Cable giants, Mississippi electric cooperatives battle over federal broadband dollars

by Geoff Pender, Mississippi Today
November 19, 2021

As millions more federal dollars flow to Mississippi for expanding broadband internet access, large cable and telecom companies and rural electric cooperatives are already sparring over the money.

During two days of state Senate Energy Committee hearings this week, officials from both sides laid out their cases for how they could best provide more rural high-speed internet access. At issue is about $162 million the state is expected to receive as part of the American Rescue Plan Act that can be used for broadband expansion projects — plus hundreds of millions more expected to soon be earmarked for Mississippi internet expansion.

“(U.S.) Treasury has specified that its preference is for this money to go to cooperatives, nonprofits and government agencies for broadband,” said Michael Callahan, CEO of the Electric Cooperatives Associations of Mississippi. “… This money was tailor-made for co-ops … There are some very core, poor parts of the state of Mississippi that desperately need broadband.”

FOLLOW THE MONEY: Mississippi Today's full coverage of spending of billions of federal stimulus dollars.

But Mayo Flynt, president of AT&T Mississippi, told lawmakers: “We do think this is a job for the private sector and not the government sector to do … Scale is your friend, you're going to get more return for your dollar, and this is a scale business … We believe that a competitive process or (requests for proposals) is going to help you get the best bang for your buck. Competition is a good thing. We are in the game and are competing.”

In 2019, the Mississippi Legislature passed a law allowing electric cooperatives to provide internet service — an effort to expand broadband access in a poor, rural state where an estimated 40% of the state lacked access. The effort has been likened to providing electricity to rural Mississippi in the 1930s. Proponents said large cable and telecom companies were failing to expand service into rural areas because it wasn't profitable enough.

But cable and telecom providers say they have spent millions in private funds expanding internet service in Mississippi, and that they shouldn't be cut out of government funding for expansion.

“We think everybody should be able to take part in this,” said T.J. Taylor, director of the Mississippi Cable Telecommunications Association. “It's best to have a program that is technology neutral, vendor neutral that emphasizes getting this out there as quickly as possible to unserved areas.”

Mississippi has already received hundreds of millions of federal dollars for broadband expansion in recent years. It received $495 million from the Rural Digital Opportunity Fund and lawmakers earmarked another $75 million last year from the first round of pandemic relief the state received. Most of this money went to rural electric cooperatives.

READ MORE: How are other states spending COVID-19 stimulus money?

Northern District Public Service Commissioner Brandon Presley and PSC staff Director Sally Doty testified to the Senate committee that the electric co-ops and small rural phone companies that received the earlier round of funds have laid thousands of miles of fiber optics and hooked up thousands of households.

After the hearing, Presley said: “If there is any idea circulating that somehow companies like AT&T can gobble up this $162 million intended for cooperatives and non-profits, I think that idea will be dead on arrival at Treasury based on their own guidance. Cooperatives and nonprofits who put people above profits are who these funds are designated for and that's who should get them under any plan sent in by the governor. To try and please the AT&Ts of the world with these funds will only delay broadband expansion. I would fight that tooth, nail and claw.”

Gov. Tate Reeves will have to apply to Treasury for the $162 million in ARPA capital funds — separate from $2.7 billion in ARPA funds going to state and local governments (much of which could also be used for broadband and other infrastructure projects). Reeves recently said he intends to do so. The deadline for applying is Dec. 27.

Callahan said that while the governor must apply for the funds, there is some question whether he or the Legislature would control spending them. Reeves and lawmakers have clashed over who controlled spending of federal pandemic stimulus, with the Legislature prevailing thus far.

“I believe this is the governor's money to spend,” Callahan said. “… I believe that was done on purpose, because so many governors lost (control of) the money in the CARES Act — they wanted to throw them a bone.”

Chris Champion, vice president of government relations for C Spire, told lawmakers he hopes Mississippi joins most other states and creates a dedicated broadband agency to direct expansion efforts.

Senate Energy Chairman Joel Carter, R-Gulfport, said he and his committee are searching for “a rock-solid plan on how to deploy fiber” and “provide high-speed connection to all of Mississippi that we can.”

In addition to the hundreds of millions the state has received through the Rural Digital Opportunity Fund and pandemic ARPA stimulus for broadband, the state is also expected to receive from $500 million to $1.1 billion for broadband expansion from the infrastructure bill Congress passed last week.

“There's enough money flowing right now and coming to this state that we would to be able to hook up fiber service to every Mississippi home,” Presley said.

READ MORE: Mississippi broadband internet expansion ‘pedal to the metal' as federal money flows

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.