Momentum is building across Mississippi to allow rural electric cooperatives to provide high-speed internet. The state House Public Utilities Committee passed a bill Monday that would do so, and it seems likely that the idea will ultimately pass with support from both Republicans and Democrats.
The plan isn’t going to make a huge difference in the state’s broadband accessibility rate, which is the lowest in the nation. That’s because it’s a difficult business proposition for utilities to both pick up a completely new industry and make it work financially in sparsely populated, often poor, areas.
Yet it gives an option for cooperatives willing to take that risk for the potential big gains of new customers in a growing field. The demand for broadband is increasing every year, especially as people move to streaming TV and movies rather than watching them over cable or satellite.
And there’s no good reason why utilities shouldn’t be allowed to do it. Why should the government put up artificial barriers to companies providing a service that is much needed in the state? The proposed law is not making any cooperatives provide service, nor is it using taxpayer money to subsidize. It’s simply opening up another avenue among many.
The concern, though, is when the government begins throwing money at the problem. That’s when the inefficiencies start.
Take the situation in Alabama, which passed a law last year similar to what’s being proposed in Mississippi now. After the law passed, the Tombigbee Electric Cooperative in Alabama received a $2.98 million USDA grant to run fiber optic cable to 425 homes over 80 square miles, according to America’s Electric Cooperatives, an industry group. It will provide lightning fast 1-gigabyte-per-second download speeds, far surpassing most anything in rural Mississippi.
It sounds great, but at what cost? Do the math, and it comes out to about $7,000 per home to run the wire. For a private company to make that investment back in, say, five years, it would have to charge $116 per month if every single household signed up.
At that price, it’s unlikely everyone would buy in, resulting in an even higher price for those who did. But the government grant kills the necessity to recoup the investment for those lucky enough to get it. Clearly the government is picking winners and losers among rural communities about who gets the grants, because there’s no way it could afford to subsidize the service that much everywhere.
A similar scenario probably would play out in Mississippi if the law is changed to allow co-ops to provide internet service. The only ones that will decide to provide the service are those who can get large government grants.
That’s not to say rural cooperatives shouldn’t be allowed to provide internet service. It makes sense because they already have some of the infrastructure needed to do so through power lines. Just don’t tilt the playing field unfairly in their advantage with lucrative subsidies.
