Telecom execs: Business case for rural broadband doesn’t work without lower fees from EMCS

ATLANTA — Telecom companies are ready and willing to invest tens of millions of dollar extending broadband service into rural Georgia, telecom executives told members of the Georgia Public Service Commission (PSC) recently.

But they can’t afford to do it unless the PSC rolls back the fees the state’s electric membership cooperatives (EMCS) charge for attaching broadband technology to utility poles, the executives testified during a four-day hearing that wrapped up Friday.

“Building [broadband] networks in rural areas is an expensive proposition in areas where there may be more poles than people,” Jason Gumbs, senior vice president for Comcast in a 10-state region that includes Georgia, said Friday, Nov. 20. “Every cost factor … takes on an added importance.

“If Georgia presents itself as a place where we cannot invest because of onerous pole rates, we will have to look at other opportunities in front of us.”

Under legislation the General Assembly passed this year, the PSC must decide how much Georgia’s EMCS will be allowed to charge the telecoms for the critical pole attachments they will need to bring vital broadband connectivity to wide swaths of rural Georgia that are currently unserved or underserved. Commissioners are expected to vote on the issue next month.

The EMCS, which currently are charging about $20 per pole per year for attachments, are asking the PSC to increase that rate to an average of $37.95 per pole, which EMC officials say reflects their costs.

The telecoms want the commission to adopt the much lower rate of $7 per pole set by the Federal Communications Commission, now in effect in states including neighboring North Carolina and close to the rate Georgia Power charges in its service area.

Douglas Frank, regional vice president for Mediacom, which serves customers in 22 states including Georgia, said the $37.95 rate would increase the company’s costs by 83%. Mediacom currently pays $20.77 per pole, Frank said Thursday, Nov. 19.

“It is simply not operationally possible … nor a sustainable business practice,” he said.

But under cross-examination, Frank conceded the 38 EMCS that will be affected by the PSC’S decision on pole rates would lose $8.3 million per year were the commission to adopt the FCC rate.

Robert Remar, a lawyer representing the EMCS, suggested the deep-pocketed national telecoms would be better able to absorb a revenue loss than the member-owned EMCS, which would have to pass on their losses directly to customers.

The telecoms are offering significant broadband investments in Georgia. Frank said Mediacom has committed $20 million to $25 million during the next several years in its service area.

Gumbs said Comcast already has begun a $9 million initiative to expand broadband service to nearly 8,000 homes and businesses in Haralson and Carroll counties, starting Dec. 7 in Tallapoosa. It’s part of a planned three-year $27 million investment in 10 Georgia counties, he said.

Gumbs said the $5 million Comcast would save if the PSC adopts the FCC pole rate would be put toward its Georgia broadband plans.

But Remar said there’s no guarantee the telecoms would use the savings from a lower pole attachment rate to expand broadband connectivity in Georgia.

“Even if the commission decides to lower your pole attachment rates, you could decide to invest in another state … some other place where you’d get a better return,” he said.

Several commissioners hinted they may be reluctant to roll back the pole attachment rates because of the potential impact on the EMCS’ 4 million customers.

“The thought of hitting these EMC customers financially with no real guarantees of offsetting that with broadband makes me a little bit nervous,” Commissioner Tim Echols said. “It seems like I’m robbing one to help the other.”

But Gumbs said a lower pole attachment rate would not automatically result in raising EMC customers’ monthly bills.

“We will attach to more poles, which would increase the revenue for the EMCS,” he said. “Electric consumption will also go up. … I don’t see those 4 million Georgians impacted.”