By Bartlett D. Cleland Institute for Policy Innovation.
While the broadband
rollout in the U.S. has been a remarkable success story there are still
unserved areas usually rural areas where consumers dont have good broadband
options. Finding innovative market-friendly ways to get broadband to these
areas is a worthy pursuit. And by market-friendly we mean not simply relying
on massive unending taxpayer subsidies or even government-owned and controlled
networks.
In Georgia the state legislature is considering legislation to allow
non-profit Electric Membership Co-ops (EMCs) to enter the communications
marketplace in unserved areas of the state. Such co-ops tend to be in rural
areas so this will help address gaps in broadband coverage as customers gain
more options.
Allowing a new entrant into the broadband market is a no-brainer for anyone who
believes in competition and markets. But its also important to not create new
problems and thats why the legislations other provisions are also critical
in providing a level playing field for all providers. The electric co-ops own
the transmission poles and their broadband competitors also attach to those
poles. Once existing electric co-ops enter the broadband business there would
be an obvious temptation to use their control over pole attachment to
disadvantage their broadband competitors.
So the new legislation would also mandate FCC rates on EMC pole attachments.
The proposal would additionally cap pole attachment fees at current rates
and include strong non-discrimination provisions that apply to all EMCs
regardless of whether they have or currently engage in leasing or providing
broadband facilities or services. Together these provisions will reduce the
costs and burdens enabling broadband service expansion and competition.
Free-market folks like us dont like such price regulation arguing that
markets should be left to operate without government involvement. But this is
not a case of markets or of market failure because there is no free market for
attaching to electric poles since the EMCs have a monopoly on transmission
poles. Not being able to attach communications equipment to these poles
at a reasonable rate is a barrier to markets especially in rural areas. We must
ensure that owners of utility polesespecially now that they may be
participating in the broadband businessare not able to exclude competitors
whether explicitly or by excessive rates.
Lack of reliable timely and affordable access to physical infrastructureparticularly
utility polesis often a significant barrier to broadband deployment. The FCC
finds that utilities by virtue of their size and exclusive control over access
to pole lines are unquestionably in a position to extract monopoly rents … in
the form of unreasonably high pole attachment rates." Such fees can amount to
20 percent of the total cost of broadband deployment as explained in the FCCs
National Broadband Plan. But the average pole attachment rates currently
charged by the Georgia EMCs are more than three times that which the Federal
Communications Commission says is just and reasonable.
Slowing the broadband rollout by demanding exorbitant costs or otherwise
stands in absolute opposition to greater broadband deployment across the country. Safeguards
on what the monopoly utility can charge and demand for rates terms and
conditions are necessary. With pole attachment fees often not based on real
costs these charges essentially function as a broadband tax slowing broadband
deployment and availability exactly in those areas that need it most
Todays TechByte was written by Bartlett D. Cleland research fellow with the Institute for Policy Innovation.
