House bill could be helping hand for broadband
There’s probably no bigger economic development issue in rural America than access to dependable high-speed internet service.
“One hundred percent,” said Rep. Kevin Corbin, R-Franklin. “It’s the biggest issue in Western North Carolina as far as infrastructure and the economy.”
Once merely a novelty, the internet has grown over the past 30 years to become much more than just a way to download the latest superhero movie or buy those designer jeans not sold at the local Walmart — it’s now about kids completing their homework, doctors practicing telemedicine and employees telecommuting to work each day from hundreds or even thousands of miles away.
Private industry, though, hasn’t seen fit to provide service to customers across rural America, citing a poor return on investment. That creates a “digital divide” between rich and poor counties that drives rural residents either to relocate, or to give up all hope of reaping any benefit from the digitally-driven 21st-century economy.
A Corbin-sponsored bill currently making its way through the North Carolina House of Representatives with wide bi-partisan support could change that, but H431 also faces stiff opposition from those same telecoms who refuse to provide broadband infrastructure in Western North Carolina.
“Listen, I don’t care how we do it,” Corbin said. “I just want to get my people in my end of the state hooked up to internet because they deserve the internet as much as somebody that lives in Charlotte or Greensboro or Winston-Salem or Raleigh.”
At its core, Corbin’s H431 would drop longstanding prohibitions on the ability of city and county governments to compete with private businesses in the telecom sector.
Those prohibitions have been in place for good reason — after all, how fair is it to the owners of small private businesses who are suddenly faced with competition from a much larger public entity that has virtually unlimited financial resources, eminent domain powers and a substantial tolerance for risk or loss?
It’s not fair at all, according to classical economic theory; the idea has been abhorrent to most Republicans and many Democrats since long before the debate about how to expand broadband access to underserved populations first emerged a few years back.
The vast majority of broadband internet service, however, isn’t provided by small “mom and pop” tech companies. Defined for purposes of H431 as at least 25 megabits per second download speed and 3 Mbps upload speed, broadband internet service is usually provided by multi-state corporate behemoths like AT&T, Spectrum and Cox, and since those companies aren’t providing broadband service to rural residents anyway, city or county governments wouldn’t really be “competing” with private industry.
Among its numerous stipulations, the bill, called the Fiber NC Act, would still prohibit local governments from delivering the actual service to customers, necessitating partnership with and thus preserving a place for private industry in what would essentially be a government-subsidized utility.
If passed, the Act would allow only certain counties and cities to take advantage of the new freedoms it grants.
So long as a county has either a major military installation or more than 4.75 percent of that county doesn’t have a broadband provider, that county can construct and/or maintain broadband infrastructure, which the county must then lease to a for-profit company for delivery of service to customers.
“The way we identified ‘underserved’ counties was if you had more than about 5 percent of folks without,” said Corbin. “That’s a joke to me. I mean, 50 percent of the people in my district don’t have internet — 50 percent.”
In taking on that role as a contractor, the county can use any unencumbered funds, including ad valorem taxes, to pay for all phases of the installation. Revenue bonds are also a permitted funding source.
To engage in the endeavor, the county must prepare an extensive report available for public inspection at least 90 days prior to installation. That report must include a business plan outlining the particulars of the project, including how the county intends to engage a lessee.
The business plan must also include a feasibility study demonstrating need and proving resources are available for the project.
The feasibility study must delineate areas within the county that have one or fewer wireline or fixed wireless providers of broadband service, as well two other service categories: areas with 10 megabits per second download and 1 Mbps upload speeds, and areas with 25 Mbps down and 3 Mbps up.
It must also disclose areas of the county to which state or federal grants have been awarded within the past 18 months, to ensure there’s no duplication of services.
After those documents are prepared, county commissioners would need to hold a public hearing before adopting a resolution declaring intent to install broadband infrastructure.
