Episode 5

Asking the Governor to Veto a Rural Broadband Bill

July 16, 2020

Episode Summary

Jeff Arnold, Executive Director of the Association of Louisiana Electric Cooperatives, discusses the grassroots efforts it took to persuade the Louisiana governor to veto a bill that would have likely limited broadband access to Louisiana’s underserved citizens.

Show Notes

Transcripts have been lightly edited for clarity and readability.

 

Stephen Smith: Thank you for tuning into another episode of Rural Broadband Today. I’m your host, Stephen Smith, and I am delighted to have with me as my guest today, Mr. Jeff Arnold. He is the executive director of the Association of Louisiana Electric Cooperatives. Welcome to the show.

Jeff Arnold: Thank you. Thanks for having me.

Stephen Smith: We have an interesting topic today. And honestly, in all my years of covering the rural broadband industry, electric cooperatives, politics, I have never seen an issue play out like this. So it’s an interesting story that I’m looking forward to sharing with our listeners. Jeff, there was a bill that on the surface sounds like a great idea came through the session recently of the Louisiana Legislature that would allow the expansion of rural broadband. But there was a little problem with that bill. Why don’t you get into it and sort of set the stage for us?

Jeff Arnold: Sure. So we had a senator from one of our rural areas who is on one of our electric co-op lines, who does not have broadband. And with the advent of COVID and the increased need on the education side for good access to the Internet, she introduced a bill in the regular session of Louisiana Legislature and called it the Louisiana Electric Cooperative Broadband Access Bill. And as she filed the bill, the language was OK, we were OK with it. We didn’t ask for a bill, but as most people in rural Louisiana know that the best way to get fiber-to-the-home is utilizing the network already in place by electric co-ops. So she filed the bill. We were supportive of it. It got into committee and the telecom companies were able to get an amendment on it in the Senate committee that — basically the bill [without the amendment] provided that installation of fiber could be used on what we call Louisiana servitudes without having to pay an additional cost to a landowner. So the electric co-op had a servitude already on that property, just laying fiber on that existing servitude did not constitute an additional payment. So what we’re trying to do is drive down the cost of bringing broadband to rural Louisiana. Telecommunications companies got an amendment on saying that you could only utilize that bill if the company that was going to use those servitudes for free was serving only the unserved areas when it came to broadband.

Jeff Arnold: And so basically the most expensive customers that the big telecommunication companies do not want to serve anyway were, with this amendment, would be the only ones you could serve. And we all know from electricity, that doesn’t work. You have got to have at least some concentration of customers somewhere along your system that helps you pay for the most expensive customers at the end of the line. You know, we’re not the big investor-owned utilities that may have 40 to 100 meters within a mile. We’re the ones who have, you know, maybe one meter every four miles or whatever the case may be. Once you get down to the end of the line, there are four meters on a mile of electrical wires. So the amendment really took us out of the ability to even provide broadband if we wanted to. In Louisiana, we were not restricted from getting into the broadband business, the electric co-ops. We could do it already.

Jeff Arnold: Now we are governed by the Public Service Commission. If we incur any debt on behalf of our membership, we would have to go to them to get approval before we place that debt or that promise of debt on our existing members and owners of the co-ops. But other than that, we had no restrictions of going into the business. This not only restricted us, it basically prohibited us, so co-ops could only serve the unserved areas. So we couldn’t even serve all of our existing customer base. So we fought that amendment. We tried to fight it in committee on the House side and were unsuccessful in getting an amendment attached to the bill that would take that amendment off. We had two attempts on the House floor to remove that amendment. Both failed, and I call it — I blame it a little bit on COVID, the reason why we couldn’t get the bill fixed, because they took over a month recess, the Louisiana Legislature. And when they came back everything was in a hurry. And on top of that, we just had a changeover with term limits. We had 60 new members in the House of Representatives out of 105.

Stephen Smith: Oh, wow.

Jeff Arnold: Right. So they warmed completely up to speed on the process, on the legislation. However, it works. And so if it wasn’t what I call a “firestarter bill” — and the firestarter bills in these sessions are the budgets and tort reform in Louisiana. So if it wasn’t those, they weren’t paying much attention to them. And to be quite frank, a broadband bill for rural Louisiana is like mom and apple pie. Who’s going to vote against it? We’ve got to get broadband. So even if you’re from the most urban areas, New Orleans or Baton Rouge, you were going to vote for this bill because you knew you had Internet and they should have it, too. The problem was in the actual language of the bill, and it did more to hurt the possibility of broadband in rural Louisiana than it did to help. In addition, it was actually in conflict with federal law. The Telecom Act of 1996 says you shall not impede competition by local or state statute, and that is exactly what this did. So as it went through the process, we thought the author was going to send it to the Conference Committee so that we could look at the amendments and possibly change them in Conference Committee. She was afraid the bill was going to die, that the telecom companies would kill it if she removed that language. So she moved to concur in the House amendments because they had a couple of amendments on the House side that were minor. And they passed it and sent it to the Governor.

