Cable company’s accidental email to rival discusses plan to block competition

On October 17, Jonathan Chambers received an email that wasn't meant for him.

Chambers is one of the top executives at Conexon, a broadband company that has built and operates dozens of fiber networks in rural parts of America. Conexon recently won one of the Louisiana state government's GUMBO grants to deploy fiber-to-the-home service in East Carroll Parish, where the poverty rate of 37.6 percent is over three times the national average.

"This isn't our biggest project anywhere. But in many ways it's our most important," Chambers told Ars in a phone interview. Conexon primarily works with electric cooperatives, favoring a business model in which the local community owns the fiber network and Conexon operates it under a lease agreement.

But the East Carroll Parish grant—$4 million to serve over 2,500 households in an area that has been called one of the least connected in the state—is in limbo because of an eleventh-hour challenge from Cable One, a cable provider that offers services under its SparkLight brand name. Cable One plans to make similar challenges in other states; in fact, blocking government grants to other ISPs is one of Cable One's top priorities, according to the accidental email received by Chambers.

"Challenging publicly funded overbuilds is becoming one of the most important tasks we do as a company," Cable One Assistant General Counsel Patrick Caron wrote in the email.

"Overbuild" is a term cable and telecom companies use to describe what is more commonly known as "competition." But in the case of East Carroll Parish, the grant was awarded because of evidence that homes in the area are unserved or underserved. US broadband maps are often inaccurate, but the existing data shows East Carroll Parish needs more and better broadband, Chambers said.

"My market is the places where nobody's built networks. I'm not even trying to go into areas that are already served," he said.

“We have to get together and determine strategy”

Cable One challenged the East Carroll Parish grant after it was awarded, claiming that Cable One already serves the area where Conexon would build. Cable One lost that initial protest and was chided by the state broadband office for not providing evidence to back up its claims. But the company is appealing, so it isn't clear when or if Conexon can start installing fiber.

The purpose of Caron's misdirected email was to set up a meeting to discuss similar challenges the company can make in other states. Besides Chambers, the email went to several Cable One executives.

"We have to get together and determine strategy around Arkansas and Missouri challenges immediately," Caron wrote, noting an October 31 deadline for challenges in Arkansas. He added that "AR and MO are no exceptions" to Cable One's strategy of challenging grants awarded to other ISPs.

Chambers told Ars he didn't respond but forwarded the message "to some friends saying, you know, 'get a load of this.'" The email was shared with Ars by the Institute for Local Self-Reliance's Community Broadband Networks Initiative, which works to expand locally owned broadband options and has been covering the East Carroll Parish saga.

East Carroll Parish highlighted on a map of Louisiana.

Credit: Getty Images | Roki Rodic

"The only thing surprising about this is the Machiavellian thinking on display in the email has accidentally made its way out into the open," Sean Gonsalves, a reporter, editor, and researcher for the group, told Ars. The challenges are "bad for the millions of unserved and underserved across the country living in communities without access to reliable and affordable broadband, including those communities that are served by a monopoly provider," Gonsalves said.

"That's why we think it's important for states to have laws in place to discourage incumbent providers from filing fraudulent challenge claims like they have on the books in Minnesota and Colorado," he added. (Gonsalves explained those laws in this article.)

Louisiana's GUMBO (Granting Unserved Municipalities Broadband Opportunities) awards rely on federal funding from the American Rescue Plan. The next major decision from a Louisiana government official on the East Carroll Parish grant is expected by December 9 if no agreement is reached before then. The process could be dragged out further if Cable One escalates its challenge to the district court.

"This is typical incumbent behavior," Chambers said. He said the email from Caron shows that Cable One "decided that this is really important, or at least this one fellow thinks it's really important as a matter of corporate policy. Mind the email didn't say, 'Hey, it's really important that we build networks.'"

A very late challenge

Chambers also criticized Cable One for not challenging during the initial periods for dispute resolution. State officials held one "protest window" from January to March and later added a supplemental round that allowed further protests for 30 days in July, as explained by the state government. Awards for Conexon and other ISPs building elsewhere in Louisiana were announced on July 25, with Gov. John Bel Edwards visiting Lake Providence in East Carroll Parish to announce grants totaling $130 million across the state.

