The West Virginia Senate approved legislation Thursday that would create a state-owned broadband Internet network, but Frontier Communications and cable companies already are lobbying members of the House of Delegates to kill the bill.
State senators voted 29-5 to build a fiber-optic network “zone by zone” across West Virginia, using money borrowed through the Water Development Authority, one of the few state agencies authorized to issue bonds.
The legislation (SB 315) aims to expand high-speed Internet in rural areas, drive down prices and bolster Internet speeds.
“This bill is one that can really promote West Virginia and move our state forward,” said Sen. Chris Walters, R-Putnam. “Without this type of infrastructure, we aren't giving the people the opportunity to succeed.”
Senate Majority Leader Mitch Carmichael, a Frontier executive, sharply criticized the legislation on the Senate floor, saying the bill would discourage Internet providers from expanding existing broadband networks or building new ones.
“The capital allocations are chilled when they know the government is going to be competing,” said Carmichael, R-Jackson. “The best way to deliver broadband is through the private sector. We don't have to always turn to government to solve technological issues.
“This frankly, from my perspective and from the industry's perspective, is not the right way to expand broadband availability in West Virginia.”
Sen. Robert Karnes, R-Upshur, agreed the state should butt out of the broadband business.
“I don't want to see the state own this network,” Karnes said. “In most states, there are broadband networks that are entirely privately owned. The government doesn't have to step in and fill this role.”
Other opponents of the bill cautioned that new technologies such as wireless Internet could render a state-owned network obsolete — and leave the state and the Water Development Authority on the hook with no way to pay off the debt.
“I have to make sure our taxpayers are not going to be water-boarded,” said Sen. Mike Woelfel, D-Cabell, who voted against the bill. “Bad pun, but we're going to go into debt.”
Under the bill, Internet companies — and perhaps cities and counties — could apply for grant and bond money through the state water agency, which already funds water and sewer projects.
Applicants would have to submit business plans detailing the number of customers they expected to serve, project costs and how they would pay off their bonds.
“We won't be building [fiber] lines that nobody will be using,” Walters said. “The business plan has to prove viability. If New York, or wherever we go for the bonding, does not see that this system can pay for itself we won't get the bonds.”
Cable companies, including Suddenlink, argue that the legislation would make water and sewer projects a “lesser priority” in West Virginia by diverting the state's limited bonding capacity to broadband projects.
“It is our contention that the bill provides limited protections to the Water Development Authority and taxpayers against fiber-optic projects that cannot sustain themselves economically,” said Mark Polen, who's lobbying against the bill for the West Virginia Cable Telecommunications Association.
Cable companies and Frontier, West Virginia's largest Internet provider, say Walters' broadband bill does not guarantee that a single business or home without high-speed Internet will get broadband service.
“There is no assurance that bonded projects will serve rural customers which is where the resources are needed most,” said Frontier spokesman Andy Malinoski.
West Virginia ranked 48th in the nation for broadband access in a recent Federal Communication Commission report.
Walters predicts his broadband bill will spur economic development and create competition among Internet providers, especially in rural communities.
“You want to diversify West Virginia's economy?” Walters asked. “This is the way to do it in the 21st Century.”
The bill next moves to the House, where it's expected to receive resistance.
Reach Eric Eyre at ericeyre@wvgazettemail.com, 304-348-4869 or follow @ericeyre on Twitter.