Broadband grants may spark better access, but hurdles remain

AUGUST 5, 2018, BY KIRK ROSS, CAROLINA PUBLIC PRESS


RALEIGH — Advocates for expanding broadband access in small towns and rural areas of North Carolina say a new grant program passed this year by the legislature offers a much-needed boost, but the state still faces major logistical and policy hurdles in extending services to all parts of the state.

According to the Federal Communication Commission’s narrow definitions of what constitutes broadband service, almost 94 percent of the state has access to it.

But advocates point out that the FCC’s estimate is flawed for two reasons. First, it counts an entire census tract as having access even if only one residence can actually get service. Second, it does not use an on-the-ground verified rate, but only the rate advertised by the provider. To qualify as broadband, the service must have minimum speeds of 25Mbps download and 3Mbps upload.

The consequence in North Carolina is that some areas without functioning access or broadband speed levels aren’t eligible for federal grants and support because the FCC lists them as being served.

In some cases, those areas, although not really served, are prevented from seeking alternatives because of their designation under the FCC rules.

Turf battles and public policy
In recent years, there has been a patchwork of turf battles around the state between large internet providers interested in protecting their service boundaries and communities looking at alternatives to improve what’s increasingly perceived as a necessary utility.

Until this year, however, the state legislature has been reluctant to take on some of the lingering policy questions since the last major dust-up over broadband in 2011, during which the General Assembly put an end to a growing municipal broadband movement and tightened restrictions on the use of public funds for broadband infrastructure investments. Proponents of the move, including the state’s top telecom and cable companies, argued that local governments should not compete with the private sector and expanding broadband should be market-based.

Since then, broadband expansion has followed patterns of growth in the state but still remains elusive in many of its rural communities.

Movement in the General Assembly
Last year, an effort to change the script and loosen rules on local government infrastructure investment to include broadband, cleared the state House but stalled in the Senate.

Going into this year’s session, proponents of expanding broadband expected to see The Bright Futures Act bill, or some kind of compromise based on it, taken up.

Instead, there was no word on new legislation until an announcement in late May that House and Senate leaders had reached a deal on a new broadband initiative as part of the budget rollout.

In a hastily called briefing for reporters, Rep. Dean Arp, R-Union and Senate Majority Leader Harry Brown, R-Onslow, announced the Growing Rural Economies with Access to Technology, or GREAT, program.

Brown and Arp called the idea a breakthrough for rural North Carolina.

The legislation sets up a new state grant program that utilizes a set of more detailed measurements to determine broadband infrastructure needs and with it a system of prioritizing communities for broadband infrastructure grants that includes community support and potential partnerships involving businesses, local governments and institutions.

The budget includes $10 million in initial grant funding along with administrative expenses for the state’s Broadband Infrastructure Office to set up and implement the program. It also opens up the possibility that federal broadband grants can be rolled into the funds available.

One key change is that the point system that helps prioritize the grant will reward higher-speed service to encourage more fiber build-out.

The other important change is that it encourages telephone and electric cooperatives to partner with internet providers to expand into rural areas.

Brown said the idea is to create a system that works for areas that don’t fit into the business model of the state’s larger providers.

“We think it’s going to create some opportunities,” Brown told reporters. “It’s going to create some partnerships that you probably haven’t seen before.”

Coupled with the state money, the potential of federal dollars being folded into the program will be a strong incentive, Brown said.

“It’s going make them work together to get out to some of the parts of the state.”

What change will mean to communities
Lisa Crawley, a spokesperson for N.C. Electric Cooperatives, said the organization’s members appreciated the effort to expand rural connectivity. Broadband access, she said, has become an important part of the quality of life in rural North Carolina.

“We will continue to support efforts that provide meaningful broadband connectivity to our state’s rural communities, including the GREAT program,” Crawley said in a statement. “Electric cooperatives across the state are evaluating the opportunities it provides and are eager to learn more about it.”

John Coggin, director of advocacy for the NC Rural Center, said the GREAT program is a significant step and fulfills the center’s long-term goal of a state-based grant to assist broadband deployment.

“We’re ecstatic about that,” he said in a recent interview with Carolina Public Press. “It’s one of the best ways of incentivize competition in areas that are harder to serve.”

