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Measure to expand broadband in rural Virginia faces uncertain future in budget negotiations

Measure to expand broadband in rural Virginia faces uncertain future in budget negotiations

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As the General Assembly works toward developing a final revised budget, lawmakers are facing pressure from cable companies over two sentences tucked within a budget bill aimed at expanding broadband in rural Virginia.

The House of Delegates passed its budget bill last week that included a proposal for a pilot program for municipal broadband authorities to compete with the private sector for state grants to provide high-speed internet in hard-to-reach areas.

The Democratic-controlled House overwhelmingly agreed to the proposal on a bipartisan vote of 73-22 and one abstention.

However, the Senate did not include the same measure in its version of the budget. Sen. Janet Howell, D-Fairfax, chairwoman of the Senate Finance Committee, did not respond to a request to discuss the issue.

With a small group of delegates and senators meeting to hash out a final budget, it’s unknown if the proposal will make it into the spending plan, which could be revealed next week.

The biennium budget is still expected to include about $85 million for broadband deployment, which Gov. Ralph Northam wanted to prioritize because of the coronavirus pandemic.

While Virginia has made significant progress in recent years in expanding broadband service in rural parts of Virginia, many areas are still lagging.

The coronavirus pandemic laid bare the digital divide. People have quit their jobs because they can’t work from home. Children are struggling to participate in virtual learning from home. While telehealth booms, those without high-speed internet can’t connect with a doctor without visiting an office in person.

“Extending broadband has been a major priority for the General Assembly, and it has been for a number of years,” said Del. David Bulova, D-Fairfax. “It’s taken on particular importance with respect to COVID-19.”

About 600,000 Virginians, mostly in Southwest, Southside and the Tidewater areas, lack access to broadband. These regions pose the most challenges toward getting broadband coverage. With mountainous terrain and more remote residences, it’s much more costly than connecting numerous residences clustered together in a suburban or urban environment.

The Virginia Telecommunications Initiative is one of the primary mechanisms the commonwealth uses to reach unserved areas. The state created the program in 2016 to provide grants for last-mile broadband infrastructure, which is the part of the network that connects individual homes and businesses to the broader network. It’s located within the Department of Housing and Community Development.

Since the program started, it has awarded $25 million to 30 localities, connecting about 53,000 homes, businesses and community institutions. Funding has increased from $1 million in 2017 to $19 million this year.

The program requires funded projects to be public-private partnerships, with a local government partnering with a private sector internet service provider to bring service to that community. So when municipal broadband authorities apply for these grants, they come with a private sector partner. Stakeholders have identified these partnerships as key to its success to expanding broadband.

What the proposal in the budget would do is allow the municipal broadband authorities to provide their own matching funds for the projects and not have to rely on a private sector partner. This pilot would run through the fiscal year 2022, and a report on the results would go to lawmakers.

The General Assembly passed the Wireless Service Authorities Act in 2003 to allow a mechanism for localities to provide broadband services. It led to the formation of public not-for-profit companies like the Roanoke Valley Broadband Authority in 2013, which works to lay miles of fiber-optic cables throughout the region with the goal of bringing cheaper, faster internet.

Because internet access is often problematic in some of the more rural areas — which are predominantly represented by Republicans — government-backed internet has turned into a bipartisan issue. However, there is still some disagreement from lawmakers and pushback from cable companies about the role of these taxpayer-funded municipal authorities.

Del. Kathy Byron, R-Bedford, proposed a controversial bill in 2017 that municipal broadband advocates feared would limit where public networks could be built. Private telecommunications providers are some of Byron’s top campaign donors.

Byron was the most vocal dissenter to the measure in the budget for the pilot program. She said the proposal would significantly change the policy of how Virginia Telecommunications Initiative funds broadband projects. She added that the private sector is best suited to invest in the areas where it’s costly to serve.

“This is not a local government function,” Byron said last week when the House debated the proposal. “Stepping in and asking local governments to — with their authorities — own and operate a broadband network is not the solution we’re looking for. It’s just going to diminish the dollars we have.”

Bulova, the delegate from Fairfax County, said expanding broadband should not be a “public vs. private” dilemma.

“It should be how do we cost efficiently deploy broadband to areas without service,” he said.

Del. Sam Rasoul, D-Roanoke, also defended the measure in the budget.

“What we need to ask ourselves is if we want to broaden competition here and allow for these authorities to be able to compete, who have done a good job in a number of areas across Virginia,” Rasoul said. “And the answer is yes.”

Ray LaMura, president of the Virginia Cable Telecommunications Association, said Wednesday the Virginia Telecommunications Initiative as it currently operates is a successful model at getting broadband to underserved communities. The association is the lobbying arm of telecommunication companies like Cox, Comcast and Shentel.

“It was created to leverage public-private partnership and leverage that private capital,” LaMura said. “What’s coming out of the House is looking at a public-public plan that really puts taxpayers completely on the hook.”

The proposal underwent some changes after lobbying from the cable companies.

As first introduced, it would not have been a pilot and the broadband authorities would be able to start immediately to apply for state funds without the requirement of investment from a private sector partner.

In the current version, there are quite a few requirements that the broadband authorities would have to meet if they apply for state funds. The applications would be for providing broadband to unserved areas — meaning they do not have any access to broadband — to address a lack of access to telehealth services or virtual learning.

Rasoul said Wednesday that he thinks, even with these limitations, the proposal can still be beneficial.

“I’m glad it makes some strides to help some areas in rural Virginia,” Rasoul said.

In the meantime, Northam announced Wednesday that Virginia was allocating $30 million in funding from the federal CARES Act to fast-track broadband projects. Localities have to apply for the funding, and because the federal money has to be spent by the end of the year, the projects have to be completed quickly.

“Broadband is to today’s economy like electricity was generations ago — when you have it, you can get ahead,” Northam said in a statement. “High-speed internet is essential for students to connect to education, business to connect to the wider world, and citizens to connect to work. The COVID-19 pandemic has made this even more clear, as so much of our lives have moved to virtual platforms.”

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