Rural Broadband Is a Bad Joke

By Blair Reeves, Executive Director, Carolina Forward

With the kickoff of the legislative season in Raleigh, the North Carolina public is being treated to an performance of high theater.

The annual ritual of politicians feigning sincere interest about rural broadband has only gotten more elaborate over the years. Politicians from both parties constantly talk about how expanding rural broadband is one of their top priorities. There is a task force. Senator Paul Newton says he’s considering forming a “stakeholder group,” so you know things are getting quite serious.

But don’t be fooled -- what we’re witnessing here is theatrical politics, specifically an absurdist dark comedy. None of it is to be taken seriously. While some of these leaders’ concerns are sincere, many are plainly not. In reality, lots of those loudly pretending to care about rural broadband are the same ones who stand, and have voted, against the easiest, cheapest, and most efficient way to expand access across our state: municipal broadband.

In short, many of North Carolina’s leaders, far from trying to expand broadband access, have actually deliberately blocked it and continue to do so today. Their concern-trolling over the issue over the last decade has mostly served to enrich cable companies at taxpayer expense. This is bad public policy from almost every angle, and poorly serves our state.

Don’t Be Fooled

In 2011, right after taking control of the General Assembly, Republican leaders passed a law (HB 129) that prohibited local governments from using existing infrastructure to offer broadband service as a public utility to their residents -- a system otherwise known as municipal broadband. The “anti-muni broadband” bill made national news at the time.

Municipal (“muni”) broadband systems are widespread in the United States and extremely popular. Take the City of Chattanooga as an example. Its municipal utility provides electrical power, as many do, but theirs offers broadband internet too. They’ve operated for over a decade, and their prices would make most North Carolina broadband customers weep. Literally hundreds of communities across the country have done the same, with many variations. (You know it’s bad when the Tennesseeans are out ahead of us.)

Voters love “muni” broadband, but there are two important groups that do not: cable companies and right-wing politicians. Republican opposition to muni broadband boils down to protecting cable companies’ monopoly power -- and by extension, the resulting campaign contributions. There is a great deal of FUD and double-speak on this issue: the Art Pope-John Locke Foundation, for example, talks in evident earnestness about “open markets and competition” and a “government takeover” in their heated opposition to municipal broadband. This is puzzling language, since what they’re actually advocating for is prohibiting competition. What North Carolinians need is more competition, which muni broadband would provide. 

Cable companies hate muni broadband plans precisely because it provides competition. They have bankrolled legal bans or restrictions in 22 states, including ours in North Carolina. For more on this topic, here’s some in-depth background on how the cable company lobby killed muni broadband in North Carolina with 2011’s HB 129. Cable companies are quite pleased, thank you very much, with having virtual or literal monopolies over captive customers who must pay whatever they charge.

“If the big telecoms are going to rule the day [in the legislature], I don’t think people should waste their time on this anymore, and North Carolina can suffer the economic consequences.” - Scott Mooneyham, N.C. League of Municipalities

Municipal broadband systems are not a silver bullet for this issue and will not work for every corner of North Carolina. (Not every single corner has electrical power service, either.) But they are a locally based, taxpayer-friendly, and highly efficient solution to a big market failure. Municipal broadband may not be the whole solution, but it is definitely a big part of one.

The GREAT Boondoggle

After slamming the door on municipal broadband, in 2018 the state’s Republican leadership came up with a new answer to the rural broadband issue: the GREAT grant program. 

To summarize, GREAT provides matching grants to private companies to deploy (i.e., bury) new fiber lines in underserved areas. In other words, the state forks over money to pay Spectrum, CenturyLink, or AT&T (smaller ISPs find GREAT ludicrously difficult to realistically use) to dig new fiber. This approach not only amounts to major savings on capital expenditures for those companies, but also leads to future revenue, because the GREAT grant recipient now gets access to lots of new paying customers. GREAT is not applicable in most counties, even in those with real need. There are no restrictions, either, on how much the cable companies get to charge the customers they get access to with taxpayer assistance. That, presumably, would be too much “interference” with the free market.

You may not be surprised to learn that cable companies love this program. It amounts to a big giveaway transfer of public dollars to their capex budget and delivers to them net-new customers -- all at taxpayer expense.

For the North Carolina taxpayer, on the other hand, this is a raw deal. It’s an incredibly inefficient way to expand access to broadband and very expensive. By contrast, most muni broadband projects are financed by federal or state dollars that don’t have a profit margin added, or by floating a bond, as the town of Wilson did in their (in)famous muni broadband saga. (When originally approached by the mayor about expanding their broadband network in Wilson, Time Warner reportedly laughed in his face.) These mechanisms are much more cost-effective means to pay for an essential utility.

The GREAT program amounts to a large, centrally planned, “Rube Goldberg machine-approach” to broadband that somehow manages to be both expensive and inefficient.

Better Is Possible

The FIBER Act, first introduced in the 2019 legislative session, is a first step forward in fixing this awful and broken system. It is not perfect, and does not go far enough to make it simpler and easier for local governments to set up municipal broadband networks. But it’s a big step in the right direction.

Unfortunately, Republican leadership killed the FIBER act in 2019, and the bill’s prospects in 2021 don’t look much better. Democrats are very supportive, but they hold no power in the General Assembly.

Voters should pay attention to who actually cares about this issue, and who is just pretending.

A lot of state leaders work hard to jealously protect cable companies’ monopoly power behind fig-leaf rhetoric about the “role of government.” Broadband access to the internet is the essential utility of the 21st century. It may not be as essential to life as clean water, but it’s arguably on par with electricity. It’s hard to overstate how fundamental a link good internet access is to educational, professional, socio-cultural, and the basic informational resources of modern life. A big part of the modern world happens on the internet. And if you’re not there, you’re simply shut out of it.

Serious policymakers should learn from our state’s history with rural electrification and embrace muni broadband. It’s smart policy, it’s good for North Carolinians, and great for our economy. It’s a boon to rural areas, many of which struggle economically and have atrocious internet service. And for those concerned, AT&T and Spectrum will be just fine. (One imagines the CEO of AT&T simply quaking in his shoes at the prospect of little Franklin, NC, launching a muni broadband project.) If leaders actually want to work for North Carolinians instead of the cable lobby, their choice is clear.

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Blair Reeves is Executive Director of Carolina Forward, a progressive policy organization dedicated to building a more just, democratic and prosperous North Carolina. Learn more at CarolinaForward.org.