As the federal government makes unprecedented investments to expand high-speed access to the Internet, unbeknownst to most outside the broadband industry is that nearly a third of the states in the U.S. have preemption laws in place that either prevent or restrict local municipalities from building and operating publicly-owned, locally-controlled networks.

Currently, there are 16 states across the U.S. (listed below) with these monopoly-protecting, anti-competition preemption laws in place.

These states maintain these laws, despite the fact that wherever municipal broadband networks or other forms of community-owned networks operate, the service they deliver residents and businesses almost always offers faster connection speeds, more reliable service, and lower prices.

In numerous cases, municipal broadband networks are able to provide low-cost or free service to low-income households even in the absence of the now expired federal Affordable Connectivity Program (ACP). And for several years in a row now, municipal networks consistently rank higher in terms of consumer satisfaction and performance in comparison to the big monopoly Internet service providers, as PCMag and Consumer Reports have documented time and time again.

Nevertheless, these preemption laws remain in 16 states, enacted at the behest of Big Cable and Telecom lobbyists, many of whom have ghost written the statutes, in an effort to protect ISP monopolies from competition.

The Infrastructure Law Was Supposed to Move the Preemption Needle But …

In the Show Me State – cradled in the center of the Ozarks – Houston, Missouri is the biggest small city in Texas County.

And what local officials have shown its 2,100 or so residents over the last four years is that it can build its own modern telecommunication infrastructure to help spark economic development and offer big city Internet connectivity at affordable rates.

It began with a citizen survey in 2019, asking residents if they would be interested in a municipal broadband service, given the inadequate offerings of the big incumbent providers. Since then – not only has the city built an 18-mile fiber ring for an institutional network (I-net) to connect the city’s facilities – it has built a fiber-to-the-home (FTTH) network that now covers 95 percent of the 3.6 square-mile county seat.

Image

“The project started in 2020 and we went live in the spring of 2021,” Randon Brown, Technology Director for the City of Houston Fiber Department, tells ILSR. “Construction of the project has taken approximately four years. (Today) 95 percent of the town (network) is operational and can be serviced.”

The city has spent $3 million of its own money to fund construction of the aerial fiber network, Brown said.

The network passes 1,200 premises with 272 subscribers now getting service from Houston Fiber, “which encompasses a mixture of residential and business customers” – though that number will soon rise to 364 (30 percent take rate) in the near future as more residents and businesses are in the pipeline waiting to be connected, he added.

Joplin, Missouri has announced a new broadband public-private partnership (PPP) with ALLO Fiber that should help boost competition and lower rates across the city of 52,000. The partnership poses a particular challenge to regional cable giant CableOne, which currently enjoys a monopoly over broadband access across a whopping 83 percent of the city.

Outside of a $5 million city contribution to harden key city infrastructure, the network will be entirely built, funded, owned and operated by ALLO.

The origins of the project extend back to 2019, when the city first began exploring efforts to modernize Joplin infrastructure under a “smart city” initiative. By 2021 the city had hired Finley Engineering and CCG Consulting to conduct a feasibility study exploring the technical and financial details of a city-owned fiber network.

Fed up by expensive and substandard broadband access and buoyed by public support, in 2022 the city issued a request for proposal (RFP) for a partner that would help build such a network. The city received nine responses to the RFP. Last month, the Joplin City Council approved an ordinance by a vote of 8-1 selecting ALLO as the city’s primary partner.

Image

“ALLO really stood out because they were coming to our market without asking us for any assistance,” Troy Bolander, Joplin’s head of Planning, Development & Neighborhood Services, recently told Fierce Network.

The U.S. Treasury Department announced another six states have been approved to receive nearly $1 billion in Capital Projects Funds from the American Rescue Plan to bring new broadband infrastructure to more than 180,000 homes and businesses.

The latest tranche of CPF funds is heading to Florida, Georgia, Iowa, Minnesota, Missouri, and Utah, bringing the total number of states to have been approved for their share of the $10 billion fund to 22 states.

Previous awards were announced in June, July, August, early October and late October. According to a Treasury Department press release, the remaining funds for additional states and Tribal territories will be released on a rolling basis.

U.S. Treasury Deputy Secretary Wally Adeyemo said the announcement further underscored the Biden-Harris administration’s commitment to invest in the expansion of reliable, affordable broadband infrastructure as the Covid pandemic “exposed the stark inequity in access to affordable and reliable high-speed Internet in communities across the country.”

This funding will lay the foundation for the Biden-Harris Administration’s historic investments to increase access to high-speed Internet and reduce Internet bills for American households and businesses.