Stephen Smith: So you basically had a bill that had a poison pill in it where the intent was to do great things for the rural residents of Louisiana. And what you’ve ended up with here is a bill that basically would prohibit the electric cooperatives from getting in there and providing broadband and really just blocking competition altogether, right?

Jeff Arnold: Well, and not only that, you know, it stopped anybody, though. The way our attorneys read the language of the bill was that anyone who wanted to use those servitudes at no cost would not be able to serve any served areas. So even the big companies, if they want to come in and serve those areas, they would have to start a new company because they already served what are called, technically, the served areas. So it really was a complicated bill. The way they read it was that we could only serve the unserved areas, but they could serve both, which was unfair competition. Cause if we went in and did the unserved areas, there was nothing stopping them from coming and competing with us. It was just crazy all the way around. So, I organized on a state level a petition of our members, so, you know, the people who lived on a line. And within 48 hours, we were able to generate over 500 petitions online where we captured names, email addresses, almost everyone’s mailing addresses, and presented that to the Governor, as well as a letter from all of my members anyway, of the Association of Louisiana Electric Co-ops. All seven of our members signed a letter to the Governor asking him to veto the bill, along with the 500 petitions that we generated in 48 hours. I presented that to the Governor. I met with the Governor and explained to him our issues with the bill. Of course, his first response was — and for a little background on me, I actually served the Louisiana Legislature for 14 years. And the current governor and I served eight years together, and I was chairman of a committee that he was a member of. So we have a really good relationship. So when we sat down to talk about the bill, he’s like, Jeff, how do I veto a bill that no one voted against? And technically, he’s correct. We had a lot of votes for the amendment; we just didn’t have enough for the amendment on the floor to try and fix it. And so we went through the whole process of why it was illegal federally, and you know, why would you sign a bill that’s called the Electric Cooperative Broadband Access Bill that every electric co-op is against? And so we went through all the points and finer points of it. To complicate things even more, he’s a Democratic governor in a very strong Republican state. So the veto override is a real possibility, if he was to veto it. And obviously, no governor wants to get an override on a veto. The Governor had also started and created Broadband for Everyone Louisiana Commission, which had just started meeting right during COVID. And so they really hadn’t had a real meeting, not in-person anyway. Everything had been on the Internet and telephone calls. And so he wanted to give the Broadband Commission an opportunity to come up with ideas so that we could get a good full implementation of broadband access to the most rural parts of Louisiana. [So there’s] a lot of things coming into play. And with that, he did veto the bill, which had over 40 coauthors and not one person in the House or Senate voted against.

Stephen Smith: Well, I was going to say, let’s back up and set the stage a little bit for our listeners. Here you have a bill coming out of the House and Senate and Conference Committee, everything’s ready to go. There has not been any opposition to it. You know, at that point, the train’s left the station. And it would seem on the surface that really your only option at that point would be, well, we are going to have to come back in the next session — hopefully, a special session, but if not, you know, the next session — we’re going to come back in and fix this problem. What gave you the idea to think that, well, maybe we don’t have to wait that long? We do have another option to get this thing taken care of quickly.

Jeff Arnold: Well, we knew that the Legislature was calling himself into session. So when the regular session ended June 1st, whatever it was, at 6:00 p.m., [then] at 6:01, they started a special session. Which included broadband and the call of the session, so they could file bills dealing with the broadband issue. The senator who held the bill in the first session, the regular session, filed a bill, and it was not really in the same vein. This was going to be a reporting bill that the electric co-ops and all the telecom companies would have to report back to the legislature next year. You know, what progress has been made to bring, indeed to bring broadband to rural Louisiana? And so the bill was in the right statute section of law as the last bill, so we were able to, after the Governor met with her and vetoed her bill, we’re able to convince her to use that bill to be the fix. So literally, they were in the special session when he vetoed the bill. And she had a bill going before Committee, so we amended that bill to be the correct version of her first bill without the bad amendments. We convinced the leadership in both the House and Senate to get on board and not amend the bill with the telecom amendments as they did in the first session. And everyone agreed. Telecom was not happy, as you can imagine. Instead of turning cards in support of the bill, as they should have because they can utilize the provisions in this bill as well if they truly want to serve the underserved. But they turned in — so we have green cards, red cards, and white cards. And a green card means you’re in support of the bill. Red card means you’re against the bill. And I did turn in red cards on the House side of the bill in the regular session. So we were against it, and we noted that. It just didn’t go very far with regard to the respective representatives. But they turned in white cards in the special session. Which we read as they’re not very happy that we were able to, number one, veto the bill. And number two, get the version of the bill that we liked out in the special session which eventually passed and the Governor has signed.

