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Private Chattanooga ISP Says City-Owned Expansion Isn't the Solution for 'Digital Deserts'

With federal grants and built-in tax advantages, the muni broadband offering enjoys an unfair advantage over private telecom companies, says one private ISP owner.

David Snyder stood with family and friends Tuesday morning in front of RevTel’s new Cleveland branch.

“This is a happy occasion for us,” he said.

Snyder for 19 years has built VOLstate, a local, independent Internet service provider from the ground up across the river in Dayton, Tenn. He also started RevTel, a telephone service that works in conjunction with VOLstate to provide an Internet and phone bundle.

“This is my life’s work,” he says of the endeavor. “This is how I butter my bread.”

But he perceives a growing threat to his business in Chattanooga’s city-owned EPB.

Snyder’s whole platform is “outsmarting the big phone company.” He’s taken a stand against municipal-owned Internet before.

But EPB, which entered the Internet and phone business five years ago as the “David against the Goliaths” of AT&T and Comcast, is trying to expand its service territory into Snyder’s backyard.

EPB recently petitioned the Federal Communications Commission asking for federal help in overturning state laws that forbid municipal-owned Internet providers from going beyond their electric service boundaries has rekindled concerns for him and other private providers.

EPB and other municipal telecommunication providers have picked up the support of FCC Chairman Tom Wheeler, who has become an outspoken supporter of municipal-owned Internet providers as a way to expand broadband coverage.

Snyder says he is reassessing the actions of his companies and the threat of EPB expansion into Cleveland and Dayton has VOLstate and RevTel caught in a holding pattern.

He can’t afford to run thousands of dollars in new fiber-optic lines on the duel bets that customers will buy in and that EPB won’t come behind VOLstate and undercut the company’s prices. Then he’s left with a big, fruitless investment.

“It’s called stranding the fiber,” he said Tuesday. “It costs lots of money for that infrastructure.”

The gamble in Internet service is that over time, customer revenue will offset the cost of building infrastructure.

Snyder says that with federal grants and built-in tax advantages, EPB enjoys an unfair advantage over private telecom companies. Because EPB potentially has no out-of-pocket expenses in its lines, the provider has less to lose and can offer prices VOLstate can’t beat.

“I’m competing with city hall,” Snyder said. “I have to pay them taxes, then they turn around and compete against me.”

EPB says that isn’t the idea behind their service or their desired Internet expansion.

Officials with the Chattanooga provider say the goal is to shore up access gaps which have left digital deserts in rural areas around the city. And EPB officials say their service has been requested multiple times from neighboring communities.

“Local communities should be able to make their own decisions about how they get high-speed Internet or other critical infrastructure,” said Danna Bailey, director of communications at EPB.

EPB officials say the FCC is required by Congress to remove barriers to Internet accessibility. The point of EPB’s petition is to remind the FCC of that and solicit the agency’s help in changing current state law.

Joyce Coltrine, for one, is on board.

She owns a small business in southern Bradley County, and she says Internet providers have snubbed her and her neighbors for years. She says broadband is not available in her slice of the county.

Coltrine attended Monday’s Bradley County commission meeting to ask local lawmakers if they’ll request EPB expansion into Bradley County, to make it loud and clear that Bradley County is for the utility’s expansion.

“We’ve gone through a lot of different phases just to get to this point,” she said.

Coltrine told commissioners that Internet hot spots and 4G data packages are too expensive and spotty to rely on for dependable connections.

Her frustrations were affirmed by an “Amen” from the crowd and other murmurs of agreement.

Bradley County Commissioner Ed Elkins sided with Coltrine.

“I think that everybody deserves to have decent broadband service,” he said. “You just can’t hardly do without it anymore.”

Any expansion by EPB into surrounding areas is probably years away. If the FCC attempts to alter state law on behalf of municipal-owned Internet providers, the decision will likely face opposition from private providers and some state lawmakers in the Tennessee General Assembly.

But Elkins said if appealing to higher authorities is necessary, the county should do it.

“I’d still support this commission going to the EPB, FCC or whatever we have to do to take care of the citizens of this county,” he said.

Snyder, meanwhile, says EPB expansion isn’t the only option for disgruntled, digital desert dwellers. He would like to see a public-private partnership, where EPB allows private companies to use its infrastructure, just as tax payers and companies use city-maintained roads. Private telecom companies could access EPB’s fiber optic lines to provide competitive options for consumers.

“That’s public property,” he said of EPB’s lines. “If we’re going to [publicly fund EPB’s broadband], it needs to be an open access network.”

For areas outside EPB’s coverage, Snyder said the solution is already in place, in the form of the Connect America Fund. Connect America is an FCC program which aims to use federal dollars for broadband infrastructure in rural, sparsely populated areas of the country deemed unserved or underserved.

When built, the infrastructure is available to the “incumbent,” or servicing Internet provider. The FCC pays a subsidy for such rural customers top get Internet and other telecom services where it might not otherwise be financially feasible.

©2014 the Chattanooga Times/Free Press (Chattanooga, Tenn.)