Sen. Watson and Rep. Matlock Propose Massive, $21 Million Annual Fee Increase on Private Broadband Internet Providers – Costs Will Hit Consumers’ Monthly Bills

NASHVILLE, Tenn.--(BUSINESS WIRE)--The Tennessee Senate Commerce Committee is considering legislation that would nearly double private broadband providers’ payments to the state’s government-owned utilities and electric cooperatives for the right to attach fiber lines to their utility poles, and in the process drive up Tennesseans’ monthly video, internet and phone bills.

“This is big-government, anti-business, anti-consumer legislation that has severe consequences for Tennessee”

• Legislation will double the fees Tennessee’s private providers pay to local government utilities to attach broadband fiber to utility poles
• Tennessee would have America’s highest utility pole attachment rates, five times higher than the $7national average.
• Massive, $21 million annual fee increase will hit Tennesseans in the pocket book in the form of higher monthly bills
• Bad policy will halt broadband internet expansion to rural and expanding communities

The unprecedented fee increase, proposed by Senator Bo Watson (R-Hixson) and Representative Jimmy Matlock (R-Lenoir City), is scheduled for Senate Commerce committee on Tuesday, March 5. Approval would increase Tennessee’s current $17 average per-pole rental average (already among the nation’s highest rates) to $33 – more than two times higher than any other state in the nation.

By contrast, the Federal Communications Commission formula for privately owned, non-government utilities – which provide about 80 percent of the nation’s power supply – is about $7 per pole, 4 ½ times less than the fee that would result from the proposal by Sen. Watson and Rep. Matlock. In fact, the D.C. Circuit Court of Appeals today ruled in favor of the FCC’s recent decision to reduce the pole rental fees telecommunications carriers pay to regulated utility owners. Tennessee’s utility power system is dominated by government-owned utilities, which are exempt from the federal formula.

“This is big-government, anti-business, anti-consumer legislation that has severe consequences for Tennessee,” said Corum Webb, TCTA executive director. “At a time when the FCC is pressing for lower utility pole rental rates, some of our legislators want to make Tennessee’s rates the very highest in the nation. It will stifle business investment and grind to a halt expansion of broadband internet to citizens in rural and developing areas. “In addition, the $20 million annual money grab by government utilities is a cost that is inevitably placed on the backs of consumers. The public is going to see an increase in monthly bills for video, internet and phone services,” said Webb.

TCTA is advocating, instead, for the Freedom to Connect Act of 2013, sponsored by Representative Steve McManus (R-Memphis) and Senator Brian Kelsey (R-Germantown). The legislation would establish guiding policy for rates, based on actual costs, and set up independent, third-party review for situations when utilities and private companies disagree. The lack of guiding policy is why Tennessee already has among the nation’s highest rates and is not expanding broadband internet as rapidly as other states.

Said Kelsey, “Tennessee’s government-owned utilities should not be able to hold private companies hostage with rates that are excessive and out of step with the nation.”

Said McManus, “We need a neutral third party that is impartial to resolve these disputes and assure that rates are fair and reasonable. That is exactly what this legislation provides.”

For more information on the Freedom to Connect Act of 2013, go to www.freedomtoconnect.org.