By Frank Chmelik of Chmelik Sitkin & Davis P.S. – January 2021
This month we will take a quick look at a growing area of port district interest – providing fiber optic cabling telecommunications infrastructure (known as “broadband infrastructure” or “digital infrastructure”) within and outside their districts. Several port districts have been real pioneers in this area and more port districts seem to be looking at broadband infrastructure. Meanwhile, this year there are some potential changes to port districts’ authority winding through the Legislature that would allow port districts to move beyond wholesale broadband to providing retail broadband to end users. It seems this is something all port districts ought to at least consider if fiber optic telecommunications infrastructure fits into your port’s business plan or a mission statement.
Public Policy Speaking: The Legislature and the Governor have repeatedly recognized that providing broadband or digital infrastructure to everyone in Washington, including rural and sparsely populated areas is essential for the future economic health of the State. On the federal level the government has conducted a series of “reverse auctions” to provide money from the Rural Digital Opportunity Fund. Under the “reverse auction” format telecommunications companies bid on the amount of subsidy they would need to service a given rural area. The low bidder gets the subsidiary and the obligation to extend the digital infrastructure. The push for broadband infrastructure today is not unlike the push to electrify rural America in the 1930s. The very successful Rural Electrification Act of 1936 provided federal loans for the installation of electrical distribution systems to serve isolated rural areas of the United States largely through electric cooperatives. If anything, the Covid-19 pandemic has highlighted the need for the development of this infrastructure as people worked remotely.
Legally Speaking: RCW 53.08.370 allows port districts to provide any telecommunications facilities within or without the district’s limits for the provision of wholesale telecommunications services within or without the district’s limits. As the statute now stands port districts are precluded from providing telecommunications services to end users. Which means the port districts must lease or otherwise agree with an internet service provider to provide the retail service to the end user. RCW 53.08.055 defines wholesale telecommunications services to include “the provision of unlit or dark optical fiber for resale, but not the provision of lit optical fiber.” Hence, port districts are involved in providing “dark fiber.”
Technically Speaking: Here is a bit of a technical explanation from a lawyer with a degree in political science – call it “fiber optics for dummies”. Now and for the foreseeable future (internet via a system of satellites might be the next big thing) the highest speed and highest capacity internet is currently provided using fiber optic network cable. The fiber optic network cable is made up of individual fiber optic strands. Twelve fiber optic strands are bundled into a “tube” and a fiber optic network cable contains multiple tubes – between twelve to twenty-four tubes or 144 to 288 individual fiber optic strands. To put this in perspective an individual fiber optic strand is about 1/10th the diameter of a human hair and can carry 25,000 individual telephone calls. The cost is not really in the fiber optic cable but rather extending the cable underground or on existing telephone poles. The cost of extension can be high for the last leg into a home or business in a rural area.
The fiber when installed is “dark fiber”. Once the fiber is extended to each end user – each home and business – an internet service provider (“ISP”) comes along and “lights” the fiber by attaching equipment for each end user and then along the way to connect to each user to the World Wide Web. Along the way, on the fiber optic system there are a series of equipment closets, called “huts” where the fiber comes in and can be connected to the next downstream fiber optic cable system. Like a small creek to a stream, to a river to a waterway to the sea, fiber optic cabling moves from a home in a remote town in Washington to the world.
The connection to each individual end user is called the “last mile” and the infrastructure from the last mile to the next big connection is called the “middle mile” and is part of the “backbone”. In constructing the “last mile” one can split fiber optic strands to service many end users. However, when that approach is taken all the end users must necessarily have the same ISP since the single fiber strand is shared. The other approach is a single fiber optic strand from each end user to the first hut. This is called “open architecture” because it allows each end user to select an ISP. Ports that are building the last mile typically want an open infrastructure so that the fiber can be leased to any number of ISPs.
Challenges and Opportunities: Again, as it has done since 1911, the legislature has turned to port districts (and to a degree PUDs) to advance an important state policy – getting broadband to unserved areas of the state. Port districts can make a real difference for rural communities by advancing fiber. But there are challenges. The Department of Revenue is struggling to recognize the appropriate way to tax the activity – leasehold excise tax, B&O tax and sales tax all play into this analysis. The WPPA and several port districts are currently in discussions with the Department of Revenue over this issue. Once constructed the fiber must be maintained with splicing for new connections and unforeseen breaks. And there are opportunities. There are state grants and perhaps county .09 funds available to support the effort. Several port districts have already banded together to form a Washington nonprofit corporation to develop and manage fiber infrastructure. Private telecommunications companies, particularly ones who won a Rural Digital Opportunity Fund reverse auction, are looking to partner to advance fiber into rural areas. In the final analysis it is for each port to determine if broadband infrastructure fits into the port’s strategic plan and the port’s mission.
Special thanks to Kara Riebold at the Port of Whitman County and Sara Young at the Port of Skagit for explaining dark fiber telecommunications infrastructure to me. They each took a complex subject with unusual terminology and made it understandable. I recommend that you call them to get more information.
As always, please contact your port counsel with any questions regarding this topic. And, if you have a particular question for a Knowing the Waters please email me at email@example.com.