289 regarding state contracts. When Sen. Virginia Lyons introduced the bill, she described it as a necessary tool to ensure transparency in government. “We don’t want to see information held back or slowed down or deviated in any way when it relates to our state or local government,” Lyons said.
Louisiana Net Neutrality Proponents Urge Senator Support
After the FCC chose to overturn federal network neutrality protections on December 14th, 2017, open Internet advocates and elected officials that favor network neutrality have sought avenues past the Commission to reinstate the policy. In Louisiana, four groups of citizens organized together to form Team Internet and stage Louisiana rallies in four cities in January. Their goal was to bring attention to the overwhelming opinion that network neutrality benefits Internet users and to convince Senator John Kennedy that he should vote to block the harmful FCC decision.
Fight for the Future (FFTF), Free Press Action Fund, and Demand Progress worked together to form Team Internet, which organized protests in Lafayette, Shreveport, Baton Rouge, and New Orleans at Kennedy’s offices. At the Lafayette office, a group of advocates led by Layne St. Julien presented petitions with more than 6,000 signatures to Kennedy’s deputy state director, Jay Vicknair. The petitions urged Sen. Kennedy to use his vote to overturn the FCC action.
According to Vicknair, constituents have called and emailed the office in numbers rivaled only by last year’s healthcare debates.
Advocate Tool, The CRA
Proponents of network neutrality — mostly people, companies, and entities that aren’t big ISPs — consider the FCC’s order harmful. In order to regain network neutrality protections, which would remove the threat of paid prioritization and better ensure an open exchange of ideas online, advocates hope to use the Congressional Review Act (CRA). Under the CRA, Congress can reverse the FCC decision within 60 legislative days of it being published in the Federal Register as long as there is a majority vote. At last count, 50 Senators had committed to supporting a reversal. Public Knowledge has created a quick video describing the process:
At the recent Team Internet protest, attendees called on Kennedy to “be a hero” and be the 51st.
In A Net Neutrality Zone
Transcript: Community Broadband Bits Episode 281
This is the transcript for Episode 281 of the Community Broadband Bits podcast. Will Rinehart of the American Action Forum in Washington D.C. discusses telecommunications and economics with our host Christopher Mitchell. Listen to this episode here.
Will Rinehart: And I do think that obviously good policy is very very important and that's where you and I agree a lot. You know there's obviously some good policies that can be enacted. There's probably better conversations that could be had in this space and that's also something else that I really do really want to see. You're
Lisa Gonzalez: listening to episode 281 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzales as a research organization. We here at the institute make it a habit to hear all sides of the debate along the way we make connections with people who offer perspectives on policy that differ from ours. We consider these conversations critical as we analyze factors that help us create policy recommendations and resources for local communities. This week Christopher talks with Will Rinehart from the American Action Forum. They got together at the recent broadband community's economic development conference in Atlanta. In this conversation you'll hear the two discuss a variety of topics they talk about the area of telecommunications and economics and the forum's approach. You'll also hear that these different perspectives aren't as black and white as they first appear. Now here's Christopher with Will Rinehart from the American Action Forum.
Christopher Mitchell: Welcome to another edition of the community broadband bits podcasts. I'm Chris Mitchell with the Institute for Local Self-Reliance. Coming to you from Atlanta sitting practically on a runway at the Atlanta airport with Will Rinehart the Director of Technology and Innovation Policy with the American Action Forum. Welcome to the show. Thanks Chris. Thanks for having me. We're at the broadband community's event here. We just had our second panel which is called a blue ribbon panel and general session kind of thing. And you and I are typically brought on as people who have very opposing points of view.
Another Perspective on Policy From American Action Forum - Community Broadband Bits Podcast 281
Christopher went to Atlanta for the Broadband Communities Economic Development Conference in early November, and while he was there, he touched base with this week’s guest Will Rinehart. Will is the Director of Technology and Innovation Policy at the American Action Forum, a DC nonprofit organization that’s been around since 2009.