Stephen Smith: Which also speaks to where their interests really lie. We wouldn’t be looking at this broadband gap in terms of rural areas if, you know, if big telecoms were serious about solving that problem.

Jeff Arnold: In Louisiana, it goes back ten years when I was actually chairman of the Commerce Committee. We passed a bill that took away the individual — you know, we have parishes in Louisiana as opposed to counties — so we passed a bill that took away the individual parish ability to franchise cable TV. So you can get a state franchise and then go and serve any area to provide competition. The intent back then was that they would bring cable TV to all Louisiana, rural Louisiana. If they had lived up to that promise that they made 10 years ago, we wouldn’t be having this conversation right now because rural Louisiana, if they had cable, it’s much easier to give them Internet. You know, ten years ago, the Internet was a luxury, not a necessity. Well, today with telemedicine, with education, and everything else, it’s not a luxury. It’s a necessity.

Stephen Smith: Yeah, absolutely.

Jeff Arnold: Right. So if they had lived up to their promises 10 years ago, we wouldn’t be having this conversation.

Stephen Smith: Jeff, I think one of the lessons to come out of this, and there are many, is that going to the Governor and asking him to veto a bill that had no opposition in the House or Senate is something I’ve never heard of being done. And so when you did that, you certainly did your homework and went with facts about how that was going to impact the electric cooperatives ability to provide broadband. But you also went with some grassroots efforts and that advocacy that you touched on a few minutes ago. I’d like to dig down into that a little bit and why you felt like that it was important for the Governor not only to hear from the electric cooperatives with those letters, but from the members themselves who would be impacted at the end of the lines.

Jeff Arnold: Right. I mean, when it comes to having served, I understand it. When, you know, having eight letters from me and from my general managers to the Governor, it is going to weigh a lot. But having 500+ letters from constituents at the end of the line makes much more of an impact on a governor who’s actually from rural Louisiana. So it had much more of an impact. Okay, 500 people took the time to send me this. And, you know, we worked at NRECA as well, and they generated some more emails directly to the Governor as well, with NRECA being the National Rural Electric Co-op Association. So all of that combined together really [created] the impression, you need grassroots. You need to make them understand because when we were fighting in that regular session, we literally had my lobbyist there and we had another lobbyist there working on behalf of our position on the bill and the amendment that we wanted to pass. Telecom had at least, I think, twenty-five lobbyists working their side of the issue. And, you know, we don’t have the deep pockets. We can’t go to an investor and say, “Hey, give me more money. I need to go fight this bill, fight for this issue, or whatever.” You know, we work on margins, and we have to give that money back to our members, whether it be in the form of capital credit or whether it comes back as an investment in infrastructure in our power lines. So we don’t have the ability to just tell the investor, give me more money.

Stephen Smith: Right, right. Well, what kind of lesson do you think, big picture, that this gives us about the importance of staying connected with your members in terms of being able to, you know, rally those members for an advocacy issue? Why is that important for an electric cooperative?

Jeff Arnold: Sure. Well, it’s the voice. It’s the real voice that elected officials are going to listen to. I took over the Association of Louisiana Electric Co-ops in November 2018. And they just had a little bit of a grassroots effort on a tax issue that was affecting electric co-ops. And that was done more on my board and my members’ boards level. But one of my goals, as I’ve been here, is to reach out further. To get to each individual electric co-ops members so that when we have a real issue, we can shoot something out to our members, which are the members of the association, those seven electric co-ops, that they can push down. Because I could tell you just from the experience of an email coming from me to a member on the line is less likely to get opened than an email coming from their actual co-op. So you’ve got to be scientific on how you do it. And actually, you typically get a better response on social media. But then again, that goes back to the whole problem of most of our people have bad access to the Internet so they’re not on social media, much either. They’re doing most of their social media on their phones if they’re in an unserved area and using that database line.

