The federal programs and tools available today to help generate social and economic development in rural communities serve as a reminder of active and broad federal involvement in the 20th century, and the possibilities for federal leadership to help rural communities meet the current moment. Yet they are outdated, fragmented, and incoherent.
No, Missouri Law Does Not Prohibit Political Subdivisions From Offering Internet Service to Its Residents and Businesses
That statement might come as a surprise to some folks.
Some articles have stated – without qualification — that Missouri law bars political subdivisions (such as cities, counties, municipal utilities, school districts and other local government entities from offering internet access service to their citizens, or even owning the equipment that others use to provide that service.
The authority given for this conclusion is Section 392.410.7 of the Missouri Revised Statutes. That statute does generally prohibit Missouri political subdivisions from owning telecommunication equipment or offering telecommunication services, and in Nixon v. Missouri Municipal League, the United States Supreme Court did decide that federal law does not prohibit the Missouri legislature from restricting or prohibiting political subdivisions from providing any type of telecommunication service. Since one reason the Missouri Municipal League challenged Section 397.410.7 was to allow municipalities to offer internet access service as part of a municipal telecommunication utility, it is not all that surprising that commentators have raised concerns about the statute.
However, the issue actually addressed by the United States Supreme Court in the lawsuit, was whether federal law (the Telecommunications Act) prevented the Missouri legislature from restricting political subdivisions that wished to offer telecommunication services. The case did not decide whether the particular statute in question (Section 392.410.7) actually did restrict political subdivisions from offering the public access to the Internet (as opposed to other types of telecommunication services). In the twenty-plus years since the statute was passed, technologies and business models related to Internet access have evolved. Today a number of Missouri cities now offer public access to the Internet directly or through partnerships with private ISPs. While the approaches adopted by these political subdivisions have varied, in each case a way has been found to navigate Section 392.410.7 to avoid violating the limits imposed by that statute.
Just what does Section 392.410.7 prohibit – and why is it no longer particularly relevant to the Internet access offered by political subdivisions today?
The Missouri legislature passed Section 392.410.7 in 1997 in response to federal legislation that deregulated the telecommunications industry. Faced with the prospect of increased competition from the private sector, legacy telecommunication companies, convinced legislators that it would be unfair to allow municipalities (political subdivisions of the State) to offer traditional telecommunication services. The rationale was that, unlike private competitors, a political subdivision (or for-profit entities that partnered with them) would have an unfair competitive advantage over existing “legacy” telecommunication companies because political subdivisions do not pay income or property tax and they are able to raise capital to finance operations through taxation.
For that reason Section 392.410.7 generally prohibits a political subdivision from “providing or offering for sale, either to the public or to a telecommunications provider, a telecommunications service or telecommunications facility used to provide a telecommunications service for which a certificate of service authority is required pursuant to [Section 392.410].” A “certificate of service authority” (issued by the Missouri Public Service Commission (PSC)) was, and continues to be required before some telecommunication services may be offered, but Section 392.611.2 specifically excludes “Broadband and other internet protocol-enabled services” from regulation by the PSC, except to the extent the provider offers voice over internet protocol service (“VoIP” or “internet telephone” service).
Additionally, the general “prohibition” against offering telecommunication services contained in Section 392.410.7 contains additional exceptions. First, and most importantly, the statute does not prohibit a political subdivision from providing “Internet-type services” (as opposed to telephony service). Second, it does not prohibit political subdivisions from providing any type of telecommunications services for its general governmental purposes, to students at educational institutions or for any educational or medical purpose. Third, political subdivisions may own and/or operate telecommunications equipment to provide E911 or other types of emergency telecommunications services. Finally, a city’s municipal utility (water, gas, electric, etc.) is expressly authorized to provide other telecommunication companies access to the municipal utility’s telecommunication and other assets on a nondiscriminatory, competitively neutral basis, at a price equal to what the political subdivision would charge if it were a for-profit business.
Read together, these exceptions make the statute largely irrelevant for a political subdivision that today wishes to own and operate a system designed to deliver access to the Internet for its citizens. Today internet access provides the public multiple opportunities to obtain online healthcare, buy goods and services, obtain an education, and launch a new business – as well as communicate with friends located anywhere in the world. The services that use the Internet to make this possible are offered by government, business, and nonprofit organizations. Those services are subject to varying degrees of federal, state and local government regulation, but the transfer data over the Internet by a political subdivision is not prohibited by the express language of Section 392.410.7. Additionally, as noted above, the statute provides wide latitude for political subdivisions to provide any other type of telecommunication service in addition to internet access) in order to deliver governmental services: public administration, healthcare, education and public safety.
If Not Specifically Prohibited — Should Political Subdivisions Undertake to Provide Internet Access to the Public?
This is a much harder question to answer. It requires communities, in consultation with legal and financial advisors, to carefully consider of a number of other legal questions, as well as economic and local public policy concerns. For example, a school district considering participation in a public-private partnership with the goal of offering internet access to each student’s home for online learning, would need to be careful that the arrangement did not jeopardize the district’s existing E-rate funding that now provides internet service to school buildings and classrooms. Many of these questions will be identified and examined in future articles, and developing strategies to address them will be part of a systematic online “Digital Community Guide” that will be made available to local government officials, community stakeholders and their advisors on the Missouri Broadband Resource Rail early next year.
However, at least part of the answer can be found in the Report published earlier this summer following the University of Missouri System’s online Broadband Internet Workshop. A core conclusion of the Workshop was that local government (political subdivisions) should actively consider arrangements involving public-private partnerships with internet service providers and other interested stakeholders to speed the deployment of affordable, reliable, high-speed internet service, and the adoption of new digital applications that use the Internet to deliver better health, education and financial opportunities for their citizens.
