by Will Brunelle
Published by POLITICO New York on April 3, 2015
At a campaign stop in Albany last October, Governor Andrew Cuomo announced an ambitious new plan to revolutionize New Yorkers’ access to broadband internet with $500 million in state funding.
Cuomo has re-announced the plan twice since then, boasting of its economic promise for upstate communities and unveiling a flashy new website that declares broadband “as vital a resource as running water and electricity to New York’s communities.”
But six months after the first announcement, Cuomo’s “New NY Broadband” plan remains a wire frame, with no defined guidelines, rules, or even a clear sense of how it will be implemented and regulated. The state’s major internet providers have yet to commit to participating in the program, and the administration is sending mixed messages about whether or not it will allow municipalities to compete for the broadband funds.
At its core, the program aims to offer $500 million in matching funds, pulled from the state’s roughly $6 billion in incoming bank settlement money, to internet service providers willing to lay the foundation for faster broadband service around the state, including the vast rural areas that providers have dismissed as financially untenable.
According to his agenda book, released alongside his State of the State address, Cuomo is aiming to have the entire state wired for 100 megabits per second internet access by 2018. The plan sets 100 Mbps as the new minimum in download speeds for broadband, up from the previous six megabit minimum, with only exceptionally rural areas allowed to operate services as slow as 25 Mbps.
How the state plans to achieve those goals remains unclear. Cuomo’s budget proposal devotes just 31 words to the program, saying it will “support the development of infrastructure to bring high-speed internet access to underserved regions throughout the state, and to support the development of other telecommunications infrastructure.”
The challenge largely falls to Cuomo’s new Broadband Program Office, led by David Salway, a former telecommunications consultant (and SUNY Albany grad), who has traveled across upstate in recent months, touting the program’s potential in communities that have often been ignored by major providers, or are dominated by just a single provider. At an event in Gloversville in March, Salway said the plan is a “business driver,” and that the high speeds it offers are a “necessity in the 21st century.”
So far, service providers appear unswayed.
Three of New York’s biggest providers—Time Warner Cable, Frontier and Verizon—all declined to comment on whether they’re interested in Cuomo’s proposal or plan to take advantage of the state funding.
Salway reassured Capital that there’s been significant interest, especially from the mid-sized provider Windstream, which competes in some of the state’s major markets, and also serves as the sole provider to several rural areas in the state. (Jeanne Shearer, the vice president of state government affairs for Windstream, told Capital the company is “always looking for opportunities to expand broadband.”)
One firm tenet of the plan, according to Salway, is that the funds be used for private enterprise.
“The primary focus of our program is that we’re not going to be in the building business,” Salway said. He emphasized that municipal governments won’t be specifically precluded from receiving funds under the program, but said that the state is “wary” of “the government building and competing with the private sector.”
“We see this as a provider partnership process where an incumbent provider or maybe a new entrant comes in,” Salway said.
Critics worry that Cuomo’s public-private approach will simply act as a giveaway to existing providers.
“The only clear beneficiaries of this program will be cable and internet providers, who will have a new state subsidy to expand their footprints into areas in which their competitors have demonstrated an inability to operate profitably,” said Ken Girardin of the conservative Empire Center for Public Policy, in a scathing review of the New NY plan.
Christopher Mitchell, the director of the Community Broadband Networks Initiative for the Institute for Local Self Reliance, said that many of the private companies will likely look to serve “tens of megabits” to the bulk of their customers, assuming that many won’t actually want or need the full power that 100 Mbps connections offer.
Mitchell praised Cuomo’s $500 million commitment as “more impressive than most states,” but said the state should “prioritize funds that are going to providers that are accountable to the public … because that’s how we electrified the country.”
Mitchell pointed to the example of Longmont, Colorado, where the city’s publicly owned utility company provided the necessary infrastructure to help provide broadband to the community of 86,000 residents.
Longmont failed in the 2000s to attract interest from providers willing to install high-speed fiber networks due to its low potential for revenue, and was prohibited under state law from providing advanced telecommunications services to the community (similar laws have been passed in several states, all heavily backed by private I.S.P.s). A caveat in the law allowed the city to reclaim that right if its residents voted in favor of it via a ballot proposition.
After being out-lobbied by private ISPs and losing the vote in 2009, the city re-introduced the ballot question in 2011 and won, despite over $400,000 in opposition lobbying from the private sector, said Tom Roiniotis, the city’s general manager. Now, 10 percent of the city has access to internet service at speeds of one gigabit per second in both download and upload, and the city will offer gigabit service (10 times faster than Cuomo’s proposal calls for) over publicly-owned fiber-optic broadband network by the end of 2016.
Roiniotis said that while every individual state and municipality should conduct their own feasibility studies and examine what their best options are, public network developments are certainly a good option for areas underserved by the private sector.
“The Longmonts of the country can decide to wait until these private sector companies decide it’s in their interest to finally build these fiber networks out, or they can say, ‘You know, we’re always going to be behind the greater technological curve of the nation,’ and do it themselves,” Roinotis said.
Allowing municipalities to act as the service providers can also help guarantee prices.
“When you subsidize the private sector, you don’t really know what kind of services they’re going to provide in the future,” Mitchell said. “There’s a fair number that basically rip off consumers,” and they “basically extract resources from the community they serve.”
Salway has said that the state will prefer providers who offer faster speeds at lower prices, though he also said that no specific New York agency has the authority to regulate broadband pricing, which means the state has few mechanisms to guarantee how much providers charge.
“The Public Service Commission has regulatory authority over cable, not broadband,” Salway said, and the Federal Communications Commission doesn’t set rules for pricing either. “But we’re going to be looking closely at the program to make sure it aligns pricing with other communities with the same demographics,” Salway said, adding that the state will “align the pricing per megabit or the standard to a verifiable, validated source that we can make sure we keep on matching as we go forward.”
As for when these rules or guidelines would be released, Salway only said that it would come after the state Legislature passes a budget (which has an April 1 deadline).
While Cuomo’s office insists on the need for public investment, at least one member of his administration has suggested an openness to other ideas.
“All proposals are on the table, because each region of the state has its own unique challenges,” Lieutenant Governor Kathy Hochul told reporters after a meeting of the Capital Region Economic Development Council. “If there are areas large providers will not go into, we will figure it out. It’s that important.”
This article appeared in the April 2015 edition of Capital magazine.