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The good, bad and ugly BEAD underbelly
Re: "Municipalities can apply for BEAD. Will it matter?," by Julia King, March 19, 2024.
Thank you for your recent article “Municipalities can apply for BEAD. Will it matter?” which sheds a light on a portion of the underbelly of BEAD funding in a number of restrictive States. I would like to fill in some good and not so good detail on your summary of Michigan law and Eric Frederick’s comments.
“The Michigan High-Speed Internet Office's Chief Connectivity Officer, Eric Frederick, said the state’s BEAD proposal was able to establish municipal eligibility through “many, many conversations" with the state’s Public Service Commission, which administer several laws limiting publicly run telecom services. Those laws differentiate between broadband and telecommunications services and do not restrict local units of government from participating in BEAD, he said.”
While I cannot speak to Eric’s efforts at the MPSC, though always appreciative of any headway he accomplishes on behalf of local communities, the fact is our state governing law addressing the authority for municipal telecommunications or broadband networks, is not a bar and only amounts to a minor speed bump or two. This is so, notwithstanding how the ISP industry represents the law to local communities considering building their own BB networks. Having represented a half dozen municipal systems since the laws were passed, I can say this emphatically: “If a community is truly interested, as many should be, municipal broadband networks can be built under current law”.
(See 2002 PA 480; MCL 484.3114 and 2005 PA 235; MCL 484.2252.)
Of much greater concern is the law that restricts municipal access to State distributed funding for such networks. See 2020 PA 224; MCL 484.3251 et seq., which bars all state Broadband funding of all governmental related Broadband networks.
Section 4 of the Act was written by and for the sole benefit of the largest ISP Monopolies who have had a many decades long, very cozy influence on State leadership. It provides:
“(2) The department shall not, directly or indirectly, award grant money to a governmental entity or educational institution or an affiliate, to own, purchase, construct, operate, or maintain a communications network, or to provide service to any residential or commercial premises.”
In a telling portion as to the authors of this restriction, the Act also restricts any subscriber friendly standards on those entities (read ISP industry) receiving funding:
(3) The department shall not, as a condition of an award of grant money, impose an open network architecture requirement, rate regulation, or other term or condition of service that differs from the applicant's terms or conditions of service in its other service areas.”
While a successful modification of the 2023 Appropriations Act occurred with our assist, to soften this moratorium in order to have the State qualify for $1.6 Billion in BEAD funding, the threat of PA 224 remains and, as another appropriations cycle comes back around, the risk of losing that battle this year looms ever present.
The net result of all this is that while the monopoly ISP’s have managed to throw a couple speed bumps across our authority to build local community Broadband networks, far worse, they have strangled our ability to obtain funding, all in order to protect their monopoly markets.
So, while we can hope for the best from the State Internet Office efforts, we remain concerned that BEAD funding for community BB Networks will nonetheless, end up on the short end of the stick for these reasons as well as at least one other.
That other major sticking point about BEAD and municipal networks which you did not touch on, but I hear regularly from urban clients, is the ISP industry’s carefully crafted “unserved” and “underserved” limitation on applicant qualifications.
By imposing that restriction, the industry protects its entire market backyard, making sure not to invite new entrants by way of BEAD funds, into their overpriced and poorly served urban markets, where most of us live in dire need of much better BB, but don’t quite qualify for funding as “unserved” or “underserved”.
Michael J. Watza, PROTEC General Counsel
Detroit, MI
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