EPB will remain largely inside its fence under Haslam's proposed rural broadband initiative

Gig City - EPB

Gov. Bill Haslam unveiled plans Wednesday to expand internet broadband service into rural Tennessee, but his proposal won't completely tear down the legal fence around the utility that pioneered the first citywide gigabit-per-second internet service in the Western Hemisphere.

Chattanooga's Electric Power Board, which put the "gig" in the city's "Gig City" slogan, has sought unsuccessfully for years to do away with a Tennessee law preventing it from offering its highspeed internet and television services outside the city.

But the municipally owned EPB and other cities' electric services appear to be included in, at best, a secondary role under Haslam's proposed Tennessee Broadband Accessibility Act, based on comments by administration officials.

Instead, Haslam wants to enlist the state's nonprofit electric cooperatives. His bill calls for lifting current restrictions that prevent the co-ops from providing retail broadband service to an estimated 2.5 million residential and business customers across the state.

At the same time, the Republican governor is proposing to provide $45 million in subsidies or taxpayer-funded grants for existing for-profit telecom providers to expand their rural broadband service.

All the steps should help expand broadband service, Haslam said at a news conference.

"There is no one solution to broadband accessibility to every single Tennessean," Haslam said. "But this legislation, I think, provides a reasonable, responsible and affordable path to improve accessibility in Tennessee."

Such access is good for education and economic development, Haslam said.

But the governor's plan stops short of endorsing calls for municipal power utilities like EPB to expand.

Asked why he didn't include EPB and other municipal electric services, Haslam said, "You have a situation where we'd much rather have private providers rather than government-subsidized entities have the first crack at getting that done."

Municipal electrical systems like EPB would be able to partner, if asked, with cooperatives on providing broadband wholesale, administration officials said. But the municipally-owned utilities remain barred from offering any retail services outside their current areas of operation.

"They [co-ops] can get it from anybody who provides it," said Amanda Martin, special projects manager for the state Department of Economic and Community Development. "It can be a telephone cooperative, it could be another private provider, it can be a municipal utility. They can also build their own kind of data center to provide it themselves."

As to whether that would include lucrative cable-like programming, which EPB uses to support its broadband program, Martin said the "bill, as it is written right now" only looks at broadband services.

EPB and some fellow municipal providers use the lucrative video offerings to help fund their operations. EPB wants to extend its broadband service, including video, to Bradley and Polk counties, where broadband is often lacking, and where AT&T and Charter Communications have declined to extend fiber optic lines to provide such service.

EPB President David Wade said in a statement he hopes any new broadband legislation will allow EPB and other municipalities to at least partner with electric cooperatives and rural telephone co-ops.

"When his draft legislation is public, we will be interested in learning more about his proposal for electric cooperatives to be more involved in broadband and hope municipal utilities will have a role in addressing the broadband gap," Wade said.

Haslam's proposal was welcomed by the state's 23 electric cooperatives, which now distribute TVA-generated power to 71 percent of Tennessee's land territory but previously were banned from offering high-speed broadband services to the home.

David Callis, executive vice president and general manager of the Tennessee Electric Cooperative Association, applauded Haslam for recognizing "the unique role electric co-ops can play in expanding access to broadband" to customers across the state in rural and suburban areas.

At first blush, state Rep. Mike Carter, R-Ooltewah, whose district includes underserved areas, wasn't happy.

"What I wanted is a free and open ability for any elected board of any co-op to make its own decisions what to do," Carter added. "And it could contract with anyone, including the municipals, private enterprise - anyone - to do that."

"I want every home to have at least two choices" that would offer the basic definition of broadband bandwidth, which is minimum download speeds of 25 megabits per second, and the minimum upload speed of 3 megabits per second, Carter said.

EPB offers gigabit service and in 2015 amped up its service to as much as 10 gigs, equal to 10 billion bits per second. That's enough bandwidth to stream 1,754 online movies all at the same time - in HD - from a single internet connection without experiencing any buffering or lag time.

State Sen. Janice Bowling, R-Tullahoma, said the measure only goes halfway in removing regulatory limits that she said now limit fiber optic service in much of Tennessee "and keeps too many rural citizens from participating in the 21st century digital economy."

"I'm certainly glad that electric co-ops will be able to retail fiber services under this measure and I think that will be significant," she said. " I am amazed that some of the giant, investor-owned telecoms have been able to confuse the conversation by trying to make it about what is fair for the provider, instead of focusing on what is right for the consumer."

In addition to allowing electric co-ops to provide telecom services, Bowling has introduced legislation to allow municipal power utilities to expand services across Tennessee.

Municipal utilities are now only allowed to serve customers within their own power service territory, as defined by the Tennessee Valley Authority.

The Federal Communications Commission voted 3-2 in 2015 to strike down that territorial ban in Tennessee to broaden broadband services, citing the political muscle of major telecommunications companies in the state General Assembly, who make lots of political contributions to lawmakers.

But the state appealed to the U.S. 6th Circuit Court of Appeals. The court struck down the FCC ruling. In upholding Tennessee's law, the court said overstepped regulators overstepped their authority.

Investor-owned telephone companies such as AT&T and private cable TV companies such as Comcast and Charter have long objected to having to compete with government entities such as EPB, which they contend have an unfair advantage by not paying income taxes and enjoying government-supported borrowing abilities.

But Bowling said she thinks "it is disingenuous to to say you don't want municipal utilities, which they equate with 'big government,' to compete with the private sector when you are giving another $45 million of taxpayer money to these private businesses."

State Rep. Kevin Brooks, R-Cleveland, said the governor's proposal "has come a long way" in advancing broadband service and was "thankful" it allows co-ops' involvement.

But, he said, too many rural areas lack broadband service and the state needs to do everything it can to help broaden coverage if it wants to achieve the goal of increasing education and economic development.

Seven municipal utilities in Tennessee, including EPB and Tullahoma Utilities Board, now provide broadband service to their customers, but broadband service in rural parts of Tennessee is more limited.

AT&T, the state's biggest telephone provider which has fought efforts to allow municipal utilities to offer broadband outside of their service territories, welcomed Haslam's plan.

The telephone giant has balked at allowing municipal utilities to expand their services into rural areas, claiming EPB and other municipal power authorities could cherry pick the best customers and undermine private telecom efforts by using their government advantages.

Staff writer Dave Flessner contributed to this article.