With a Ky. Bill to Force its Muni Broadband Sale Imminent, a Frankfort Utility Digs In

Municipal utility provider FPB formed in 1943 and added cable TV nine years later. FPB began offering internet over a hybrid fiber-coaxial network in the late ’90s. Now, FPB is 65% through a fiber-to-the-home deployment, with the board self-funding an upgrade of all residential customers and tapping federal support from the American Rescue Plan Act coronavirus state fiscal recovery fund to expand service to 884 unserved homes, said FPB's telecommunications product manager Harvey Couch and Cathy Lindsey, its communication and marketing director. FPB expects it will complete the build in about two years, said Couch. The municipal utility doesn’t cross-subsidize its business lines, the FPB officials stressed. “We're not taking dollars from the electric department to pay for fiber lines,” said Couch.

Williams’ guest column in Frankfort’s local newspaper first alerted FPB to the state senator’s plan, which would force the sale of its internet business to a private entity, Couch and Lindsey said. Williams wrote, “It is time we ask an important question: what role should the government play in providing internet service, and would taxpayers be better off having a private company offer these services?” FPB customers pay above-market rates for internet, claimed Williams: The city could spend cash from the sale on its downtown and riverfront.

FPB would have to submit “independent appraisals for the properties and associated services and assets of each discrete project or operation undertaken by the board that is unrelated to the provision of water or electric utility services,” within 90 days of the proposed law taking effect, said a draft bill circulated in December. After receiving the appraisals, the municipality’s governing body would have to vote by Dec. 31 to transfer, sell “or otherwise dispose” of those properties and services.

FPB started a “not for sale” public outreach campaign and launched a website in November. The campaign includes a billboard, newspaper and social media ads and a customer petition. On Dec. 18, the Frankfort City Commission unanimously supported a resolution expressing “unwavering support” for FPB. Mayor Layne Wilkerson opposed the potential sale in a Dec. 20 guest column in Frankfort’s State Journal. “FPB has provided us with competitive prices and reliable services for many years, while becoming a vital part of our local community,” the nonpartisan mayor wrote. “Privatization has risks: potentially higher rates or reduced service quality, and less accountability.” Franklin County Fiscal Court Judge Executive Michael Mueller opposed the draft bill in a Dec. 21 letter to state legislators.

Williams presented his plan to FPB last month, indicating that he wanted timeline changes made to his December draft, though he was unwilling to back down on the bill’s goal of forcing privatization, said Lindsey. While the bill wasn't filed one month into the legislature’s Jan. 2-April 15 session, the utility anticipates "he will drop a bill.” FPB has representatives monitoring legislative action at the State Capitol, she said. Kentucky lawmakers aren't required to prefile bills and can discuss legislation in a closed caucus, noted Lindsey. While the deadline to introduce bills in the Senate is Feb. 28, legislators sometimes replace the entire text of an existing bill through an amendment after that deadline, she said. Williams didn’t comment.

For Lindsey, the proposed bill is unnecessary because Frankfort has a process for selling any part of FPB, if it chooses. The mayor could propose a sale to the city commission and then the community would vote on it in an election, she said. However, the possible bill would end the community’s choice and set a bad precedent for other municipalities, said Lindsey. “It’s not something that we would be opposing if we were poorly managed or had bad service or noncompetitive rates. None of those things are true.” Williams took office in 2023 and isn’t from FPB’s area. Franklin County was added to his jurisdiction through redistricting two years ago, she noted.

“Sen. Williams’ legislation sets a dangerous precedent for action that could destroy local control and municipal utilities across the Commonwealth, putting low-cost utilities and their ongoing investments back into the community at risk,” said a Jan. 17 letter to legislators signed by FPB, Kentucky League of Cities, Kentucky Rural Water Association, three cities and a dozen municipal utilities.

FPB’s internet business is probably attractive to private ISPs in the area, said Lindsey. “We’re an easy take … Much better than trying to overbuild us.” Couch said FPB’s top competitor is AT&T, which offers fiber to some customers in FPB’s footprint. Charter Communications sells broadband in surrounding areas and Comcast offers service in western Kentucky, he said.

Industry Behind the Curtains?

Communities like Frankfort should be able to “exercise choice,” AAPB’s Sohn said in an interview. “If a community decides that the public network model no longer works for them and wants to sell to a private entity … I wouldn’t oppose that.” On Jan. 16, AAPB sent a letter to Kentucky legislators opposing the expected bill. The group received no responses, said Sohn.

The attack on Frankfort’s network is “of a piece” with efforts in other states, said Sohn. AAPB claimed in November that a group called Domestic Policy Caucus used dark money to launch a website and ads attacking Utah’s Utopia Fiber and other community broadband networks. Earlier in the year, AAPB said the Utah Taxpayers Association, which it alleged cable backed, tried unsuccessfully to stop Utopia from building a network in Bountiful City, Utah.

Sohn challenged ISPs to deny they are behind the Kentucky proposal to force FPB to sell its internet business or the other recent attacks on muni broadband. While she lacks evidence of ISP involvement in Kentucky, Sohn said, she questioned why Williams, a new state senator in a new district, would decide “out of the blue” to make selling the muni network his “signature issue,” even though the Frankfort community loves the service, she said. “It just doesn’t happen organically.” Comcast, which opposed Colorado cities’ efforts to opt out of a now-defunct law banning municipal broadband, never denied it was behind the Utah Taxpayers Association effort, said Sohn.

Comcast declined to comment. The Utah Taxpayers Association “advocates for taxpayers collectively, not exclusively for any one group,” responded President Rusty Cannon in an email. The century-old nonprofit has more than 1,000 dues-paying members from “virtually every sector of the economy,” he said. “Comcast and other ISPs are more than capable of fighting their own battles.” Charter, AT&T and the Domestic Policy Caucus didn’t comment.

Industry is probably behind the recent attacks, said Chris Mitchell, director of the Institute for Local Self-Reliance Community Broadband Networks. “I think it is the cable and telephone monopolies starting to practice their messaging and lobbying because they are worried about the growth in municipal broadband,” the muni broadband advocate wrote in an email. “Not only are cities continuing to build, but some states like [New York] and California have recognized it is an efficient solution to make sure everyone is connected in areas that are poorly served by the monopolies.”

Often, a muni network’s “attractiveness is fleeting and has only served to drive away private competitors who could have made more sustainable investments,” countered Joe Kane, Information Technology and Innovation Foundation director-broadband and spectrum policy. “Because they are not subject to the same market constraints as private ISPs, it will be difficult for the municipal network to tell whether the resources it consumes could be better deployed somewhere else by someone else,” Kane said. “The choice is further distorted if the government exempts itself from permitting requirements or cross-subsidizes the network with utility revenue or taxes. A municipality should evaluate alternative providers on equal footing, not giving favorable treatment or subsidies to itself that it does not extend to others.”

“Private sector providers should be preferred over municipal telecom networks,” agreed Free State Foundation President Randolph May. And there appear to be at least two private ISPs in FPB’s area, he said. “While I’ve supported muni networks where there was no private provider that wanted to provide service, this is a more problematic situation.”