Tennessee Gives AT&T, Comcast Millions In New Taxpayer Subsidies, Yet Banned A City-Owned ISP From Expanding Broadband Without Taxpayer Aid

from the dysfunction-junction dept

If you want to understand what's wrong with the American broadband industry, you need look no further than Tennessee. The state is consistently ranked as one of the least connected, least competitive broadband markets in the country, thanks in large part to Comcast and AT&T's stranglehold over politicians like Marsha Blackburn. Lawmakers like Blackburn have let Comcast and AT&T lobbyists quite literally write protectionist state laws for the better part of a decade with an unwavering, singular focus: protecting incumbent revenues from competition and market evolution.

The negative impact of this pay-to-play legislature is non-negotiable. One state-run study last year ranked Tennessee 40th in terms of overall broadband investment and availability (pdf), and found that 13% of households (or 834,545 Tennesseans) lack access to any high-speed broadband internet service whatsoever. The study found that the vast majority of Tennessee residents still get internet access through slower services like DSL, wireless or dial-up connections, either because that's all that's available, or because they couldn't afford faster options.

Like twenty other states, Tennessee long ago passed a state law hamstringing towns and cities looking to improve regional broadband networks. As a result, popular municipal broadband providers like Chattanooga's utility-run ISP, EPB, have been banned from expanding its up to 10 Gbps offerings into any more markets. Attempts to repeal the law earlier this year went nowhere after mammoth pressure from incumbent ISP lobbyists. When that didn't work, one lawmaker tried to pass a compromise bill that would have allowed EPB to expand into just one neighboring county.

That proposal was shot down as well, one of the dissenting votes being that of Rep. Patsy Hazlewood, a former AT&T executive.

Tennessee residents have increasingly seen through Tennessee's unwavering fealty to some of the most despised brands in America. Some annoyed state residents have gone so far as to spend their own money to wire the state glacially, hilltop by hilltop. In a feeble attempt to try and placate those tired of expensive, slow broadband, Tennessee lawmakers recently passed HB 0529 or the "Broadband Accessibility Act of 2017." The centerpiece of the bill: throwing $45 million in additional subsidies at ISPs, the majority of which will be enjoyed by AT&T.

Motherboard correctly points out that the state banned EPB from expanding service to those same users without any cost to taxpayers, but was willing to throw additional subsidies at two giant companies with a mixed track record on putting government subsidies to work:

"To be clear: EPB wanted to build out its gigabit fiber network to many of these same communities using money it has on hand or private loans at no cost to taxpayers. It would then charge individual residents for internet service. Instead, Tennessee taxpayers will give $45 million in tax breaks and grants to giant companies just to get basic infrastructure built. They will then get the opportunity to pay these companies more money for worse internet than they would have gotten under EPB's proposal.

"Tennessee taxpayers may subsidize AT&T to build DSL service to Chattanooga's neighbors rather than letting [EPB] expand its fiber to neighbors at no cost to taxpayers," Christopher Mitchell, director of the Community Broadband Networks initiative at the Institute for Local Self-Reliance said. "Tennessee will literally be paying AT&T to provide a service 1000 times slower than what Chattanooga could provide without subsidies."

Given the repeated billions that have been thrown at incumbents that then consistently find ways to wiggle out of the obligations, resistence to the "throw subsidies at giant ISPs with a long, documented history of anti-competitive behavior and hope that does the trick this time" model is understandable. Especially in a state like Tennessee, where holding giant companies accountable for misdirection of telecom funds has never been a priority.

Fortunately, this new bill does make it legal now for electric cooperatives to provide broadband internet access to some areas -- a concession to outraged locals and a small sign of progress. That said, these co-ops will still find themselves hamstrung by Tennessee's other, existing, protectionist laws, which impose all manner of reporting and financing restrictions on anybody not named AT&T or Comcast. Popular companies like EPB -- ranked recently by Consumer Reports as one of the best rated ISPs in the country -- still can't offer service outside of its traditional electric utility footprint under Tennessee state law.

