Officials Urged To Let Local Utilities Cooperate On Providing Broadband

Saturday, October 24, 2015 - by David Davis
NASHVILLE — Two municipal utilities made cases for removing the provision in state law prohibiting cooperation between municipal utilities when it came to providing reliable Internet service. 

Cleveland Utilities President/CEO Ken Webb said, “Helping and cooperating with each other is in the DNA of public power utilities.”

Ben Lovins, senior vice president, Telecommunications Division of the Jackson Energy Authority, advised commissioners that some people want to make broadband connectivity a complicated issue.

“Some make it about public versus private, pole attachment fees and how much speed is needed, but it truly is a simple matter,” he said. “Give local leaders the choice to work solutions that best fit their communities and that includes allowing our municipal systems to work together to help our neighbors.”

Mike Knotts, director of government affairs, Tennessee Electric Cooperative Association, brought a somewhat different perspective to the conversation when he said, “Advanced telecommunications will be as important to the next 100 years of electric system operation as steam power was to the first 100 years.”

He said the number one barrier to providing adequate Internet access is “purely customer density” and suggested looking at the model of rural electrification in the 1930s. “What cured the problem of rural electrification was the ability to create nonprofit entities that were able to amortize those expenses over much, much longer periods (than private companies). That was the very simple magic that took, in 10 years, less than 10 percent of American farms being electrified to 100 percent — not much more in the secret sauce other than that.”

Mr. Knotts said his organizations sees “very little correlation between broadband availability pole attachment rates” complained of by private carriers.

During his presentation, Mr. Lovins asked commissioners if rural communities should be resigned to being unserved or under served by high-speed Internet.

“City and county mayors and local leadership know what is best for their communities. They are willing to fight for their citizens to see their communities grow and embrace connectivity. It’s time to act,” Mr. Lovins said. “Internet access is no longer a luxury. It is fundamental to the economic growth of our state and for providing more educational opportunities, job training and telemedicine.”

“If communities are not given local choice, who benefits,” he asked. “Who benefits if communities are given local choice to tackle the challenges before them? Rate payers, families, students, small-business owners, industry, health care, agriculture and many others benefit from high-speed connectivity and competition.”

Mr. Lovins said in-home health care monitoring would continue to increase and allow senior citizens to remain longer in their homes. Agriculture uses drones to increase yields. High school students in Jackson are learning code applications. Online college degrees are achievable, which is consistent with Governor Bill Haslam’s “Thrive to 55” initiative. “Tennessee Promise” is being achieved largely online.

“All of these are unachievable without affordable, reliable high-speed data,” he said. “Hundreds of thousands of Tennesseans lack true broadband and those areas of our state are struggling to thrive in a connected world.”

Jackson’s venture as an internet provider began just that way. In the late 1990s, when an industrial prospect asked about the availability of high-speed connectivity, their largest telecom providers said, “Jackson didn’t need that type of connectivity.”

That led to the Tennessee General Assembly approving a private act in 2001, which formed the Jackson Energy Authority. Today, the telecom division serves 18,000 customers with the annual revenue approaching $30 million.

“All of this was achieved through local choice, no taxes and no government funding,” Mr. Lovins said.

He said several communities, including Chattanooga, built fiber optic infrastructures and invested in systems for long-term use and “ a commitment to the future strength of our communities.”

Due to the inherent nature of a public utility, he said the division looks beyond the next fiscal quarter toward the next several decades and the “ability to serve customers across all socioeconomic stratus.”

The JEA Telecommunications Division is a separate division from the rest of the Authority with its own bond debt. The Tennessee Comptroller audits the division annually.

In response to a question from Cleveland Mayor Tom Rowland, he said the “load on electric rate payers has been reduced.”

Mr. Webb said people realize that access to reliable, high-speed Internet is no longer a luxury.

He said CU is in the process of developing a plan modeled after the public power concept of service that is reliable; that is reasonably priced; it must offer first-class customer service; and it must be based on sound financial principles following a business plan based on conservative estimates and assumptions.

Continuing, he said the service must be available to all within the existing electric footprint when fully built and the service must stand on its own financially without subsidies from other utility divisions.

“It is a necessity in our ordinary life,” he said. “Access to high-speed Internet today is the electricity of the 1930s and 1940s. Broadband availability has become such a necessity; we need to address the issue sooner than later. In my mind, the public versus private debate has been settled since some private enterprise entities have accepted public money for their systems.”

