Lexington Broadband Update: Grants, Mergers, Current Standing

June 2016

First, a recap: On January 8, the Broadband Program Office, under the leadership of Jeffrey Nordhaus, announced that the Round 1 application window for matching grants had opened. Mr. Nordhaus had replaced David Salway as the head of what was previously called The New York State Broadband Office. Mr. Salway had spent a quantity of time during his tenure visiting communities in upstate New York, mostly at their request, to hear their frustration at a lack of connectivity that hampered business and opportunity in their communities. Mr. Nordhaus had not had time to do so. His background is with Empire State Development. Mr. Salway presented himself as an ambassador for the New New York Broadband 4-All expansion grant program. He came to our July Pep Rally and “hoped he’d be with us next year when we celebrated successful grant application.” He brought his kids and ate a hotdog.

On to October, 2015: The criteria of the Round 1 rollout was ominously foreshadowed when a Request for Information (RFI) appeared in community and provider inboxes. Elements of the RFI indicated that there were ideas being considered by the Broadband Office that would make it more difficult for smaller, less densely populated communities to win an award. One was the idea for a Reverse Auction where sealed bids would come from providers with the bid that promised the least expenditure over covered miles would win the matching grant award. Another was that larger projects of at least 2500 homes passed would be favored. There was to be a waiver system that allowed providers to ask for exemptions to criteria proposed.

In fact, these ideas made the final cut and became a part of the criteria for applications. Both conflict with the reality that it is more expensive to bring broadband connectivity to less densely populated areas. They seem to subvert the state’s original intention of providing one to one public/private matching grants to cut infrastructure costs for providers willing to serve where populations and profitability are lower. Moreover, prioritizing larger projects would work against towns like ours, where a prospective plan was developed that was a win for the provider and a win for the town but could not possibly meet a 2500 passed home minimum for consideration. Our proposed project is about 750 homes passed. A year before, in January 2015, we were encouraged to go it alone by Greene County Broadband coordinator Warren Hart because we are a geographical and topographical outlier within Greene and completely unserved without near providers with any inclination to serve us. If we could go get it, find a way, find a provider, and work, work, work against the odds, we might have our opportunity. That is what you did. That’s what we did and that’s what we continue to do, do, do.

The Round 1 Rollout: was a real smack in the head for us and for all smaller state providers and counties with regional plans in the making. Unexpectedly and unbelievably, Round 1 was based on two entities: Time Warner and Verizon. Also announced on January 8 at the meeting where Round 1 grant criteria was released was the Public Service Commission’s approval of a gigantic merger proposal whereby Charter Communications would purchase Time Warner assets for over 50 billion dollars and become New Charter. Although the FCC had not yet signed off on the merger, the Broadband Program Office (BPO) ruled out any area, down to the census block, where Time Warner had a franchise footprint. Those areas were ineligible to apply for a matching grant in Round 1. Why? Because the BPO was observing one among many concessions demanded of Time Warner and Charter as a condition for the merger– that they would, on their own dime, carve out 145,000 more unserved homes in their franchise areas and connect them. Challenging the prohibitive conditions of the criteria,  Albany area attorney, Peter Henner, in alliance with Rural Broadband Companies.org filed an anti-trust case in April, asking for an injunction to stop many aspects of the rollout as it concerned Time Warner. No word on the outcome there.

I encourage you to read the following article published in the Times Union on June 8. In it, a letter from the Attorney General’s office is reprinted. It informs Time Warner-Charter that it won’t be fooled by a “rebranding” campaign to mask past transgressions, and that Time Warner has earned the “miserable reputation it enjoys among consumers.” The AG’s office promises to continue its investigation of Time Warner for false promises to its customers for “blazing speed” and innovation.

http://www.timesunion.com/business/article/Schneiderman-Probe-of-Time-Warner-internet-7971862.php

The Other Entity: on which Round 1 depended was Verizon, our landline nemesis. There are federal Connect America funds, lots of money, that was offered to Verizon to beef up connectivity in rural areas of NY. Here’s your explanation of those funds ($170 million) directly from Senator Schumer’s website:

“The FCC’s Connect America Fund (CAF) program was set up to award federal funding to private telecommunications companies across the U.S. so that they could deploy and increase access to high-speed broadband in unserved and underserved areas. Due to its large, unserved population, NY State made up a considerable chunk of those awards, receiving $49 million in annual CAF funding for six years. However, after receiving this funding, only three of the four price cap companies decided to accept the CAF award. Those companies – Fairpoint, Frontier, and Windstream – have been successfully deploying broadband in NY ever since. Schumer explained that Verizon declined to accept the CAF funds, which amounted to over $28 million annually. As a result, the territories served by Verizon, spread throughout the state, are currently denied the opportunity to receive high-speed broadband supported by CAF funds.”

Senator Schumer was campaigning to keep the funds in New York State rather than seeing them turned over to other states with designated providers more likely to use them. It appears he will be successful in that effort and more– the relaxation of stringent federal grant administrative obligations that make them less attractive for providers. You can read about his success here:

https://votesmart.org/public-statement/788379/after-senators-push-schumer-announces-feds-will-unlock-485-million-in-unused-funds-that-will-help-bring-broadband-to-underserve

For us, the point is this: Because we are in Verizon’s landline footprint (along with lots of other upstate regions) we were ineligible to compete for Round 1 matching grants. Period. No waiver for Verizon’s utter contempt of the landline communities it serves and its unwillingness to upgrade corroded copper lines that give us dropped calls, static, bad weather landline disappearance, the “Lexington Hum;” and apparently no consequences despite being our core provider, without cell connectivity, in emergencies. No waiver opportunities in Round 1 for ineligible blocks. Period. This, while we were in the midst of working with the Public Utility Law Project protesting our Verizon service degradation, and still are. Oh, the irony.

The word on the front now is that the federal funds Verizon turned its back on may be folded into the state broadband expansion grant program in some way. On the state end, Round 1 application winners are probably going to be announced in July. This from Mr. Nordhaus at a recent meeting reported back to the Lexington Broadband Initiative. Only two applications made it in Northern Greene in eligible blocks. Round 2 may open in July or “soon thereafter.” Lexington and the other Verizon “carve out” areas are expected to be released to apply for Round 2 grants. Our prospective provider, MTC Cable, remains in our corner and ready, with our partner Western Catskills Community Revitalization Council, to produce an energetic and well written grant application. You have continued to work for this project. The “Second Round Woes” video was seen and heard well beyond our borders. The Lexington NY Farmers Market Facebook page had over 3100 hits alone, (not all of them mine). Last week, on Thursday, The Times Union printed the following editorial by me in their Commentary section.

www.timesunion.com/tuplus-opinion/article/High-speed-affordable-Internet-essential-to-7971691.php

Please be assured that The Lexington Broadband Initiative is alert and observant. We continue to track the expansion grant program and look for ways to positively present our insistence that we be served.

We feel like we’re getting close, even as we understand anything can and does happen when the issue is matching grants for Broadband.

Bonnie