Could small-town power companies bring internet to rural Georgia?

Over Blood Mountain in rustic North Georgia, internet service was spotty, slow or nonexistent.

Students drove to Chick-fil-A to do their homework online because it had Wi-Fi. Businesses set up shop in bigger cities. Families struggled to stream movies on Netflix.

That began to change several years ago when a couple of local power utilities, Blue Ridge Mountain EMC and Habersham EMC, started offering internet service.

They didn't wait for permission from the state government to go into the broadband industry. Now, they could become a model for the rest of rural Georgia, where lack of high-speed connectivity is strangling economic growth.

Georgia lawmakers are considering whether to explicitly allow electric membership corporations to offer internet service along with power, helping the 16 percent of households in the state that lack fast online access. Electricity cooperatives already provide power to 4.5 million customers, many of them outside metropolitan areas where broadband service is a given.

“We had to do something,” said Erik Brinke, the administrative services director for Blue Ridge Mountain EMC, which serves five counties near Young Harris and got into the internet business in 2002. “We knew there was a market for it. Our members were absolutely demanding this.”

Today, the electricity cooperative has 7,500 internet subscribers, a number that’s steadily rising to reach more of its 46,000 power customers.

But the potential for small-town internet through electricity cooperatives faces opposition from traditional internet service providers through cable TV or phone companies. A bill that would have granted EMCs permission to provide internet access didn't pass during this year's session of the Georgia General Assembly.

Cable companies don't object to letting EMCs provide internet service to underserved areas, said Stephen Loftin of the Georgia Cable Association. But if they want to expand into communities that already have internet options, they should be required to play by the same regulatory rules, he said. For example, EMCs shouldn't be allowed to subsidize their internet products through their electricity business.

“It is imperative that the state adopt strict cross-subsidy and fair competition rules to ensure that the EMCs don’t use their monopoly power to gain an unfair advantage over their competitors in the broadband market,” Loftin said. The Georgia Cable Association’s members include Charter Communications, Comcast and Cox Communications, the cable and broadband internet subsidiary of Cox Enterprises, which also owns The Atlanta Journal-Constitution.

Many rural areas have been bypassed by interstate highways, rail lines and airports that drive economic growth, said Jeremy Nelms, the general manager for Blue Ridge Mountain EMC. They don’t want to be left behind again by digital networks that are essential infrastructure for business, education and health.

Just as cooperative electric companies brought power to outlying areas under President Franklin Delano Roosevelt’s New Deal programs in the 1930s, they can extend internet access today.

“One of the greatest concerns our community had was the lack of connectivity and the lack of economic development, and the ‘brain drain’ that was occurring” when professionals move away, Nelms said. “We were in a good position to meet a need for all of our members.”

Blue Ridge Mountain EMC’s fiber internet service starts at $42.95 per month for a 30 megabit-per-second connection and costs $99.95 monthly for 100 megabit-per-second access. Those prices are competitive with similar offerings from other internet companies.

Internet service from North Georgia EMCs started slowly but greatly expanded with the arrival of $33 million in federal stimulus funding and $9 million in local funding for Georgia broadband service in 2009, said Bill Verner, a senior vice president for Georgia EMC, a trade association that serves the state’s 41 electric membership corporations.

Under current Georgia law, EMCs are neither allowed nor prohibited from providing internet access. If the state passed a law making it clear that EMCs could sell and market internet products, it could revitalize rural areas where incomes and populations have been steadily declining, Verner said.

“It would make a significant difference. Even without that statutory clarity to provide internet service, EMCs are still very much involved in helping bridge the digital divide,” Verner said. “EMCs are not waiting around for that clarity before doing something.”

Legislation to allow EMCs to offer internet stalled after debates over how to ensure a fair market in areas where existing internet companies also want to do business.

The General Assembly passed one bill setting up a framework for future government funding of rural internet service, but the proposal permitting EMCs to build online networks died without receiving a final vote before the end of this year’s legislative session in March.

State lawmakers promised to try again in 2019.

"In today's world, there's so much technology available, and if you don't have broadband, you'll be left behind," said state Sen. Steve Gooch, R-Dahlonega. "To have an EMC authorized statutorily to provide broadband service is a good step because it provides another option for rural areas to get service that they can't from their current provider."

While EMCs wouldn't be able to bring internet to everyone who needs it, they could help, House Ways and Means Committee Chairman Jay Powell said.

Providing internet service in rural communities is more expensive than in densely populated areas, and less than half of potential customers subscribe to the service where it’s available.

“Look at a map of the unserved areas of the state, and look at a map of where EMCs have their territories. There’s an extremely strong correlation,” said Powell, a Republican from Camilla. “They’re certainly part of the solution because they’re already serving the areas we’re talking about.”

At Habersham EMC, about 44 percent of its customers where the utility has built access to internet lines have subscribed to the service, said Glenn Purcell, its vice president of technology and services. That’s about 3,800 internet subscribers so far, with more being added.

“It’s phenomenal,” Purcell said. “Based on similar electric cooperative take rates, that’s one of the best in the country.”

Speedy internet connections from Blue Ridge Mountain EMC are critical for health services provided by Union General Hospital, Chief Information Officer Chris Loyd said.

The hospital needs fast internet for online consultations, high-quality video when physicians are remotely reviewing information, and cloud-based health information systems.

“These hospital applications take up so much bandwidth,” Loyd said. “It transforms into a better patient experience and better outcomes.”

AT&T, which has more than 4 million miles of fiber optics for high-speed internet in Georgia, says the state government should ensure that EMCs aren’t able to charge competitors high fees to use their poles or engage in other anti-competitive practices.

“We applaud Georgia’s policymakers who are working hard to maintain an environment that welcomes investment and provides for a level playing field,” AT&T spokeswoman Catherine Stengel said.