Mr. Webb said there are areas in Bradley County outside the service territory of Cleveland Utilities and Chattanooga Electric Power Board that are in the service area of Volunteer Energy Cooperative.

“Access in some areas to reliable high-speed Internet is limited or nonexistent,” he said. “However, this ‘barrier’ in state law is preventing EPB from willingly serving portions of these areas. Should this barrier be removed, some residents stand to get world-class access to the Internet within a few short months from EPB.”

Mr. Webb said removing the barrier would open up a world of opportunities between utilities with Tennesseans being the ultimate winner.

“Cost savings would be significant and would be passed onto customers; and all would benefit from the ‘best practices’ of the others,” he said.

In response to a question from State Senator Jeff Yarbro, D-Nashville, Mr. Webb said the utility is looking into providing Internet because there are gaps in existing service.

“This is something a number of businesses have asked us to look at. They feel like service provided them from a local level would provide them more than what we currently have,” he said.

Mr. Webb told of a conversation with attorney William Brown, whose office is located one block south of the Bradley County Courthouse on Ocoee Street.

“Only recently was he able to get Charter to expand service to his office,” Mr. Webb said. “He had some service from another carrier but it did not meet what he felt he needed to run his business.”

Cleveland Mayor Rowland said it took Mr. Brown 24 years to get decent service in his office.

Mr. Yarbro asked if there was truly a gap or simply a matter of Internet speeds that was driving CU’s interest.

Mr. Webb said, “Cleveland wants to offer its citizens and its citizens the absolute best that we possibly can. … We don’t want to fall behind in Cleveland.”

Mayor Rowland asked all of the panelist, “What do I tell a major trucking company with 150 trucks across the state who is doing business with one provider, gets the weakest service they can provide while the business right behind him, in an adjoining lot, gets the best service from the other provider. The one providing the least service will not improve it and the one that could provide the better service does not come across the backyard? There are a lot of inconsistencies in service.”

Mr. Knotts said during his presentation that state law prohibits electric coops from providing broadband internet service.

“We are not part of the ‘us versus them’ in this discussion. We have the ability to help solve this problem without delving into some of the finger pointing,” he said.

He said the 22 electric cooperatives cover about 75 percent of the landmass of the state and serves approximately 2 million people in the rural areas that were the topic of discussion. Mr. Knotts said the electrical service is generally provided at 99.9 percent reliability, but that would change in the future without broadband access.

Broadband is important to the electric coops because electric systems need it to function. As an example, he said the “great blackout of 2003” in the Northeast United States.

 “It was a cascading blackout. That blackout was caused by one tree that made contact with one transmission line in rural Pennsylvania,” he said. “The outage cascaded along the transmission system.” The cascading effect happened because the transmission system was largely “dumb” with little connectivity between the “pieces and parts of that electric system and therefore; they were unable to communicate with each other and as an electric circuit does, it tripped.”

Advanced means of telecommunications can prevent cascading blackouts. Coops themselves need broadband now and in the future as electrical grids become more complicated. In the old distribution systems, electricity moved in one direction.

“In the electric grid of the future, electricity moves in both directions and that provides extra challenges,” Mr. Knotts said.

He said the Federal Communications Commission definition of broadband Internet is 4:1 megs ratio between download to upload speeds. The 10:1 standard is used for funding decisions, but the FCC is moving toward the 25:3 standard.

As an illustration, he showed maps of Internet coverage in Tennessee ranging from 1 to 25 megabyte service availability. He explained that the National Broadband Map provided is limited because if any part of a census block receives Internet service at a certain level, then the national broadband map reports the entire census block as receiving the service.

“So when you look at a map of geographic coverage or population those census blocks correspond to: that is a best case scenario,” Mr. Knotts said. “In actuality, the numbers are going to be lower.”

He said 25 megs is the coming standard and “there are significant geographic portions of the state that lack adequate connectivity based on the 25 meg standard. By-and-large, those areas are electric cooperative service areas."

EDITOR’S NOTE: This is the third in a four-part series covering The Tennessee Advisory Commission on Intergovernmental Relations held Wednesday on the status and deployment of broadband Internet service in Tennessee.

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