Cities and towns, too, can choose on their own to engage in the installation of broadband infrastructure as long as 60 percent of the municipality’s population resides in a county that is also eligible to do so.
All of the same procedural conditions that apply to counties apply to cities, including that the infrastructure must then be leased to a for-profit company, or co-op.
Those leases can be for a maximum of 25 years and could be entered into upon completion of an RFP process and a public hearing 30 days prior to lease approval by the governing board.
Importantly, the bill continues to prohibit governments from engaging in the business of providing telecommunications services directly to customers.
The bill also requires a “vote of the people” if the infrastructure is ever sold, meaning that a municipality couldn’t spend taxpayer money or revenue bond proceeds to install a broadband system and then turn right around and sell the infrastructure to a private company.
Corbin is a primary sponsor of the Fiber NC Act, along with reps Josh Dobson, R-Avery, John Szoka, R-Cumberland and David R. Lewis, R-Harnett.
“That was done very strategically,” said Corbin. “Josh is an Appropriations chair, and then we got two legislators from the eastern part of the state.”
David Lewis is chair of the powerful House Rules Committee, and John Szoka is one of three senior chairs of the equally powerful Finance Committee.
“The first committee it was referred to was State and Local Government,” Corbin said. “And guess who chairs State and Local Government?”
It’s Corbin, and after a 90-minute debate, the Act passed his committee on Aug. 7 by a vote of 13 to 9.
Since it was first filed on March 21, the bill has seen significant pushback from two main sources, according to Corbin.
“Man, the big telecoms, I mean they went crazy,” Corbin laughed. “They don’t like me and Josh, I can tell you that. “They speak and wave when they see us, but that’s about it.”
Throughout the drafting of the bill, Corbin and Dobson periodically met with telecom companies who said they like to be able to connect one customer for about every 40 feet of line; in Corbin’s district, many residences are thousands of feet apart, if not miles.
“I mean, this whole discussion is about money,” he said. “If the state had unlimited resources or cities and counties had unlimited resources, it wouldn’t be an issue. If the telecoms could make money hooking up rural North Carolina, they’d do it. I’m trying to convince them — you’re not going to make your money back in three years, but let’s look at it as a 10- or 15-year return on investment.”
The other source of opposition has Corbin and his three Republican primary co-sponsors bucking their own party.
“The rhetoric goes, ‘You know, that’s just one area that the government doesn’t need to get involved in,’” he said. “Well, I totally disagree because the government is involved in paving our roads and building airports. Government’s role should be to do things that we can’t do individually. Government should help with that.”
The Fiber N.C. Act is now bound for the Finance Committee, but thanks to the ongoing budget standoff between the Republican-controlled legislature and the state’s Democratic Gov. Roy Cooper, that hearing has yet to be scheduled. If deemed favorable, the bill’s next stop would be the Rules Committee.
If and when it makes it to the House floor, the Act stands a good chance of passing, Corbin said.
“I will make this prediction,” he said. “If we can get it through the committee process, if it comes to the floor, it will pass. We’ve already got the votes. If it passes now, it would make it eligible to be brought up in the short session next term. We’ve gotten it through one committee and it’s been in about every news outlet in North Carolina, so the push is out there, the publicity is out there, the telecoms know we’re doing this and they know we’re gonna keep pushing and we’ve told them we’re not going to stop.”
The Act has 70 sponsors in all, 31 Republican and 39 Democrat, among them WNC reps Joe Sam Queen, D-Waynesville, Michele Presnell, R-Burnsville, and Susan Fischer, D-Buncombe. It’s also supported by the N.C. League of Municipalities and the North Carolina Association of County Commissioners.
If the Act advances out of the house to the Senate, Sen. Jim Davis, R-Franklin, says he’d support it but isn’t optimistic about the rest of the Senate sharing his sentiments.
“I think it’s unlikely to be heard, but I would advocate for it, “ said Davis. “There’s a lot of history with local governments laying down fiber, and they lost a lot of money doing that. I think that concern is overblown, but it’s there.”