Florida

The Sunshine State is set to receive $248 million to fund new broadband infrastructure that will connect an estimated 48,400 households and businesses, or about 10 percent of locations in Florida that do not have access to high-speed Internet. That amount accounts for 68 percent of the CPF funds Florida will receive as plans for how the state will spend the remainder of funds is still under Treasury review.

Freshly proposed legislation in Missouri would prohibit towns and cities from using federal funds to improve broadband access in areas telecom monopolies already claim to serve. It’s just the latest attempt by incumbent telecom giants to ensure that an historic wave of federal broadband funding won’t harm their revenues by boosting local broadband competition.

Missouri SB 1074 - Sponsored by Sen. Dan Hegeman (R., District 12), proclaims that “no federal funds received by the state, political subdivision, city, town, or village shall be expended for the construction of retail broadband internet infrastructure unless the project to be constructed is located in an unserved area or underserved area.” It passed the Senate Commerce, Consumer Protection, Energy and the Environment Committee on April 13th.

According to the bill, the Missouri Office of Broadband Infrastructure would certify the project prior to a political subdivision receiving authorization. Before being authorized, the office would be mandated to check with incumbent broadband providers to ensure that they don’t offer service in the specified area. 

The bill prohibits federal funding for any projects in areas where a single provider already receives funding to deliver 100 Megabits per second (Mbps) download speeds. If it passes, it also allows Internet Service Providers (ISPs) to submit written challenges to grant applicants within 45 days. The Department of Economic Development would then be tasked with determining the truthfulness of each challenge. 

Only if applicants can prove they’re servicing an “unserved” or “underserved” area (which again is defined by flawed FCC Form 477 data that routinely overstates existing coverage and speeds using broadband definitions set at ankle height) will the applications be deemed valid. 

But the bill gives incumbent monopolies even greater leverage in the challenge process, by letting them challenge a deployment if an incumbent ISP has “taken affirmative steps to begin the process of construction to provide broadband,” or “has been designated funding through federal programs to support the deployment of broadband” in the targeted areas.

Electric cooperatives illustrate the power that community-owned enterprises have to bring Internet access at scale to unconnected rural communities. Because of their work, states like Missouri (where 15 percent of all households only have access to broadband speeds slower than 100/20 Megabits per second, and only 38 percent have access to speeds of 100/100 Megabits per second or faster), will go from being among the least-connected states to one of those with the greatest connectivity in rural areas in coming years. 

An infusion of federal funding shows how publicly owned infrastructure can go farther and move faster. Ralls County Electric Cooperative (RCEC) serves as example in Missouri, building on its existing broadband infrastructure to further increase connectivity in one of the most connected counties in the state.

Closing the Gap

Ralls County, located in the northeastern part of the state, is one of three statewide to provide fiber or wireless Internet access to over 90 percent of residents in its service territory. With $1.3 million in funding from the Rural Digital Opportunity Fund (RDOF) now in hand, RCEC is extending broadband access outside of its electric service area.  

RCEC’s initial fiber buildout began in 2010. By 2014, it was the first electric distribution cooperative in Missouri to have built fiber out to all 6,300 of its members. 70 percent of RCEC’s members currently subscribe to its fiber services. Through its wholly owned subsidiary, the cooperative offers five speed tiers. Speeds range from 50/10 Megabits per second for $50/month to 1 Gbps/15 Mbps for $100/month in select locations. 

Reaching Beyond its Electric Membership Footprint

With American Rescue Plan funds flowing into state government coffers, about a third of the nation’s 50 states have announced what portion of their Rescue Plan dollars are being devoted to expanding access to high-speed Internet connectivity.

The federal legislation included $350 billion for states to spend on water, sewer, and broadband infrastructure, though everything we have seen suggests that the vast majority of that will not go to broadband. There is also another $10 billion pot of rescue plan funds, called the Capital Projects Fund, that mostly must be used to expand access to broadband.

Laboratories of Broadband-ification 

As expected, each state is taking their own approach. California is making a gigantic investment in middle-mile infrastructure and support for local Internet solutions while Maryland is making one of the biggest investments in municipal broadband of any other state in the nation. And although Colorado does not prioritize community-driven initiatives, state lawmakers there have earmarked $20 million for Colorado’s two federally-recognized Indian tribes to deploy broadband infrastructure with another $15 million devoted to boosting telehealth services in the state.     

Undoubtedly, individual states’ funding priorities vary. Some states may be relying on previously allocated federal investments to boost broadband initiatives and/or have been persuaded the private sector alone will suffice in solving its connectivity challenges. And in some states, such as Illinois, Minnesota, and Maine, lawmakers have prioritized using state funds to support broadband expansion efforts while other states may be waiting on the infrastructure bill now making its way through Congress before making major broadband funding decisions.

