Reply To: What are your thoughts about the Michigan, BEAD five-year action plan?

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    DrRon Suarez

    Organizer
    September 25, 2023 at 1:34 pm

    Possible restrictions in Michigan law: there are some questions about municipal broadband. However, research should help us determine if these restrictions affect the ability of community stakeholders to form a cooperative, that is not officially part of the municipal government.

    We asked our AI chat bot

    In Michigan, the primary restriction on municipal broadband is codified in the “Uniform Video Services Local Franchise Act” from 2006, known as Public Act 480. The language of the law effectively restricts municipalities from providing telecommunications services directly to the public for a fee.

    Specifically, the law states:

    • A municipality shall not provide to the public a telecommunications service, directly or indirectly, for a fee unless all of the following requirements are met:

      1. Public Hearing: Before providing the telecommunications service, the municipality holds public hearings on the matter.

      2. Existing Service Providers: There is no existing private provider of the telecommunications service to the public or area that the municipality intends to serve.

      3. Fee and Costs: The cost of providing the telecommunications service does not exceed the revenue derived from the service, excluding any indirect or in-kind contributions to the cost, including but not limited to any contribution to the cost from the general fund of the municipality, a grant, a gift, or a low-interest loan.

      4. No Cross-subsidization: The financial operations of the telecommunications service, including but not limited to the investment in and the cost of maintaining and operating the infrastructure of the telecommunications service, are separate from the other operations of the municipality.

    The law puts significant obstacles in the path of municipalities seeking to establish their broadband service:

    • It’s challenging for municipalities to initiate a project if any private provider offers service in the intended area, even if that service is subpar or expensive.

    • Financial restrictions require municipalities to demonstrate that revenues from the service will cover all costs. This can be challenging in the early phases of a project when capital costs are high.

    The underlying motivation behind these regulations likely stems from the desire to protect private-sector competition and reduce potential financial risks to municipalities. However, critics argue that such restrictions hinder local autonomy and the ability of municipalities to address broadband needs in underserved or unserved areas.

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