In 2010 the city of Salisbury, home to 34,000 people, made headlines with a municipally owned, municipally managed internet service financed by $33 million in bonds, called Fibrant.
Upon completion, Salisbury’s service may have been the fastest in the United States — up to 1 gigabyte per second download, or about 20 times faster than Time Warner Cable’s Charlotte service at the time.
By May of 2018, the system was losing $3 million a year, and voters approved leasing the network to a private company with experience in managing such undertakings.
Corbin remains insistent that this isn’t that — governments aren’t permitted to run the service, like Salisbury did, and just because it didn’t work there and then doesn’t mean it can’t work here and now.
“That’s like breaking up with your girlfriend,” he said, “and then saying, ‘I am never going to date again.”
Were the Act to gain enough momentum in the Senate to pass, it wouldn’t bind cities or counties to install broadband infrastructure. It would merely allow them to do so if so inclined.
A Smoky Mountain News survey found overwhelming support from one end of Western North Carolina to the other, among elected Democrats and Republicans, in both city and county governments.
“Absolutely,” said Jon Feichter, a Democratic alderman in the largest North Carolina town west of Asheville, Waynesville. “This has the potential to exponentially increase the pace of broadband expansion in North Carolina.”
When first elected in 2015, Feichter was a tech entrepreneur himself, running an IT business in downtown Waynesville. Now, he’s the director of information services at Meridian Behavioral Health Services in Sylva.
Feichter said he has no qualms about private businesses being forced to compete with municipalities when those private businesses aren’t extending service to customers anyway, but he does oppose municipalities acting as internet service providers.
“This bill takes that possibility off the table and in many ways represents the best of both worlds. The town would own the fiber lines and whichever internet service provider they’re leased to would have to provide the service, and everything that entails, to the customers. Plus, they have to support it,” he said. “Fortunately, they’re already expert in all of that. The reason they don’t build it themselves is the high cost. The government receives revenue from the lease of the fiber, and the service provider gets tons of new customers without having to build to them. That’s a win-win.”
Although he doesn’t think it would make much sense for Waynesville — which already owns and operates an electric utility — Feichter said he’d support a feasibility study to back that up with hard data.
“If [the legislature] really wanted to make this an attractive proposition, they’d allocate funds or at least make low-interest loans available. Given the extraordinary costs associated with building this kind of infrastructure, it’s going to be a difficult row to hoe for most small municipalities,” he said. “For example, the City of Wilson built the Greenlight network in 2008, and that network fiber connects every home and business in the city. But, the cost to do that was $37 million. Needless to say, we’re talking big money here. Costs would almost assuredly be significantly higher in the mountains due to the rocky soil.”
The Town of Canton is less than half the size of Waynesville, and Canton Mayor Zeb Smathers supports the idea as well, but echoed Feichter’s cost concerns.
“It comes down to the ability to fund it,” Smathers said. “Of all the projects we’re facing in Canton, it would take a huge amount of money to do this.”
The same goes for the Town of Franklin — home to Rep. Corbin and Sen. Davis — which has about the same number of residents as Canton does, but far worse internet service.
“I support it, and Kevin Corbin has worked hard on this,” said Franklin Mayor Bob Scott, a Democrat. “However, it doesn’t go far enough. In rural areas it will take a massive effort on the level of the Tennessee Valley Authority, where massive amounts of public funds are spent to bring broadband into the rural areas the for-profit providers do not want to serve. Had it not been for TVA and electric membership corporations, there would likely not have been electrification to some areas, and I feel this is exactly what it is going to take to bring broadband to rural, isolated areas — especially here in the mountains of Western North Carolina.”
Perhaps better positioned to spearhead a government-owned broadband infrastructure project are counties; Republican Chairman of the Haywood County Board of Commissioners Kevin Ensley says he also supports the idea.