Some quick reaction to Monday’s FCC Rural Digital Opportunity Fund (RDOF) Auction Award Announcement:
It’s good news of course! – Over $346 million allocated to seventeen providers that proposed to bring gigabit level service to almost 200,000 (199,211) locations through-out Missouri. On average – that means the Federal government is offering to contribute about $1,740 per location over the award period.
Overall the auction award was not as large as what was authorized (around $20 billion) — $9.23 billion was awarded nationwide. So more funds are expected be awarded in the future, hopefully using a revised system to identify unserved areas within census tracts that are now partially served. Only census tracts that had no adequate broadband service were eligible to participate in this round of awards – a fact that all agree is a significant shortcoming of the award program that needs to be corrected.
A bit of additional fine print:
Companies receiving awards are required to submit much more detailed information to the FCC throughout next year before their award is final. That information includes engineering data, deployment plans and a financial data, and failure to submit it by the deadlines can result in forfeiture of the award.
Once the award is final, the winning bidders will receive their grant over a ten-year period in equal annual installments. In other words the average award of $1,740 for each Missouri location, entitles the winning bidder to a $174 annual subsidy paid over ten years for each location. This likely means that companies will need to find separate financing sources to fund costs of constructing the broadband infrastructure that ultimately will be repaid from annual award installments.
Companies that received awards are provided a significant period of time to complete actually provide the promised service. The first 40% of locations must be served after three years, and final build out need not be completed for six years (2027).
Finally, while the awards were based on locations in census tracts, the winning bidders were not required, and did not agree to serve all residents in living in the census tract.
Does this mean that the RDOF Award is not “good news” for residents in rural Missouri?
Of course not!
But it would be a mistake to think that the award is more than a single step in bridging the digital divide. To close the digital divide, government and community stakeholders will need to continue to work creatively with internet service providers.
In that regard, it’s also important to keep in mind that bringing internet infrastructure to a location, is not the same thing as actually providing service to residents and businesses at that location. As important as the RDOF program likely will be to closing the digital divide, it does not directly address the issues of affordability and digital literacy, and we know that both must be solved before underserved populations can actually reap the benefits of the new digital technologies that use broadband.
More than $346 million was earmarked to expand Missouri’s rural broadband infrastructure, the Federal Communications Commission (FCC) announced Monday.
The funds come from the commission’s Rural Digital Opportunity Fund, a $20 billion effort to bring broadband services to rural homes and small businesses.
More than 199,000 unserved Missouri homes and businesses are set to receive access to the internet at speeds averaging 25 megabytes per second (MBPS) through the fund, according to the commission.
The Trump Administration announced that the United States Department of Agriculture (USDA) is investing $91.5 million to provide broadband service in unserved and underserved rural areas in Missouri. This investment is part of the $550 million Congress allocated to the second round of the ReConnect Program.
The Rural Utilities Service, Rural Business-Cooperative Service, and Rural Housing Service, agencies that comprise the Rural Development Mission Area within the United States Department of Agriculture, are issuing this final rule to establish the authority authorized by Section 6210 of the Agriculture Improvement Act of 2018, which will assist rural families and small businesses in gaining access to broadband service by permitting recipients of a loan, grant, or loan guarantee from RD to use up to 10 percent of the amount provided to construct broadband infrastructure in areas not served by minimum acceptable level of broadband service.
The State of Missouri is providing up to $2 million in grants to reimburse providers that have expanded, or plan to connect, high-speed internet (25 Megabits per second / 3 Megabits per second or greater) to new subscribing residentsin unserved or underserved areas in response to the COVID-19 pandemic. The Missouri Department of Economic Development (DED) will administer and facilitate the reimbursement program for broadband providers that expand service in order to directly benefit qualified households, including those households: 1) that meet one of the categories identified as a vulnerable population, 2) with a Missouri resident on telework status, and 3) with a student resident (pre-school through higher education). The Emergency Broadband Investment Program will be technology-neutral and open to all broadband providers in good standing with the State of Missouri and meeting program guidelines. The program was developed using the federal law, guidance, and frequently asked questions from section 601(a) of the federal Social Security Act, as added by section 5001 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
Applications will be reviewed immediately upon submission by DED using the following criteria and point values. DED will also assess the regional diversity of the grant requests. These evaluation criteria reflect information provided in thegrant application. To ensure that an application receives the best score possible, it should include comprehensive responses and all requested attachments. Applications may also be subject to a challenge process to ensure that CARES Act resources are deployed only as necessary and not for areas already adequately serviced.
DED reserves the right to revise these program guidelines to conform to CARES Act guidance issued during the grant period or as it otherwise deems prudent in its sole discretion.
More information can be found here: https://ded.mo.gov/content/emergency-broadband-investment-program
Even if broadband is available and affordable, individuals and families can’t connect without equipment and digital literacy.
● Twenty-one percent of non-broadband users cite the cost of a computer as one of the reasons they
do not have broadband at home.
● Many American workers lack digital skills they need to successfully navigate digital devices.
● The Digital Equity Act would provide funding to states to implement digital equity plans, and to
other stakeholders to support digital equity projects.
State broadband policies make a diference, a new report says. In particular, residents of states that have their own broadband funding programs did better. And in states that restrict municipal broadband, residents fared worse.
Communities hoping to improve their broadband service have several different models
to choose from. Here’s how to go about making the choice.