John Locke Update / Research Brief

Legislators consider ways to encourage broadband expansion into unserved parts of NC

posted on in City & County Government, Economic Growth & Development, Government Reform, Law & Regulation, Rights & Regulation
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  • To speed up broadband provision to unserved areas, a recent Locke report urged charging broadband providers fairer rates for utility-pole attachments, including the net book value of any pole needing replacement
  • The report also recommended expedited resolution by the NC Utilities Commission of any pole-attachment disputes
  • SB 689, one of several broadband bills currently before the legislature, would make those changes among others

A few days ago Locke published my report on “Expanding Rural Broadband Access in North Carolina.” While acknowledging good work from state leaders in recent years to expand opportunities for rural broadband, especially wireless, the report points out that North Carolina is now facing a big opportunity and even bigger challenge:

In 2019, the Federal Communications Commission (FCC) created a $20.4 billion new Rural Digital Opportunity Fund (RDOF) to deploy broadband to eligible unserved and rural locations across the country. When the results of the Phase I RDOF auction were announced, nine companies had won bids to expand broadband access to 155,137 locations across the state of North Carolina — nearly all of the 158,805 eligible locations identified across the state.

This very welcome news also presents a challenge for North Carolina policymakers seeking to deploy broadband access in those areas quickly. Labor, materials, and investment capital for expanding broadband deployment will be in high demand, and given the FCC’s six-year window for project completions, states will be competing with each other for broadband workers and material. They will flow to states where their use promises to be the most efficient and cost-effective, and that will depend upon states having the right policies in place to ensure timely builds and relative certainty over costs.

The following map shows the 155,137 bid-winning unserved rural locations. They comprise nearly 98% of the unserved locations identified by the FCC.

The sooner providers can connect these areas to broadband infrastructure, the better. The more cost-effective the projects are, the more people they can reach, sooner. Clearing the path of any unnecessary government obstacles and cost uncertainties will help private providers connect people faster and more efficiently.

The three pressing reforms I urged were to remove certain impediments to cable broadband providers trying to reach people in unserved areas and needing to attach facilities to utility poles to do so. They are:

  1. When a pole attachment necessitates purchasing and installing a replacement pole, have pole owners share in the cost so that the new attaching entity is responsible for the remaining net book value of the pole being replaced, not the full cost of purchasing and installing the new pole.
  2. Require the North Carolina Utilities Commission (NCUC) to expedite disputes concerning pole attachments.
  3. Have all utility pole owners (whether municipal, electric membership corporation, or investor-owned) adhere to the same FCC cable rate formula for pole attachments.

Broadband bills under consideration

The General Assembly is currently considering several bills regarding broadband provision in North Carolina. One of them, Senate Bill 517, has some promising-sounding provisions but the details have yet to be fleshed out as of this writing.

Another is the return of the FIBER NC Act. It’s a measure to allow a city to build broadband infrastructure to lease to a private company, which I criticized in 2019 because it “would expressly allow the local government to use property taxes, revenue bonds, and other unrestricted funds to fund it,” “create an exemption in current law so that the lease could extend up to 25 years,” and then “even exempt the system from the Level Playing Field Law” (the origin and importance of which I discuss here).

This year the FIBER NC Act is offered in two different versions, House Bill 384 and Senate Bill 547. Both would still allow use of property taxes, revenue bonds, and other unrestricted funds to fund the building of city broadband infrastructure for leases that could last up to 25 years. Where the measures differ, however, is that SB 547 would still offer the red-flag exemption from the Level Playing Field Law, but not HB 384, which would have this new infrastructure covered by it. HB 384 would also include an anti-exclusive provision that infrastructure “shall be leased” to a private provider and “similarly situated private providers.”

Most intriguing to me is Senate Bill 689 as filed. It would make several changes I recommended above.

For example, SB 689 would stipulate that, in an unserved area as determined by the Federal Communications Commission (FCC), a municipality or electric membership corporation (EMC) “shall replace” any utility pole as needed and on request from an attaching broadband provider and — importantly — that the cost shall be those “incurred solely because of the attachment” which shall be “reasonable costs” based on the net book value of the retired pole, the incremental value of the newer, bigger pole, and other incremental costs that only would be incurred because of the attachment.

SB 689 would require the municipality or EMC to act “promptly,” including either taking or allowing the provider to take actions necessary to attach facilities. Consistent with this urgency, it would also have the NCUC to resolve any pole-attachment disputes in an unserved area within 120 days, though it would allow an extension of that limit “for good cause” and if all parties agree.

The bill would also let counties provide grants to private and nonprofit providers for broadband provision, using state or federal money but also using property taxes. It would likewise let counties build infrastructure for lease or sale to private or nonprofit providers, so long as the counties do not provide the service themselves. While respecting the Level Playing Field Law with that provision, however, the measure risks exclusivity by allowing sale of this infrastructure or lease of it to a single provider.

Finally, SB 689 would also prohibit cities from charging wireless providers specifically for the collocation of their facilities on city utility poles in addition to other charges they already pay, including the application and technical consulting fees and right-of-way charges.

 

Jon Sanders is an economist studying state regulations, that spreading kudzu of invasive government and unintended consequences. As director of regulatory studies and research editor at the John Locke Foundation, Jon gets in the weeds of all kinds of policy… ...

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