Pa.’s broadband authority reverses position on key state law before new federal funding arrives

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HARRISBURG — A state agency recently reversed its position on whether Pennsylvania law could cause problems for an unprecedented surge of federal investment for expanding access to high-speed internet.

In the first draft of the state’s plan for administering more than $1 billion in federal funding, the Pennsylvania Broadband Development Authority said that to avoid a conflict with federal law it would waive an obscure state statute that restricts when local governments can build their own internet networks.

But in the latest draft of the document, submitted to the federal government last year, the agency reversed course, declaring that there was no conflict.

The about-face came after the first draft of the plan drew public comments that included praise, pushback, and questions about the agency’s ability to set aside state law.

“It’s a complete 180,” said Sascha Meinrath, a professor of telecommunications at Penn State and lead author of two major state reports on rural broadband. “The original draft says this law poses a problem and the new iteration says there is no problem.”

As Pennsylvania prepares to receive its share of the largest-ever federal investment in broadband, jockeying among industry representatives and advocates over the rules that will govern how the grant money is handed out has intensified. Supporters of publicly-owned broadband have also pressured the state to resolve an apparent tension between the aims of the federal infrastructure law and a 2004 state law that limits local governments’ ability to build internet networks.

Pennsylvania is one of at least 16 states that impose restrictions on when and how government entities can provide broadband service.

Under the 2004 law, local governments may not provide high-speed internet unless they first ask the original landline phone company serving the area to provide the service itself. If the company declines, the local government can move forward; otherwise, the company must provide the requested service within 14 months.

At the time, one critic of the provision said it gave the phone companies a “virtual veto” over local efforts to expand broadband access.

The Biden administration has signaled its support for publicly-owned broadband, initially proposing a plan to give priority to networks owned or operated by local governments, nonprofits, and cooperatives because they would be under “less pressure to turn profits” and have “a commitment to serving entire communities.” The final version of the infrastructure law, by way of compromise, says states cannot “exclude” local governments from qualifying for the new broadband grants.

The federal agency overseeing the broadband initiative has urged states that restrict or prohibit publicly-owned networks to waive those laws for the new grant program, but has also indicated that states that refuse will not face delays in receiving their funding.

So far, most states have not been willing to roll back their restrictions.

“The sentiment behind the law is pretty clear, but how that gets interpreted today is pretty different,” said Meinrath.

Other observers argue that restrictions like Pennsylvania’s are consistent with federal law because they are not outright bans and do not deny government entities the chance to compete for grant funding — the position the state Broadband Development Authority ultimately settled on.

The agency also faced questions from industry representatives and groups representing local governments about its ability to waive state law.

“Simply stated, the PBDA has no legal authority to ‘waive’ any Pennsylvania statute,” Steve Samara, president of the Pennsylvania Telephone Association, which represents rural landline phone companies, wrote in a public comment submitted on the draft plan.

State lawmakers had several years to address any conflict between state and federal law on this issue, but declined to do so, Samara noted.

Sixteen Republican state representatives from rural areas also signed letters questioning the broadband authority’s ability to waive state law. “We are sure you understand the considerable legal implications of such a statement to bypass legislative intent and authority,” one of the letters said.

Brandon Carson, the broadband authority’s executive director, said the language in the first draft was based on federal guidance. But after taking a closer look in light of the public comments, the agency came to a different view. Carson said the federal government had not raised concerns about a potential conflict and that the authority has not had discussions with state lawmakers about the possibility of removing the restrictions.

The change was one of many made to the first draft in response to feedback, Carson said, including encouraging grant applicants to coordinate with local governments in the areas they plan to serve.

Ongoing uncertainty

For years, the right of first refusal law was rarely invoked. But as the pandemic highlighted the urgency of improving broadband access in rural areas, some local governments began to take a more active role and found the state restrictions to be a stumbling block, Spotlight PA reported in 2022.

In the Southern Alleghenies region, local officials anticipated that complying with the law would add so much time and uncertainty to a planned broadband project that they decided to sidestep it altogether by creating a new, ostensibly private, nonprofit that would not be subject to the requirement to seek a right of first refusal from phone companies.

In the Central Susquehanna region, a local economic development organization created by several county governments found itself in protracted legal proceedings before the state Public Utility Commission, arguing with several phone companies over whether it had complied with the law — and whether it was even required to do so in the first place.

In its ruling on the case, issued last year, the PUC acknowledged that there had been “a considerable lack of clarity” on how the law was supposed to work in practice. The utility commission found that the economic development organization had fulfilled the “right of first refusal” requirement.

But the commission rejected the organization’s argument that would have been within its rights to skip the process because it does not offer broadband services directly to residents. Instead, the organization leases access to its network to several private companies, who provide internet services themselves.

The state Broadband Development Authority has said it strongly encourages public-private partnerships like this, but has described the law as a roadblock.

Several responses to the broadband authority’s draft plan echoed concerns from local officials and advocates about the potential chilling effects of a lack of clarity over the law’s implications for partnerships.

If the rules are not clear, partnerships could be discouraged from applying for grant funding altogether, or face legal uncertainty if they do, said Aadil Ginwala, a senior policy advisor at the University of Pittsburgh. In a public comment, Ginwala urged the authority to “definitively declare” that such partnerships do not trigger the “right of first refusal” requirement.

A spokesperson for the Broadband Development Authority said this would depend on the specific details of the partnership arrangement.

The latest version of Pennsylvania’s plan awaits federal approval.

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