It's ironic, in that ISP lobbyists and loyal lawmakers usually try to justify their state bans on community broadband by pretending they were solely interested in protecting state residents from additional taxpayer spending. Yet this is all pretense to justify protecting large incumbent broadband duopolists from having to actually compete. One lawmaker that's actually trying to eliminate the state's restrictions on community broadband perhaps put it more succinctly:

"What we have right now is not the free market, it's regulations protecting giant corporations, which is the exact definition of crony capitalism."

And yet Tennessee's Marsha Blackburn has been consistently and generously rewarded for the kind of "crony capitalism" she's relentlessly advocated for on the state level. She recently was tagged to replace Greg Walden as the head of the House Energy and Commerce Committee's Subcommittee on Communications and Technology. Since that committee tackles most of the pressing internet-related issues, you can expect Tennessee's particular brand of AT&T and Comcast earlobe nibbling to manifest even more strongly on the federal level moving forward.


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  • identicon
    Anonymous Coward, 13 Apr 2017 @ 11:14am

    so why keep voting the likes of Blackburn into office? if the people dont grow some and change their representatives, no point in crying about what is happening!!

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 13 Apr 2017 @ 11:20am

      Re:

      Because the political parties have convinced people that they are the only real option, and so people vote for the party and not the person, even if they have to hold their nose while doing so..

      reply to this | link to this | view in chronology ]

      • identicon
        Thad, 13 Apr 2017 @ 11:32am

        Re: Re:

        As long as we decide elections by FPTP, elections are, by the nature of that system, going to come down to a race between two candidates. In the rare cases where those two candidates aren't from the two major parties, it's going to be at the expense of a candidate who is (for example, when Ned Lamont beat Joe Lieberman in the Democratic primary and Lieberman ran as an independent, he essentially pushed the Republican candidate out of the race.)

        Any time a viable third party has appeared, it has supplanted an existing major party: the Republican Party replaced the Whig Party, which had, in turn, replaced the Federalist Party.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 13 Apr 2017 @ 8:42pm

          Re: Re: Re:

          Using acronyms in a comment without bothering to every explain them is a waste of everyone's time.

          reply to this | link to this | view in chronology ]

          • icon
            Aaron Walkhouse (profile), 13 Apr 2017 @ 10:38pm

            There's no need to explain the most obvious which are fully explained in WikiPedia.

            reply to this | link to this | view in chronology ]

            • identicon
              Anonymous Coward, 14 Apr 2017 @ 5:17am

              Re:

              I quit reading the comment as soon as I hit the acronym. I'm not submitting to the passive-aggressive demand that I do research in order to interpret whatever stray thoughts some Internet stranger posted.

              reply to this | link to this | view in chronology ]

              • icon
                Aaron Walkhouse (profile), 14 Apr 2017 @ 4:48pm

                Your passive-aggressive demand to be spoon-fed everything
                reveals that all the passive-aggressive vibes you perceive
                are coming from your side of the internets. ‌ ;]

                reply to this | link to this | view in chronology ]

                • identicon
                  Anonymous Coward, 16 Apr 2017 @ 3:21am

                  Re:

                  The use of jargons, cants, unexpanded acronyms, any sort of specialty argot is typical of those who identify as members of a subculture relatively disenfranchised with respect to the society in which it is embedded. Those of us accept adult membership in the dominant society along with the concomitant requirement to promote change when needed, communicate as clearly as possible without argot. The accepted usage of acronyms in written communication cites the full usage in the first mention within a presentation and parenthetically provides the acronym directly after that initial usage. You, like the original acronym-user, appear have a need for a facade of "cool-ness" and control within your chosen clique. I have no such need, since I own real power in the ruling culture of my society. You and your passive-aggressive "cool friend" lose once for the original offense and again and again for attempting to defend it twice. I promise to ignore you if you want go for four.

                  reply to this | link to this | view in chronology ]

    • icon
      jupiterkansas (profile), 13 Apr 2017 @ 1:26pm

      Re:

      She lives in a wealthy district and won her last election with 72% of the vote. She's a tool of big business.

