How much bandwidth does the Broadband Accessibility Act provide?

Friday, May 19, 2017

Tennessee Gov. Bill Haslam held a ceremonial signing of the Tennessee Broadband Accessibility Act, at the Governor’s Rural Development Task Force at H&R Agri-Power in Brownsville Tuesday in hopes that it will increase broadband internet access to the state’s unserved citizens.

The Tennessee Broadband Accessibility Act permits Tennessee’s private, nonprofit electric cooperatives to provide retail broadband service, and it provides $45 million over three years in grants and tax credits for service providers to assist in making broadband available to unserved homes and businesses. In addition, the plan makes grant funding available to the state’s local libraries to help residents improve their digital literacy skills and maximize the benefits of broadband.

Tennessee currently ranks 29th in the U.S. for broadband access, with 34 percent of rural Tennessee residents lacking access at recognized minimum standards.

“More than 800,000 Tennesseans don’t have access to broadband, and one in three businesses identified it as essential to selecting their location. Spurring deployment in our rural, unserved areas will open them up to economic investment and growth,” Haslam said. “I want to thank the General Assembly for its overwhelming support, particularly Senate Majority Leader Mark Norris (R-Collierville), Sen. Mike Bell (R-Riceville) and Rep. David Hawk (R-Greeneville) for carrying this legislation, which provides a reasonable, responsible path to improve broadband access through investment, deregulation and education.”

Even with a substantial investment of state dollars, $45 million over three years, this won’t even get the bottom of the broadband bucket wet when it comes to providing resources, such as fiber optic cable, to undeserved residents.

Take for instance, the rural areas served by the Duck River Electric Membership Cooperative. The Governor’s new law makes it legal for DREMC to provide broadband internet access to its customers, but the cost would be prohibitive. “We would need to run 6,000 miles of cable at a cost of $400 million,” said Carol Garrette

DREMC Member Services manager. Do the math for 24 rural electrical cooperatives across the state and the numbers get scary.

When Governor Haslam signed the Tennessee Broadband Accessibility Act, he removed legal restrictions allowing the state’s private, member-owned electric cooperatives to provide high-speed internet service to co-op members. In light of this, DREMC is examining all options.

The expected number of members that would subscribe to broadband, which is known as the “take rate,” is estimated at about 30 percent of those eligible, according to sources at DREMC.

DREMC averages 12 electric members per mile of line. Municipals (city-owned electric companies) like Tullahoma, Lewisburg and Chattanooga have a much higher customer density, say three to four times higher. With an average participation of 3.6 customers per mile, the challenge will be how much investment can be paid for and maintained with a reasonable and competitive monthly internet bill?

The Tennessee Valley Authority will not allow DREMC to finance a project to provide retail broadband with revenue from electric rates. In other words, the broadband undertaking will have to stand on its own financial legs. This will be a challenge because the main reason ISPs such as AT&T and Comcast are not already on your street or road is density; not enough potential customers to offset the cost of the investment.

The estimated cost of providing broadband access in DREMC’s electric service area is $150 million, and this is just to get fiber to the edge of the road and not all the way to the home or business. Additionally, this project would take 10 or more years to complete.

Immediately, DREMC sees a solution to its own digital communication problem by using fiber-optics to connect our offices, substations and other assets. This fiber backbone or loop will improve the electric system, save the co-op money and help provide continued reliable electric service.

This backbone will be a 370-mile network from Franklin County in the east to Maury County in the west. The goal would be to complete it in three years and would begin this year.

Leadership at DREMC believes that investment in the core network will potentially be a starting point to motivate others to find ways to reach homes and businesses with fiber. This is where partnering with ISPs comes into the picture. Discussions with experts in retail internet service continue, and there is definitely interest in this approach.

The House of Representatives passed HB 529/SB 1215 93-4 on April 10, and the Senate passed the legislation 31-0 on April 3. The legislation came after a year of study and stakeholder conversations by the administration. Haslam actually signed the law April 24, 2017.

In July 2016, the Department of Economic and Community Development released a commissioned study assessing broadband in Tennessee and options for increasing access and utilization. In addition, a report issued by the Tennessee Advisory Commission on Intergovernmental Relations (TACIR), which completed extensive work on the subject of broadband accessibility and adoption, significantly contributed to Haslam’s broadband proposal.

The Tennessee Broadband Accessibility Act is part of Haslam’s NextTennessee legislative plan aimed at building and sustaining economic growth and the state’s competitiveness for the next generation of Tennesseans.