Saturday, April 20, 2024

Broadband projects in rural Louisiana advance as major telecom companies drop grant protests

by BIZ Magazine

By Wes Muller, Louisiana Illluminator

Louisiana is in the early phase of a grant program to expand broadband internet services to rural communities in the state, yet established companies in the industry have taken steps to limit competition in these underserved areas. Moving forward, it appears some major telecommunications companies are backing down from this fight — and will have fewer chances to do so in the future.

The number of broadband expansion grants under protest has reduced from 26 to 16 after several telecom companies withdrew their challenges, according to the Louisiana Office of Broadband Development and Connectivity. Housed under the Division of Administration, the office awarded 67 Granting Unserved Municipalities Broadband Opportunities (GUMBO) grants for rural broadband expansion in the first wave of awards on July 25, amounting to $130 million funded through President Joe Biden’s American Rescue Plan Act.

Many of the grants have gone to smaller internet service providers (ISPs) and telecom startups, several of which are Louisiana-based companies, but almost immediately following a July 25 announcement of initial grant awards, competing telecom companies filed formal protests with the Office of Broadband Development and Connectivity, forcing the state to halt 26 of those awards in accordance with state law and the rules of the GUMBO grant program.

Since then, however, several of the challenges have been voluntarily withdrawn, reducing the number to 16 as of Sept. 8, according to Veneeth Iyengar, Broadband Development and Connectivity executive director.

One of the 16 protests still under review has halted a $4 million grant for a project in East Carroll Parish in rural northeast Louisiana. The protest made headlines last week as residents and community activists aired their frustrations with big cable companies and the state laws that allow them to protest grant awards so late in the process. Sparklight, a subsidiary of telecom giant Cable One, filed the protest even though the company never applied for the grant itself.

The grant was slated to go to Conexon Connect, an upstart from Missouri that partners with rural electric utility cooperatives to provide high-speed internet service to hard-to-reach communities. The Conexon project would bring affordable internet access to 851 locations in the Lake Providence area.

The Office of Broadband Development and Connectivity is still reviewing Sparklight’s protest, along with the 15 others, to see if they have merit. Iyengar could not say when the review might be complete. The office’s ruling can still be appealed to the Division of Administration, after which the companies can then file a lawsuit in court, potentially delaying the projects further.

Conexon executive Jonathan Chambers said his company would have finished or been close to completing the East Carroll project by now if Sparklight had not filed the protest.

Reached by email last week, Cable One spokesperson Tammy Gabel said the company already services the Lake Providence area and doesn’t feel the area needs grant money for broadband expansion. Any ISP company can apply for the GUMBO grants, and several have been awarded to major telecoms such as AT&T and Cox Communications.

Sparklight and AT&T are the two major internet providers in East Carroll Parish, though several residents have said service from both companies is unreliable and slow to the point of making video streaming nearly impossible. Local advocacy group Delta Interfaith spent the past two years conducting research and gathering speed test data from customers in East Carroll and found that current ISPs were charging for speeds that customers were not receiving, organizer Nathaniel Willis said.

In a sampling of data Willis shared with the Illuminator, the majority of customers clocked download speeds far below 25 megabits per second, which the Office of Broadband Development and Connectivity uses as the minimum threshold for an internet connection to be defined as broadband. That threshold will increase to 100 megabits per second next year, Iyengar said.

GUMBO grant law changed to limit protest period 

Chambers said Louisiana’s broadband grant process is unlike that of other states in that it allows protests after the grants are awarded and does not have predetermined areas of grant eligibility. Many other states have maps showing counties or other areas that are eligible for broadband expansion, a feature Chambers said he believes would have prevented many of the protests. He also pointed out that Louisiana keeps the protest documents confidential from the public.

“It’s a complete black box process,” Chambers said. “The lack of transparency is unusual.”

Iyengar said some states have predetermined eligibility areas while others ask grant applicants to show if a certain area is in need. As for the protest period and keeping protest documents confidential, Iyengar and Division of Administration spokesperson Jacques Berry said the Louisiana Legislature included those parameters when it created statutes for the GUMBO grant program.

“Believe me, the ISPs are well represented in the legislature, and for them, everyone got this legislation where they wanted it,” Berry said. “Our job, solely, is to carry out the will of the legislature.”

Lawmakers have since amended the protest statute, so the new law as of Aug. 1 allows only for one protest period instead of two. Under the previous law, companies were allowed to protest a grant during the 60-day application period and in the seven-day period after the grants were awarded. Now, protests can only be filed during a single 30-day period after grants are awarded, Berry said.

The protest documents are made public after a final ruling is made, Berry said, adding that it’s no different from any other procurement process that involves a company’s proprietary information, which is shielded from Louisiana’s Public Records Law. Specifically, companies often consider their geographical mapping data proprietary, Berry said.

The Office of Broadband Development and Connectivity, which has just three employees, traveled more than 3,000 miles throughout the state between November and January to share information about the GUMBO grants with local officials, businesses, community members and others interested in it, Iyengar said.

“We went and spent an aggressive amount of time communicating this everywhere,” Iyengar said, adding that his office shared just about every detail of the grant process. “Anyone who tangentially or indirectly touched broadband, we reached out to.”

More grants to come

Most of the first wave projects to bring broadband service to rural areas will be completed within two years with 11 taking less than six months and 14 requiring more than two years, according to a list provided by the Office of Broadband.

On Aug. 31, the office announced the second wave of awards, which included 14 projects for a total of roughly $38 million. None of the 14 grants have been protested.

As of Sept. 8, a total of 65 out of 81 or 80% of the GUMBO grants are moving forward without protests. If all 81 grants move forward, they will expand broadband connections to about 82,000 locations, roughly 90% of which are residential, Iyengar said, adding that the new internet services will cost less than what customers are currently paying.

“It’s really a busted investment if we invest in all the capital expenses for these projects and no one pays for it,” Iyengar said. “What’s the point of high-speed affordable reliable internet, which we’re awarding, if it’s not affordable?”

The Office of Broadband Development and Connectivity plans to announce a third and final wave of awards, conducted under the new protest rules, before the end of the year. At around this time next year, Louisiana will offer even more grant money, about $1 billion, for broadband expansion thanks to federal funding from the bipartisan Infrastructure Investment Jobs Act, Iyengar said.

“We do believe it is appropriate for the legislature to make tweaks to GUMBO every year,” Berry said. “Things are going to change, we’re going to find better ways to do things, the speeds are going to change because of data use and things like that. We fully expect that to continue, and we’ll continue to work with them to do that.”

Projects under protest as of Sept. 1 were in the parishes of Allen, Caddo, Ascension, Caldwell, DeSoto, East Carroll, East Feliciana, Franklin, Iberia, Iberville, Lafayette, Madison, Orleans, Pointe Coupee, Richland, St. Martin, Tangipahoa, Tensas, Washington and West Carroll.

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