NASHVILLE -- The Bredesen administration is backpedaling on its proposal to let Chattanooga's EPB and other municipal electric services expand their advanced broadband offerings outside the areas they now serve.

Senate Minority Leader Jim Kyle, D-Memphis, said he plans to delete the provision from the administration's "omnibus" budget bill.

"That was a proposal of the administration, and the administration asked me to offer the amendment to withdraw it," Sen. Kyle said.

Sen. Kyle said he did not know why the administration had decided to take the action. He noted he had recused himself from getting too involved in the proposal because his wife, Sara Kyle, serves on the Tennessee Regulatory Authority.

That agency would have had some oversight of disputes involving access to municipal electric services' broadband networks under the legislation.

Efforts to contact Deputy Gov. John Morgan were unsuccessful on Wednesday. He previously said Gov. Phil Bredesen was favorably impressed by EPB's advocated broadband service during a recent visit to the company's headquarters in Chattanooga.

Mr. Morgan advocated for the plan along with EPB President and CEO Harold DePriest on Tuesday. But the proposal ran into a buzz saw of opposition from AT&T Tennessee President Gregg Morton, the cable industry and an association of small and rural telephone exchanges and cooperatives.

Senate Majority Leader Mark Norris, R-Collierville, said there was a good reason why the plan was abandoned.

"DOA (dead on arrival)," he said. "They (administration) carried it away. That's not the kind of matter you bring in the last days of a two-year session with sincerity. It seemed to us even the administration was not sincere. It seemed to be punitive toward cable and some of the issues that had transpired earlier this session."

The cable industry successfully killed a Bredesen proposal to apply the state sales tax to the first $15 on a cable bill.

Sen. Bo Watson, R-Hixson, another Finance Committee member, said using a budget-related bill to push a major policy change was problematic.

"The argument is compelling, but the argument should be made in Commerce (Committee)," Sen. Watson said. "It's not a budgetary question. But there is no question that EPB has got a fantastic model, and I think the members on the committee heard that."

He later said that "government versus private entity is a problem for me. But it's worthy of debate."

Gov. Phil Bredesen's decision to include the municipal electric services provisions in the "omnibus" budget legislation, which includes statutory changes the administration deems necessary to implement the state's annual spending plan, had drawn fierce opposition from telecommunications executives and at least 28 registered lobbyists, according to filings with the Tennessee Bureau of Ethics and Campaign Finance.

AT&T's top Tennessee executive, Mr. Morton, attacked the proposal repeatedly on Tuesday during testimony before the Senate Finance Committee.

The provision also would have allowed the municipal electric services for the first time to use taxes or cross-subsidization for advanced broadband provided their elected governing boards voted to do so. That is unfair, Mr. Morton said. He also questioned whether communities even need the amount of megabytes that EPB and the six other municipal electric services are able to provide.

Mr. Morgan said unleashing the seven municipal electric services would spur the spread of high-speed broadband Internet services to areas across Tennessee.

"In many communities it is unlikely the current delivery mechanism will produce the kind of information infrastructure that (officials) may well believe are in the best interests of their communities," he told the panel Tuesday.

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