TACIR Report Draft And Legislative Preview

Posted: December 22, 2016

Tennessee legislators will return to the state house in Nashville on Jan. 10 in what is expected to be an eventful session for telecom-related legislation.

While no bills relevant to the industry had been pre-filed at the time of publication, the results from a recent TACIR report on broadband and last summer’s TDEC report are likely to spur action among legislators. Gov. Bill Haslam has already created a “Broadband Task Force” headed by his Senior Advisor for Policy and Strategy Stephen Smith.

Smith, who joined the governor’s cabinet in August, had been the deputy commissioner for policy and external affairs at the Tennessee Department of Education. Smith, 41, lives in Williamson County.

It is expected that the task force and the governor will heavily influence the drafting of a bill intending to increase broadband access in rural areas based the TACIR and TDEC reports. Senate Majority Leader Mark Norris, R-Collierville, who is also the chairman of TACIR, will likely  introduce the bill in mid-January, and that bill will be at the center of any broadband-related discussion and legislation this year.

TACIR Broadband Report

For its part, a near-final draft of the TACIR report obtained by TTA seems to be favorable to many of TTA’s positions.

“It’s got a lot of good points in it,” says TTA Executive Director Levoy Knowles. “Some of the points we don’t really agree with, but overall, this is a report that gives a fair view of broadband in Tennessee. It’s something we can work with.”

For instance, the draft does not recommend that the gaps in Tennessee’s broadband coverage be filled by municipalities, and it goes on to point out many of the problems with municipal broadband that TTA has been pointing out for years.

“Municipalities that build broadband infrastructure outside of their electric service areas and taxing jurisdictions put electric ratepayers and municipal taxpayers at risk in the event that they are unable to earn enough revenue from subscribers to make debt payments on bonds issued to expand their systems,” the draft states.

It goes on to point out that of the two municipal providers allowed to expand broadband outside of their territories, Morristown Utilities has chosen not to and Covington started expansion but has since sold its network.

The report does discuss electric cooperatives building broadband networks, which is currently not allowed by state law. Citing the fact that electric cooperatives have larger service areas and could reach more of the state than telephone cooperatives, the report states that legislators could give electric cooperatives the authority to provide retail broadband service. It goes on to state that “this would require them to build their own central office facilities, which would likely be cost prohibitive for many cooperatives.”

Encouragingly for TTA members, the TACIR report concludes that “a better option” would be for the legislature to allow electric cooperatives to partner with existing providers to provide broadband service in the electric cooperatives’ service areas. This would open some significant opportunities for many TTA members, and TTA is hopeful that the task force and legislature will consider making such partnerships possible.

“TTA members are already the broadband experts,” Knowles says. “The electric cooperatives could be great partners in building and maintaining a network, but they don’t have any experience going inside a customer’s house or managing a data network. The type of legislation recommended in that part of the report could lead to some very strong partnerships that ultimately serve the interests of rural Tennessee.”

Pole Attachments

The TACIR report also briefly addresses pole attachment rates but concludes that legislators’ hands are tied by TVA. The report states, “Pole attachment fees may also affect the ability of providers to expand service in some areas,” and says TVA’s new rates doubled the current median fee charged within the state. The report found that TVA’s rates “can be several orders of magnitude” greater than FCC guidelines.

Unfortunately, the report agrees with the legislature that TVA’s rates supersede any possible state laws.

Among its 147 pages, the TACIR Broadband Report draft concludes:

  • Satellite internet and mobile wireless are not comparable substitutes for wireline and fixed wireless broadband.
  • Access to broadband is improving in Tennessee, but coverage is still limited in rural areas.
  • Less than half of Tennesseans with access to broadband subscribe to the service, though adoption rates continue to increase.
  • The Department of Education and the Tennessee State Library and Archives should continue to work with schools and libraries to help them maximize the state’s use of E-Rate funding to ensure that all schools and libraries have broadband.
  • The state, through the coordinated efforts of its existing agencies … should encourage and assist local governments in establishing targeted broadband adoption programs that combine training and financial assistance.
  • Tennessee could use the broadband deployment fund to provide competitive grants to unserved or underserved areas not already being targeted by Connect America Fund grants.
  • Tennessee could offer credits against franchise and excise taxes for broadband infrastructure investments and target improvements to unserved and underserved areas by giving larger credits for investments in those unserved and underserved areas.
  • To assist communities that want to streamline local regulations, Tennessee could, like Indiana and Wisconsin, designate communities that adopt a checklist of permitting and zoning procedures as “broadband-ready communities” to signal providers that they have removed regulatory barriers to broadband investment.
  • Capacity of 10 megabits per second download and 1 megabit per second upload is the bare minimum for broadband.
  • Communities need at least 25 megabits per second download and 3 megabits per second upload to take full advantage of broadband.
  • Too many Tennesseans either have not adopted broadband or don’t have access to it.