Should taxpayers incentivize commercial ISPs to bring broadband to rural areas?

I was recently asked my opinion on subsidizing commercial ISPs to extend broadband into under served areas. This is my response. Also, if you live in the Sweetwater Utility Board service area, please sign this petition.

The local ISPs rank at the top of the most hated companies in the United States because they hold monopolies in the communities in which they operate and they refuse to reinvest the obscene profits that they make back into our communities by extending into areas with low profit margins. In cases where they have received subsidies from the Federal government to bring broadband to rural areas, they’ve done the bare minimum because they know that in a few years when that technology is no longer good enough, they can come back with their hands out asking for more money.

Now that we’re seeing the content producers (ISPs like AT&T and Comcast) and content providers (Fox, Time Warner, etc) merge, people need a choice to opt-out of this mass-marketing agenda where these providers will collect everything you do on-line and use it to flood you and your family with ultra-targeted advertising. Think those erectile dysfunction ads on TV are uncomfortable now? Wait until you’re watching football on Thanksgiving with the in-laws and everyone knows that the reason you see those ads is because you visited the Viagra web site. Folks are going to rightly be pissed and a public/member owned solution is the only way out.

On the other hand, public and member owned utilities DO reinvest in the communities that they serve. Chattanooga’s EPB uses profits from broadband to help keep energy rates low in Chattanooga. They also deploy fiber optics, which is seemingly limitless in the speeds it can deliver. To start, the County should fund feasibility studies for each electric provider in the County to deliver fiber to the home. From this, it can be determined what level of subsidy each provider would need to be profitable. This number could be used to determine the rate of a County-wide property tax increase to bring much needed competition to the area.

If the municipalities and cooperatives were on board with this plan and a quick time line could be agreed to, the dollars saved by consumers by having more competition could more than make up for the property tax increase for most homeowners, not to mention the increase in property value of 3% on average where fiber to the home is available. These electrical providers can then use profits to enhance and optimize operations in the communities they serve. This gives tax payers a much greater return on investment.

Once the network is built, the County could look into subsidizing remote workers to move to the area like Vermont is doing. An annual $100,000 economic development subsidy could be divided up in $5000 grants to attract 20 high income workers and their families to the County.

EPB and Volunteer Energy can only provide retail broadband service within their designated service areas. Volunteer Energy(VEC) is building fiber to its customers but at least for now, they aren’t providing broadband. They’ve contracted with Twin Lakes Telephone Cooperative in Middle Tennessee to provide that broadband and TV service. Similar arrangements could be made for other electric utility providers not wanting to “get into the broadband business.”

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