      "The 7th is a very safe seat for the Republican Party. In fact, it has long been reckoned as the state's most Republican area outside the party's traditional heartland in East Tennessee. The district's politics are dominated by the wealthy suburbs of Nashville, such as Brentwood, Franklin and Spring Hill. These areas boast some of the highest median incomes in the state."

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 13 Apr 2017 @ 3:11pm

      Re:

      I love it when corporations literally steal from the taxpayers' purse!

      What steaming bullshit from any politician supporting this. WE should just legalise bribery and tax it at 100% of income from bribery. That would be both more efficient and an excellent revenue stream for the Government of kleptocrats.

      reply to this | link to this | view in chronology ]

    • identicon
      Andrew D. Todd, 14 Apr 2017 @ 8:59am

      Limits of Electoral Politics.

      I think the real problem is that the conventional political system is a one-subject system. It can only handle a limited range of subjects at any one time. These tend to be rather more mundane issues such as employment, immigration, and the welfare state. Someone like Representative Blackburn will keep or lose her seat, based on these kinds of issues. There is something additional: local politicians tend not to speak to the issues of the kind of person who can and does more across the country to find a better job. If sending out resumes or C.V.'s to addresses in a trade/professional directory is part of your ordinary experience, you are not likely to be very passionate about whether the local factory is closing down. Local politicians tend to get into the business of organizing the stay-at-homes.

      I recently sent my congressman a paper letter, with a hand-written address, which is the form most likely to be taken seriously. However, the letter was not about net-neutrality, or any of the other standard Techdirt concerns. It was about health insurance. I am nearly sixty years old, and the cost of health insurance is just on an entirely different scale from anything having to do with the internet. I suppose you could say that I have a mind-body conflict.

      I deplore the abolition of net-neutrality as much as the next man, but the going rate for VPN's is something like thirty dollars a year, in the same range as web-hosting, and VPN's really do work (*). I have dial-up access from a state agency, because I am not a very video person, and it is practical for me to buy disks by mail-order when appropriate. I believe telephone calls are still protected, even when they are to a modem bank. At a higher level of non-cooperation, there are wireless mesh relays. As I see it, the most urgent network issue is how to get wireless mesh relays from prototype-level to mundane consumer product.

      (*) Incidentally, Limor Fried did something rather clever with her _Onion Pi_ TOR access system. She put the software on an inexpensive Raspberry Pi computer, with a WiFi unit, choosing to economize on installation issues rather than on hardware. This is of course good advice for anyone trying to provide alternative net-access services.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 15 Apr 2017 @ 5:11am

        Re: Limits of Electoral Politics.

        VPN's do not protect you from the ISP recognizing and throttling video streams, or other open links with high volumes of data flowing through them. Nor does a VPN prevent the ISP from imposing data-caps, and zero rating some services, so long as you do not access them through a VPN

        A VPN does not stop an ISP tying you data-cap into the level of your cable subscription, so that you have to buy a premium cable package to get a decent data allowance.

        In other words, without net-neutrality, many US ISPs will manipulate how they charge for and manage Internet traffic so as to protect their cable TV business.

        reply to this | link to this | view in chronology ]

        • identicon
          Andrew D. Todd, 15 Apr 2017 @ 9:23pm

          Re: Re: Limits of Electoral Politics.

          Well, my concerns about security, tracking, and censorship are first and foremost about content, and about the written word. In terms of the written word, a megabyte is a lot, a whole book. It is none of Comcast's business who is reading, say, _The Sayings of Confucius_ (the _Lun Yu_, c. 500 BC).

          The sage wrote:, speaking of rulers, that is, kings and presidents "To be less than upright and at the same time foolhardy, to be less than diligent and at the same time immature, to be unreliable and at the same time incompetent: I have nothing to teach about such things." ( _The Sayings of Confucius_ (the _Lun Yu_), Ch. 8: ("Count T'ai"), Verse 16:). This is obviously a rather subversive proposition. I count 181 characters, which is a bit too long for Twitter.