Will and Christopher don’t always see eye to eye on issues that affect telecommunications and broadband policy, but both agree that it’s important to have spirited debate to share perspectives. Only by examining issues from different sides can we craft policy that creates lasting benefits.
In this interview, Will describes his organization and his work there. Chris and Will look at compelling issues such as ISP competition, government regulations, and how the FCC’s 2015 upgraded definition of broadband has reverberated in the market. The two get into franchising and ubiquitous broadband, local authority, and connectivity in rural America. It’s a spirited discussion chock-full of issues.
You can tweet to Will, he’s @WillRinehart on Twitter.
This show is 30 minutes long and can be played on this page or via Apple Podcasts or the tool of your choice using this feed.
We want your feedback and suggestions for the show-please e-mail us or leave a comment below.
Listen to other episodes here or view all episodes in our index. See other podcasts from the Institute for Local Self-Reliance here.
Thanks to Arne Huseby for the music. The song is Warm Duck Shuffle and is licensed under a Creative Commons Attribution (3.0) license.
Local Authority "A-Number One" Priority For Congress, Says Wheeler
“A-number one importance.”
On September 15th, the Senate Commerce, Science and Transportation Committee gathered to discuss FCC oversight and telecommunications issues. Among those issues, the Committee discussed municipal networks.
Senator Cory Booker (D - NJ) asked FCC Chairman Tom Wheeler to provide his thoughts on how important it is that Congress takes action. The matter he put before Wheeler was the prospect that Congress act to allow local communities to have local authority on issues relating to Internet infrastructure and advanced telecommunications capabilities. How important is it?
Wheeler’s answer: “A-number one importance.”
Wilson, Pinetops, And A Harmful State Law
Booker, who introduced a bill in 2015 to restore local authority, brought up the subject of Wilson, North Carolina, and nearby Pinetops. When the FCC rolled back restrictive state laws in 2015, Wilson’s electric utility finally had the legal authority to help their neighbors so began offering high-quality Internet access through it’s municipal Internet service, Greenlight. Earlier this summer, the Court of Appeals found in favor of the state, which challenged the FCC decision. As a result, Wilson must cut off service to Pinetops or risk losing the legal ability to serve anyone. The FCC has announced that it will not pursue further review of the decision and will focus its resources on other areas.
Booker described the situation in Pinetops as “disturbing,” but went on to praise Wilson for investing to solve the need in the region and pointing out how local businesses, including those in Pinetops, came to depend on those investments. He went on to say he was “disappointed, if not angered” by the Court of Appeal’s decision.
Watch a clip of the hearing:
U.S. Senator Cory Booker Introduces Community Broadband Act
“As Mayor of Newark, I saw firsthand the value of empowering local communities to invest and innovate. The Community Broadband Act provides cities the flexibility they need to meet the needs of their residents,” Sen. Booker said. “This legislation will enhance economic development, improve access to education and health care services, and provide increased opportunity to individuals in underserved areas. At a time when local governments are looking for ways to ensure their communities are connected and have access to advanced and reliable networks, the Community Broadband Act empowers local governments to respond to this ever-increasing demand.” "Barriers at the state level are preventing communities from developing local solutions when there is little or no choice in their Internet service provider,” Sen. Markey said. “This legislation will support the ability of cities to decide for themselves whether or not they would like to build their own broadband networks and provide community members with high speed Internet service. I thank Senator Booker for his leadership introducing the Community Broadband Act, which will support more options in the broadband market and greater local choice. I also continue to urge the FCC to act now to use its authority to end any restrictions placed upon local communities to make these decisions for themselves.” “Folks in small towns and rural communities should have the same access as everyone else to the Internet, and the jobs and business opportunities it brings,” Sen. McCaskill said. “Large Internet providers too often aren’t willing to offer service in rural America, so this bill ensures local communities can come together to provide their residents with access to the opportunities high-speed broadband offers.”And we included this statement:
We believe these decisions about how best to expand Internet access are best made by local governments, who are most informed of the need and challenges.