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Expanding Broadband Access while Preserving Market Competition

While the broadband rollout in the U.S. has been a remarkable success story, there are still unserved areas, usually rural areas, where consumers don’t have good broadband options. Finding innovative, market-friendly ways to get broadband to these areas is a worthy pursuit. And by market-friendly, we mean not simply relying on massive, unending taxpayer subsidies or even government-owned and controlled networks.
In Georgia, the state legislature is considering legislation to allow non-profit Electric Membership Co-ops (EMCs) to enter the communications marketplace in unserved areas of the state. Such co-ops tend to be in rural areas, so this will help address gaps in broadband coverage as customers gain more options.
Allowing a new entrant into the broadband market is a no-brainer for anyone who believes in competition and markets. But it’s also important to not create new problems, and that’s why the legislation’s other provisions are also critical in providing a level playing field for all providers. The electric co-ops own the transmission poles, and their broadband competitors also attach to those poles. Once existing electric co-ops enter the broadband business, there would be an obvious temptation to use their control over pole attachment to disadvantage their broadband competitors.
So the new legislation would also mandate FCC rates on EMC pole attachments. The proposal would additionally cap pole attachment fees at current rates and include strong non-discrimination provisions that apply to all EMCs regardless of whether they have or currently engage in leasing or providing broadband facilities or services. Together these provisions will reduce the costs and burdens, enabling broadband service expansion and competition.
Free-market folks like us don’t like such price regulation, arguing that markets should be left to operate without government involvement. But this is not a case of markets or of market failure, because there is no free market for attaching to electric poles, since the EMCs have a monopoly on transmission poles.  Not being able to attach communications equipment to these poles at a reasonable rate is a barrier to markets, especially in rural areas. We must ensure that owners of utility poles—especially now that they may be participating in the broadband business—are not able to exclude competitors whether explicitly or by excessive rates.
Lack of reliable, timely and affordable access to physical infrastructure—particularly utility poles—is often a significant barrier to broadband deployment. The FCC finds that “utilities by virtue of their size and exclusive control over access to pole lines are unquestionably in a position to extract monopoly rents … in the form of unreasonably high pole attachment rates.” Such fees can amount to 20 percent of the total cost of broadband deployment, as explained in the FCC’s National Broadband Plan. But the average pole attachment rates currently charged by the Georgia EMCs are more than three times that which the Federal Communications Commission says is just and reasonable. 
Slowing the broadband rollout, by demanding exorbitant costs or otherwise, stands in absolute opposition to greater broadband deployment across the country. Safeguards on what the monopoly utility can charge and demand for rates, terms and conditions are necessary. With pole attachment fees often not based on real costs, these charges essentially function as a broadband tax, slowing broadband deployment and availability exactly in those areas that need it most.