“I believe broadband is like water and sewer lines. It is needed in our communities for residents to be able to work from home as well as for students to do school work, elementary, high school or college,” he said. “Businesses are not serving the public and this is a way to serve all residents.”
Ensley said he views it as an economic development tool, and would support a revenue bond to pay for it. At least one other Haywood commissioner agrees with him.
“I can’t speak for the rest of the board but I feel that we would all support it,’ said Republican Commissioner Brandon Rogers. “Broadband is a subject that has been discussed for years and to me is one of our biggest issues. When businesses are looking to locate here and homes are being sold, this is one of the biggest questions asked.”
Along with Rogers, Haywood Republican Commissioner Tommy Long traveled to Washington, D.C., last week for a meeting of the National Association of Counties, where Long said much discussion with former Georgia governor and Secretary of Agriculture Sonny Perdue centered on expanding broadband in rural areas.
“This bill does give local governments some say so, and options,” said Long. “I think it would be good, but proceed with caution.”
There are two camps, one advocating for conventional hardwiring to each individual dwelling, and one betting on advances in wireless technology.
“If this technology advances rapidly as tech usually does then we/private companies and possibly government-subsidized systems could be left in the dust with huge capital outlay passed up by wireless technology,” he said. “Nobody wants that kind of egg on the face with public and-or private money wasted.”
Long cites the cost savings and cutting-edge advantage of a wireless system, especially due to the elevated costs hard installation would bring in such a rocky, river-laced region.
“We live in a unique place, with 14 peaks over 6,000 feet and many valleys between. It costs more, much more, due to the terrain here as opposed to the flatlands to run hard cable. I’m pulling for wireless,” said Long. “Wireless has the advantage here simply because of the population density. Hard cable companies have penciled in a population density formula and if the equation doesn’t spit out a profit where you live then tough luck. The locations and some hardware components (towers, microwave hardware, relay stations) may help private companies with the profit equations and thereby provide much-needed broadband to remote areas with small populations.”
Commissioner Mark Pless agrees with Long on some points, but says he can’t support it due to the funding requirements.
“Technology changes so quickly that any system we installed would be outdated before we could get it paid for,” he said. “For-profit companies do not seem interested in building infrastructure to provide service in Haywood County. I feel they know it would not be profitable. I would like to see a company invest in Haywood County, and would help support them in anyway we could legally.”
Further west, in some of the state’s smallest, poorest counties, the funds are even scarcer, and the support for the Fiber N.C. act is even greater.
“I don’t see any other way,” said Gary Westmoreland, Republican chairman of the Cherokee County Board of Commissioners.
“We don’t have dependable landline phone service in the 21st century,” said Dale Wiggins, Republican chairman of the Graham County Board of Commissioners. “We have phone issues reminiscent of the 1950s and 60s, not 2019. No company will install the ‘last mile’ of broadband here [because it is] too expensive to ever recover the cost to install because we just don’t have the population base for it. Yet, we have to be able to communicate with the outside world of state and federal government.”
Parents, Wiggins said, often have to drive their children into town to get them access to Wi-Fi hotspots so they can complete their homework. If Graham County could secure some sort of funding to build out infrastructure it could then lease to a provider, Wiggins says it would probably do so.
“If we had to rely on our tax base to fund it, then no,” he said. “Only 28 percent of Graham County is private land and taxable. The rest is primarily U.S. Forest Service. We are having to build a new courthouse because judges don’t want to have court in our 77-year-old courthouse. We’re having to build a jail at the same time. That will cost the county some $12,000,000 dollars. We already have one of the highest millage rates in western N.C., just to be able to provide the essential services our citizens need. So we have no options really.”
Wiggins said that there’s broadband fiber within a half-mile of a former manufacturing complex, and the county is trying to attract new tenants who all ask about broadband access.
“We try very hard here, and will continue to do all we can to make dependable internet access available to all of our citizens,” he said. “The question is, how many years will it take? Too many — unless we get some real help from state and federal governments.”