ISPs Band Together, Fight West Virginia State-Funded Broadband Network

State legislation is intended to improve Internet service and drive down prices in rural parts of the state, but proponents say the cable companies want to block competition from smaller providers.

by Eric Eyre, The Charleston Gazette / January 21, 2016
West Virginia SB 315 aims to ensure every rural customer has broadband Internet. Flickr/Carolyn Lehrke

(TNS) — Cable companies that provide Internet service are working to kill legislation that would create a state-financed $72 million fiber-optic network across West Virginia.

Suddenlink, Comcast, Shentel, Time-Warner Cable and other members of the West Virginia Cable Television Association oppose building the high-speed Internet network, saying it’s a waste of money.

“This bill [SB 315] would obligate the state to borrow between $75 million and $100 million, and it wouldn’t guarantee that a single rural customer who doesn’t have broadband service would get it,” said Mark Polen, executive director of the state cable association.

Sen. Chris Walters, who’s spearheading the legislation, said the cable companies want to block competition from smaller Internet providers. Walters’ bill aims to improve Internet service and drive down prices in rural parts of the state.

“I’m trying to get people in rural communities off this island,” explained Walters, R-Putnam. “I’m trying to take something to them and create a path where Internet companies can get to them.”

The cable companies and others want no part of Walters’ proposed 2,500-mile broadband network.

Frontier Communications, West Virginia’s largest Internet provider, came out against the bill two weeks ago. The state’s chief technology officer, Gale Given, also has reservations. On Wednesday, an industry group called the Utilities, Telecommunications & Energy Coalition of West Virginia announced its opposition to the project.

Since 2000, the cable companies have spent a combined $2 billion building 6,600 miles of fiber-optic networks that reach 50 of West Virginia’s 55 counties, Polen said.

“The state-financed, state-owned and state-operated fiber network will be in direct competition with the private investments our members have made in West Virginia,” he said.

Some examples: Shentel has built fiber connections to 10,000 households in McDowell County. Armstrong Cable is starting similar projects in Lincoln, Wayne and Ritchie counties. Suddenlink and Comcast have “gigabit” projects that will bring some of the fastest Internet speeds in the nation to customers in West Virginia.

The cable companies say they have no use for a state-financed Internet network and wouldn’t pay to connect to the network to serve customers. That disinterest could sink the statewide broadband project.

Walters said Internet companies, especially those that sell wireless Internet service, would pay to tap into the network. Smaller firms like Citynet and Alpha Technologies support Walters’ proposal to build the “middle-mile” network that would bring fiber from cities to rural communities.

“Once we build this network, people are going to use it,” Walters said. “If all of a sudden you have a network that affordably gets you where you want to go, you’re going to use it if it makes financial sense.”

The cable companies allege that Walters wants to require state agencies and local governments to buy Internet service from the state-owned network to help pay for the project, which would be financed through a bond issue. The companies also fear the state would try to seize part of their fiber networks to complete the state’s network.

“Providing a new state fiber network operation with the powers of intimidation, just short of seizing private property built exclusively with private capital does not seem like the kind of free market solution to problems that the new majority in the West Virginia Senate has identified as a goal,” Polen wrote in a letter to Walters earlier this week.

Walters disputed both assertions.

“There is no mandate that state agencies use this network, and there are no plans to use ‘eminent domain’ to take any fiber.”

As an alternative to Walters’ bill, the cable companies are backing legislation (SB 16) that would give tax credits to companies that expand Internet service to homes and businesses in remote areas. Internet providers would be eligible for a $500 tax break for each new location that receives broadband service. The tax credits would be limited to $1 million a year for all Internet providers.

“Senator Walters is proposing to put the state on the line for as much as $100 million,” Polen said. “If we start tackling the problem of rural broadband by only spending $1 million of state money, I think that’s a good investment.”

Walters said he would support the tax credit proposal if it spurs the expansion of high-speed Internet to more West Virginians. He heads the Senate Transportation and Infrastructure Committee, which is expected to take up both bills next week.

“My goal is to do everything we can to increase broadband in West Virginia,” Walters said.

©2016 The Charleston Gazette (Charleston, W.Va.), Distributed by Tribune Content Agency, LLC.

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