Changes the Ohio Senate made to its version of the state’s next budget bill could set back the state’s work on broadband expansion, and threaten existing municipal networks.
The House version included $190 million in funding for a new broadband expansion grant program, established by House Bill 2 earlier this year. House Bill 2, which passed the Senate unanimously April 28, included an initial $20 million in funding for that program, with more expected to come from the budget.
Then, the Senate unveiled its own version of the bill — one that completely cut broadband funding.
The Senate version also added amendments to restrict municipal broadband networks, heavily. Those amendments came in an omnibus amendment June 8, one day before the bill passed out of committee, and then out of the Senate.
“For all municipal networks in Ohio, it would basically put us out of business,” said Dave Corrado, chief executive officer of Medina County Fiber Network.
The House and Senate are continuing to work out differences in their versions of the budget in a conference committee. The state’s new fiscal year begins July 1, and lawmakers will need to have the bill to Gov. Mike DeWine’s desk by June 30 for it to be signed and take effect by then.
Funding
The grant program funding was removed partly to help cover a 5% tax cut included in the budget, legislators said in the June 9 Senate hearing when the bill was passed. Senate president Matt Huffman, R-Lima, also said legislators wanted more clarity about how the funds proposed for the grant program would be used, the Associated Press reported June 16.
Lt. Gov. Jon Husted, who also directs InnovateOhio, has urged the legislature to fund the budget for broadband expansion fully, noting that nearly a million Ohioans don’t have access to broadband.
“We have a plan to begin solving this problem; it’s time to put it into action,” Husted said in an emailed statement.
Reps. Rick Carfagna, R-Genoa Township, and Brian Stewart, R-Ashville, who sponsored House Bill 2, also stressed the importance of funding the grant program and called on the Senate to make a financial commitment to it in a joint June 1 statement.
“Given today’s Senate announcement to remove these funds in totality, I look forward to hearing how they intend to accomplish House Bill 2’s vision of facilitating the expansion of high-speed internet to unserved households across Ohio,” the statement reads.
The Ohio Farm Bureau also sent a letter urging the General Assembly to add funding for the grant program back into the budget. In the letter, executive vice president Adam Sharp noted only 61% of rural residents have broadband access, and access is increasingly important for farmers.
“State tax revenues are running in surplus, and the state is receiving billions of dollars from the federal government. At least a portion of these resources should be reinvested in communities in need of broadband access,” Sharp wrote. “As the COVID-19 pandemic has highlighted, the internet is no longer a luxury item, as many aspects of society depend upon connectivity to sustain healthy communities.”
Municipal networks
In some areas, it isn’t profitable for a private sector business to offer broadband service, or a faster level of service. In some of these cases, municipalities have tried to fill the gap by developing their own networks.
The language on municipal networks in the budget bill limits these networks to only serving residents who live in otherwise unserved areas. The bill defines “unserved” as not having access to at least 10 mbps download and 1 mbps upload speeds. It also restricts how these networks can use federal funds.
But based on the bill’s definition of access, only about 1.72% of the state is unserved, according to data from Connected Nation Ohio.
“In Fairlawn (Ohio), that would really put us out of business at the end of the day, because anyone in Fairlawn would get multiple providers to provide that low of bandwidth to them,” said Ernie Staten, public service director for Fairlawn. “The bill looks to be intended to kill the idea of municipal broadband.”
The city of Fairlawn developed its network, FairlawnGig, not because there was no access, but because residents were looking for better options, Staten said. About 60% of the addresses in Fairlawn now use that service.
“If the people of your community want it, they should be allowed to have a choice,” Staten said. “There should be competition in the free market.”
Huffman said the goal of the amendments was to make sure municipalities aren’t getting into broadband for profit or to compete with the private sector, and are sticking to serving underserved areas in their own jurisdictions, the Associated Press reported.
In Medina County, the network provides infrastructure, and customers can choose from 14 carriers, Corrado said. Often, companies build their networks so they don’t overlap, which means that in many cases, customers only have one option. Providing public infrastructure that private carriers can use, he said, has created more competition and driven costs down for customers.
“With an open network, it’s not government vs. commercial,” Corrado said. Instead, companies compete with each other, using the common infrastructure.
Local leadership in several cities and counties that have municipal networks, including Medina County, Summit County and the city of Fairlawn, have passed resolutions opposing the legislation.
“We don’t see that there’s a compromise, at all,” Staten said. “This is the budget bill for the state of Ohio — generally, you do not mix policy with budget … what is this doing in that bill?”
The bill also could violate Ohio’s “home rule” rights for local governments by not allowing them to provide a service to residents and restricting how they spend funds, Staten said.
A group of 20 private sector businesses and organizations, including the Coalition for Local Internet Choice, Google Fiber, the Electronic Frontier Foundation and Netflix, also sent a letter to state leadership June 10 opposing the amendments. The letter argues the amendments would hurt the private sector, in addition to Ohio communities.
“These provisions were dropped into the Senate’s proposed amendments at the last moment, with no prior notice or opportunity for debate,” the letter reads. “They would effectively kill existing and future community broadband initiatives and public-private broadband partnerships in Ohio.”
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