Jeff Arnold: So, you know, whether it’s email that they’re checking out work because they don’t have it at home. It’s more likely to be opened if it comes from their actual co-op as opposed to coming from their statewide association. So that’s the avenue we’re working. We’re working with our managers to expand that. We have a couple of our co-ops that are really engaged with their members on a social media front and on the email front. And we’d like to build that across Louisiana, not just for Louisiana issues, but actually from the National Rural Electric Cooperative Association’s point of view. You know, generating contributions to our Political Action Committee, which funnels money back down to Louisiana as well, so that we are able to have funds to fight these issues as they come up. So it’s important all the way around.

Stephen Smith: Absolutely. So getting back to that bill, kind of give us an idea now of what the new bill enables for the electric cooperatives. What does that mean, and what do you see in the future moving forward because of this legislation?

Jeff Arnold: Sure. It’s a much cleaner, what we call, access bill. So what the bill is intended to do and provide is any company who wishes to bring broadband access to a rural electric co-op customer who is considered unserved, they can utilize our servitudes without having to pay the landowner for that use of servitude. So right now, you have to go and negotiate. If you’re laying fiber, you need to go — even if you are using our existing servitude, you have to go and negotiate with each of the landowners because that was not part of our agreement with that landowner. You need to get your own. With this legislation, you no longer have to do that. And there is a real example of how that was abused and with a lawsuit, where one of our electric company’s IOUs, laid fiber on their existing lines saying that they will use it to monitor their electric systems. And they installed more fiber than they needed to just monitor their transmission lines and everything else. And they started to lease out or sell out the excess capacity of their fiber lines on those existing servitudes. Someone found out about it. A landowner lawyer found out about it. They sued, and they won. So that electric company now had to pay and negotiate to pay an additional fee for use of that servitude that was not included in their original agreement. So that’s why we needed the legislation so that we can try and maintain some affordability of installation as we move forward so that the installers in the company providing the broadband know that all they have to do is pay for it and run that line. They don’t have to worry about negotiating every piece of private property that they may be crossing. That’s taken care of now in the legislation. So that’s the biggest thing; we’re trying to drive down the cost of bringing internet to the most rural parts of Louisiana.

Stephen Smith: Right. Because it’s expensive enough as it is to get in those low-density areas, that’s for sure.

Jeff Arnold: Well, talking to the individual broadband installers and providers, that’s their biggest impediment to get into the most rural areas is that cost of servitude access.

Stephen Smith: Right, it makes sense. So, Jeff, what do you see ahead? What’s the landscape look like for electric cooperatives looking to really move into the broadband business, possibly in the state of Louisiana? What might be ahead?

Jeff Arnold: Right. Well, there’s so many different models, as you know, all over the country, of how co-ops are getting into the business. Do I see a couple of them maybe getting into the business themselves as the subsidiary, where they run the whole company? But a more likely scenario is partnering with smaller broadband companies that have the expertise and installation service, and then allowing the co-ops to use their expertise and an already built-in administration to possibly do billing and those sorts of things, because there you have the people in place to do it on the electrical side. And I really see that as the biggest advantage, and then working together with, in Louisiana, our planning districts and with the government to make sure we’re accessing all the available funds that are out there. The legislature also passed a couple of tax credits dealing with broadband, some of which would be beneficial to the co-op. Some of them are not because we’re not for not-for-profits. But there are some opportunities that they had done to make it even cheaper to get tax credits towards putting installation of broadband in. So as we partner with companies that are eligible for those credits, you know, it also drives down the cost. So we’ll be looking for partners in some areas of the state and some of our co-ops, as I said, will probably go out and do it on their own.

Stephen Smith: That’s definitely a mixed bag, and I think that’s what it’s going to take because there are so many different applications and possibilities and scenarios that are going to work in different situations across the country. But, Jeff, we appreciate you sharing your story on our show today. A big congratulations to getting the veto and fixing a bill. Again, I’ve never heard of anyone taking that approach, and it worked out great for you guys sounds like. So I really appreciate you joining us on the podcast today.

Jeff Arnold: Well, I appreciate you having me. Thank you so much.

Stephen Smith: Thanks for listening to Rural Broadband Today, where we take a look at the people and the issues that are shaping the rural broadband story across America. I’m your host, Stephen Smith. This podcast is produced by WordSouth — A Content Marketing Company. Be sure to like and share this podcast with your network as we spread the rural broadband story. Thanks for listening.

Subscribe to our podcast

Apple Podcast Google Podcast Spotify Podcast