As of this writing, 17 states have earmarked a portion of their Rescue Plan money (totaling about $7.6 billion) to address the digital divide within their borders. Those states are Arizona, Arkansas, California, Colorado, Delaware, Hawaii, Indiana, Kentucky, Maine, Maryland, Montana, Missouri, Virginia, Tennessee, Vermont, Washington, and Wisconsin.

Callabyte Technology, the Fiber-to-the-Home subsidiary of Callaway Electric Cooperative, recently announced a new expansion into the town of Wardsville (pop. 1,800), after strong interest by residents, businesses, and local officials. It marks just the latest in a succession to area communities exhibiting a strong demand for fast, affordable, reliable Internet access.

We covered Callabyte’s formation after its launch in 2015, when Callaway partnered with nearby King’s Telephone Cooperative to bring fiber service to members. The cooperative, which serves more than 13,000 electric meters, ran a successful pilot in one neighborhood in its electric footprint in 2015 and quickly expanded thereafter. 2016 saw growth to five surrounding areas, and was paired with an announcement that it would be expanding to the totality of the cooperative’s membership going forward. In July 2017, Callabyte celebrated its two-year anniversary as well as signing up its 1,100th subscriber. In 2018 the network doubled its projected size by adding a third build region, and announced a fourth large expansion to fill in the region coverage to be completed between 2019 and 2020.

Driven by Demand

Growth has been driven by strong demand. By September 2017, the network had 1,500 subscribers across 300 miles of main-line fiber. Just three short years later it served 4,700 homes and businesses, with more than 9,000 interested and registered for service.

Image

All across the country, municipal networks, cooperatives, and cities have been putting in extra effort to make sure that Americans have the fast, affordable, reliable Internet access they need to conduct their lives in the midst of the COVID-19 pandemic. 

AT&T has decided to take another route. A USA Today report last week revealed that the company has stopped making connections to users subscribing to its ADSL Internet as of October 1st. Anyone calling the company to set up new service is being told that no new accounts are being accepted. 

The decision comes right as the National Digital Inclusion Alliance has released a report detailing that only 28% of AT&T’s territory can get fiber from the company. AT&T has deliberately focused investment in more urban areas of higher income. From the report:

The analysis of AT&T’s network reveals that the company is prioritizing network upgrades to wealthier areas, and leaving lower income communities with outdated technologies. Across the country, the median income for households with fiber available is 34 percent higher than in areas with DSL only — $60,969 compared to $45,500. 

The Deep South Hit Hardest

As of today, it looks like the most conservative number of those affected by the decision will be about 80,000 households that have no other option. Our analysis using the Federal Communication Commission’s (FCC) Form 477 data shows that the Deep South will be hit the hardest (see table at the bottom of the page). 

Collectively it means more than 207,000 Americans who, if disconnected, will have no option for Internet aside from their mobile devices or satellite service. The number of Americans affected by the decision but which have additional wireline options is higher: roughly 2.2 million American households nationwide subscribe to the service (see map, below).  

Gascosage Electric Cooperative, serving members in south-central Missouri, recently joined the list of ReConnect recipients. The co-op will use a $14 million grant and loan combination to deploy gigabit Fiber-to-the-Home (FTTH) to members in four counties where people are unserved and underserved.

Natural Choice

Gascosage General Manager Carmen Hartwell told St. Louis Public Radio, “We’re really a natural choice for this. We already have the infrastructure in place and a history of bringing utilities to rural residents.”

Co-Mo Cooperative and Ozarks Electric Cooperative in Missouri are two other rural electric cooperatives that have expanded the use of their infrastructure to provide broadband to members. In the rural regions of Missouri, as in other states, people living in less populated areas recognize the crucial role high-quality connectivity plays in economic development, educational opportunities, and ability to remain competitive.

“When we take a look at educational opportunities and economic development, internet access may stimulate growth of businesses in our area,” said Hartwell. “It might bring more people into our area that otherwise maybe telecommute for their jobs. Now, they’re going to be able to live on family farms.”

Phasing In Fiber

The co-op has a three-phase plan to connect more than 1,100 households, 20 farms, 20 local businesses, and two rural fire-protection districts. Gascosage has posted detailed information for members, including maps, on their website and their Facebook page revealing exactly where the deployment will occur. The deployment areas are in Camden, Maries, Miller, Phelps, and Pulaski counties. Subscribers will also be able to sign-up for voice services.

Phase one should be completed in early 2021 and will make symmetrical gigabit connectivity available to 285 premises, three farms and eight businesses. Phase two will add 295 premises, to the network, and should also be completed in 2021. The largest Phase will connect 729 homes, businesses, and farms; the co-op will deploy this phase in 2022 and 2023.