He said the $10 million fund is a good start.

“With $10 million, we’re not going to see statewide transformative change, but I do think what we’ll start seeing is the spark,” he said.

There won’t be a large number of projects in the first round, he said, but it’s important to have the program in place so that it could be modified and expanded based on how it’s working.

“I estimate about five projects, and they’ll be in the areas that desperately need it, and it’ll give us a good sense of how to expand the program,” he said.

Municipalities still excluded
While the new program does expand some potential partnerships, it stops short of a proposal earlier this year from the League of Municipalities that sought to loosen some of the restrictions on public investment.

Scott Mooneyham, director of public affairs for the league, said he agrees that the GREAT program is a step forward, but it sidesteps the need for public investment.

“The General Assembly’s passage of a broadband grant program is a clear recognition that we need to do more to improve access, and they should applauded for it. It is a great first step,” he said. “It will not further the types of public-private partnerships that we see happening in other states across the country.”

To make a real difference, Mooneyham said, the legislature will have to find a way beyond the grant program to allow local communities to get involved.

“The private sector alone, particularly the larger telecoms, cannot make a business case for extending fast, quality service in less densely populated towns and rural areas, and their executives have acknowledged that in comments to investors, even if their glitzy television ads do not,” he said.

“Meanwhile, smaller firms are able and willing to enter into these partnerships with local governments and want to create more jobs and business opportunities.”

Coggin said one of the major tasks ahead is convincing legislators that expanding the scope of partnerships is not a threat to the major providers, who wield considerable clout in Raleigh.

“We understand that for the big companies, reaching some of the hardest-to-serve areas is not going to fit their business model and never will. We understand that,” he said.

“We’re not asking them to lose money on supplying the last mile. But there other business models out there that are better suited to getting broadband to those areas. It’s just a repeat of electrification of rural areas. We’ve got to create an even playing field for the folks that can make it work. That’s the big challenge ahead of us.”

How will it work? Still being worked out
For now, there’s a wait-and-see attitude as the details of the grant program and the guidelines for applying are worked out.

The state’s Broadband Information Office is expected to release a request for proposals later this year for the initial round of grants.

Derek Kelly, state and local government and legislative affairs manager for CenturyLink, one of the state’s top providers, said the company is reviewing the program and how it might work in some of its service areas. He said working with some electric cooperatives is a possibility.

“CenturyLink is supportive of the GREAT grant program and believes it is a good model for helping offset costs to bring broadband to areas that are otherwise uneconomical to serve,” Kelly said in an email to Carolina Public Press.

“We’re currently evaluating the unserved areas that fit within the program, and we look forward to the Broadband Infrastructure Office administering the program over the coming months.”

Kelly said the company supports the idea of using public-private partnerships for a fiber build-out in hard-to-reach areas.

“Owning a fiber network is costly, both from an upfront capital expense perspective as well as the ongoing cost to maintain and upgrade the network,” Kelly said.

“By pursuing creative public-private partnerships, government can help offset the costs to deploy broadband in unserved areas while minimizing financial risks to local citizens.”

Next steps
Coggin said he expects another major push for broadband in the 2019 session of the General Assembly.

Concerns about the rising importance of telemedicine and closing the homework gap, which includes initiatives like putting Wi-Fi on buses and creating hotspots where students can have improved access, are resonating with legislators and could help drive new policies and initiatives, he said.

The legislature also needs to clarify the role of local governments, he said, and how they can partner with providers to improve and expand service.

Potentially poisoned provision
There are concerns that part of the legislature’s efforts this year left that issue even more unclear due to a provision added at the end of the GREAT program that could potentially affect even existing local government contracts for leasing of publicly owned fiber networks.

Mooneyham said the provision is still being studied, but it’s unclear for now how it will affect cities and towns with existing programs. It could also affect nonprofits that are considering similar programs, he said.

“It is disappointing that language was placed into a budget provision,” Mooneyham said.

“Perhaps it was inadvertent, and it is unclear right now its real effects. Intended or not, symbolically it tells those smaller firms that want to enter into these partnerships that they have to be careful how they do so and that North Carolina has not embraced all of their business models.”