          Mesh wireless networks, when operated on a line-of-sght basis, at a suitable frequency, have surprisingly high capacity. They can enable people to unplug from the telephone company or the cable company. Connections from the mesh wireless network, to the internet proper, would be subject to effective competition. The highest form of completion is "multi-homing" where you have connections to two or more providers, in order to see which one works best, from one second to the next.

          In a lot of places, there are only two convenient supermarkets, but they do not form a duopoly, because too many people would take the trouble to drive ten or twenty miles for their groceries. If you buy, say, a thousand dollars worth of stuff at a go, a long drive is acceptable. The result is that the two local stores compete vigorously. The cases I have heard of, where there are monopolies in groceries have been "company stores," run by employers, whose employees are required to shop at the company store, and are not paid in money, but merely in store credit. To create a monopoly, the stores had to capture the paycheck at its source. The classic company store was owned by a mining company. Mines are where the minerals are found, and that often resulted in the company setting up a whole town around the mine, in the middle of nowhere, a town in which the company owned everything.

          The telecommunications monopoly is mostly in the last five hundred or a thousand feet. Bypass that, and you are in a strong position. Of course, faced with serious competition from the right kind of wireless, the telephone companies would probably choose to sell their landlines to the local water district. And thta is Game, Set, and Match!

          reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 13 Apr 2017 @ 12:06pm

    i HAVE TO ASK...

    1. wHY ARE THE same PEOPLE REPRESENTING THESE PEOPLE??
    2. IF you are a law maker, WHY/HOW would someone CHANGE your vote for something that YOU KNOW isnt right?

    WHAT are/is the Corporations GIVING these people to MAKE them do the wrong thing??
    And, ARNT there LAWS against it? and CAN it be proven?

    reply to this | link to this | view in chronology ]

  • identicon
    Kronomex, 13 Apr 2017 @ 5:00pm

    Plainly and simply; the corporate pig trough will almost always win.

    reply to this | link to this | view in chronology ]

  • icon
    discordian_eris (profile), 13 Apr 2017 @ 7:06pm

    It amazes me that the US is considered the 18th least corrupt country in the world. The only real difference between the US and Kazakhstan is that the corruption is on open display here. The other truly amazing thing is that our Supreme Court has ruled that there is no real evidence that money influences how idiots like these legislators vote.

    This is just more evidence showing that we do indeed live in a kakistocracy.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 13 Apr 2017 @ 8:51pm

      Re:

      The differences are that here in America, the average citizen never encounters corruption directly. We are not expected to bribe police, tax people, or school officials. Yes, many of the higher up government jobs have become corrupt. Businesses pay pennies on the dollar to get laws and bills passed that directly benefit them. We allowed it to happen and now act surprised that our laws have been used against us.

      reply to this | link to this | view in chronology ]

      • icon
        That One Guy (profile), 13 Apr 2017 @ 9:13pm

        Re: Re:

        The differences are that here in America, the average citizen never encounters corruption directly.

        ...

        We allowed it to happen and now act surprised that our laws have been used against us.

        I wonder if those two might have anything to do with each other...? If you don't know that a problem exists, because odds are good it won't affect you in a visible way, then you're not likely to be 'fighting' against that problem.

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 15 Apr 2017 @ 5:14am

        Re: Re:

        We are not expected to bribe police

        Why would they ask for bribes when the law allows them to seize the money you are are carrying, along with anything else that they fancy, as the proceeds of crime>?

        reply to this | link to this | view in chronology ]

    • icon
      jupiterkansas (profile), 14 Apr 2017 @ 8:33am

      Re:

      It's not corruption if it's legal. That's the American way!

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Apr 2017 @ 5:21am

    Pay-to-Play

    "Tennessee will literally be paying AT&T to provide a service 1000 times slower than what Chattanooga could provide without subsidies."

    No subsidies means no kickbacks for Marsha Blackburn, Patsy Hazlewood, and their cronies. If EBP wants to be taken seriously, they've got to pony up.

    reply to this | link to this | view in chronology ]


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