July 25--Chattanooga-owned municipal broadband provider EPB on Thursday applied to become the first of possibly many electric utilities to begin offering gigabit Internet and TV service across the traditional boundaries set up over years of cable TV dominance.
EPB, which also distributes electricity and phone service, submitted a formal petition on Thursday to the Federal Communications Commission to allow it to compete outside the strictly regulated boundaries enforced by Tennessee legislators.
The FCC has sent increasingly strong signals in recent years -- especially under current chairman Tom Wheeler -- that the agency is not only open to such an idea, but would welcome the chance to spread gigabit service like that enjoyed in Chattanooga to rural areas that lack access.
Tennessee law now prevents EPB and other utilities from offering high-speed Internet service outside their service areas. EPB's area comprises Hamilton County and parts of North Georgia as well as Graysville, Tenn., in southern Rhea County.
The law protects private competitors, such as cable companies, from what they see as government-sponsored competition from city-owned entities such as EPB.
But it also creates a landscape of haves and have-nots for ultrahigh-speed broadband, restricting access to the next generation of surfing speeds for some, while opening the door to blistering bandwidth for others.
Even in the Chattanooga area -- where EPB's gigabit-per-second Internet is widely available for $70 a month -- there are still areas with limited or no access to broadband (1 mbps upload and 4 mbps download) Internet, though those areas are mostly rural, where profit margins are thin for Internet providers.
Chris Mitchell, director of community broadband networks and infrastructure at the Institute for Local Self Reliance, said Thursday that the wall of regulation facing EPB and other public Internet providers in the state was inevitably going to produce resistance at some point.
"It's hard finding a community that likes not having the option [to purchase Internet from a public utility]," he said.
State laws that restrict municipally owned utilities often trace their roots back to the federal Telecommunications Act of 1996, which aimed to open up competition among telecommunication providers, he said.
Soon after the act became law, private telecom companies began lobbying for state-level restrictions on public providers, Mitchell said.
Private telecom providers like AT&T and Comcast have said that public owned and supported utilities enjoy an inherent advantage because they don't pay the same taxes as their private competitors.
While officials have been loath of late to publicly criticize EPB, which has received high marks for its service and the reliability of its Internet, Comcast and AT&T officials previously have said that their services -- while slower than EPB's -- often come with better mobile integration, more apps and a wider variety of services than EPB's offering.
Spokespersons for the two companies had no comment Thursday on EPB's latest move.
But shots have already been fired in a legal battle that has ranged between cold war and active hostilities since the city-owned utility in 2008 first won approval to offer fiber services in Chattanooga.
EPB won four lawsuits brought by rivals before it began rolling out fiber-optic service in 2009, including a complaint brought in 2007 by the Tennessee Cable and Telecommunications Association.
Resistance hasn't been contained to the judicial realm. Groups of U.S. senators and congressmen have sent letters opposing any expansion of government-owned utilities, painting any action by the FCC as forcing "taxpayer-funded competition against private broadband providers -- against the wishes of the states."
It's true that EPB has received some government benefits, such as a $111 million federal stimulus grant in 2011 to help build its fiber optic network, which private providers did not receive.
Critics of EPB's Internet service also fear the company could use money from its power customers to subsidize the construction of high-speed Internet infrastructure, then turn around and charge taxpayers again for Internet.
But EPB officials emphasized in the Thursday announcement of its FCC petition that there would be no cross-pollination between their electric and broadband services.
"EPB has never used electric customer dollars to cross-subsidize Internet and video services and never will," officials wrote in a news release.
The expansion does come with a few caveats. EPB would only extend into communities if local officials request its presence and only expand if it is "financially feasible" to do so, meaning that some communities may not contain enough customers to justify the expense of laying fiber over many miles.
Danna Bailey, vice president of corporate communication at EPB, said the utility "only wants to go where communities want us to be" and the city-owned utility will not expand to areas where there have been no requests for EPB Internet.
"That's what people are asking for," she said.
Yet in many cases, some infrastructure already exists. State law allows EPB to take its telephone service anywhere in the state. In that sense, the utility would simply use that same infrastructure to provide Internet, Bailey said.
EPB's appeal to the FCC isn't the utility's first attempt to bridge state-mandated digital divides. But state legislation that would enable companies like EPB to expand outside their boundaries stalled in Nashville during the previous legislative session.
Bailey said EPB has "looked at different options throughout the years" to address state rules barring their expansion. She noted that the FCC gave the company no indication as of Thursday as to what's next.
"We don't have a good feel for how long it's going to take," she said.
History, however, looks to tilt the field in EPB's favor. Wheeler, the FCC chairman, has offered more than a little clarity as to where he stands in venues ranging from public speeches to blog posts.
In June, Wheeler criticized Tennessee's municipal broadband laws, saying that Chattanooga was the "poster child" for both "the benefits of community broadband networks, and also a prime example of the efforts to restrict them."
"Tennessee's law is restricting Chattanooga from expanding its network's footprint, inhibiting further growth," Wheeler wrote in a blog post.
"The mayor [Andy Berke] told me how adjoining communities have asked to join the network, but cannot also be served by a simple extension of the broadband network because of the state law. In some of these communities, there is no available broadband service whatsoever."
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