But the state regulations governing the grant program allowed another protest period of up to seven days after the announcement of awards. "There was this brief one-week period, which I think was set up by the legislature to catch any kind of errors... That's when Cable One came in, after everybody else had done their work," Chambers said.

East Carroll Parish residents had scheduled a launch event with Chambers to begin signups for Internet service but scrapped the event when Cable One stepped in to block or at least delay the project.

"The governor flew into Lake Providence on a helicopter to give the grant and now this is happening," resident Laura Arvin said in a podcast with the Institute for Local Self-Reliance. Lake Providence is the parish seat and has about 3,500 residents.

ISPs “don’t want to serve rural areas”

Meanwhile, residents who don't have good Internet service are still waiting for Conexon's project to get the final go-ahead. Community members have "worked for years to improve broadband connectivity in the area, forming an Internet task force during the COVID-19 crisis when families struggled with the lack of reliable broadband," the Delta Interfaith group said last month after the state government rejected Cable One's initial challenge.

Once Conexon's fiber network is built, "children will have the connection they need to do their school work from home," and "we will no longer have to drive 70 miles for a doctor's visit when an online consultation will do," Wanda Manning, an East Carroll resident and a leader at Delta Interfaith, said at the time.

"Existing Internet operators don't want to serve rural areas. They say it doesn't make money. And here's the crazy part: They don't want anyone else to serve these areas either," Manning said in a press conference near the state Capitol on August 31. Manning and other East Carroll residents were in Baton Rouge that day to protest Cable One's attempt to block the new fiber network, according to Louisiana Illuminator. Manning is a retired teacher who says she is "paying a lot of money each month, about $140, to get Internet and phone service, but the Internet isn't dependable."

Contingent on grant funding, Conexon plans to offer symmetrical 100Mbps service for $50 a month, 1Gbps symmetrical for $80, and 2Gbps symmetrical for $100. Conexon's grant application said the service will be eligible for the federal Affordable Connectivity Program, which gives $30 monthly discounts for qualifying low-income households, and the Lifeline program that offers another $9.25 monthly discount.

Cable One operates networks in 24 states and says it has over 1.1 million residential and business customers. Cable One Louisiana General Manager Josh Williams wrote an open letter to residents defending the challenge in September.

"Sparklight filed this protest, via the process outlined by the state, because we currently service the Lake Providence area with high-speed Internet, offering plans with speeds up to 940Mbps download and 50Mbps upload. It is our belief that public grant funds would be best used in areas of Louisiana that do not already have access to broadband," he wrote.

First appeal failed due to “paucity of information”

In its decision to reject the grant challenge, the Louisiana Office of Broadband Development and Connectivity wrote that Cable One (referred to as Sparklight in the document) didn't provide evidence for its claim that the area already has sufficient broadband access. "Because Sparklight has provided such a limited explanation of its position, it is difficult to discern and analyze its argument," the office's executive director, Veneeth Iyengar, wrote.

Iyengar continued:

[T]urning to the words within its one-page protest, Sparklight states that the information it has provided is the "number of serviceable locations within the proposed project area, including the speeds those serviceable locations are able to receive." Based on this information, it appears that Sparklight is not asserting that the locations within the area "are receiving" the speed of 960/50 mbps, but rather, that they are "able to receive" these speeds. It is OBDC's opinion that the intent and purpose of the Gumbo Act is the statutorily mandated speeds will be delivered and received functionally and reliably. When I consider the paucity of information set forth in Sparklight's narrative, it is my opinion that Sparklight has not met its burden to demonstrate that the necessary speed is reliably delivered and received by the residents of the area at issue.

The cable company "implied in its protest that it is able to provide broadband speeds exceeding the statutory threshold of 25:3 [25Mbps download and 3Mbps upload] to 2,856 locations within the area that Conexon has applied for funding," the decision said. However, "Sparklight has offered no data or evidence with regard to specific speeds actually delivered and received by its customers or at locations within the area."

The decision was issued on September 30, and Cable One had 15 days to appeal to Commissioner of Administration Jay Dardenne. The company's appeal to Dardenne argued that the grant to Conexon "violates Louisiana law and facilitates the misuse of federal funds" because Cable One offers service of at least 25Mbps downstream and 3Mbps upstream at 669 of 851 locations targeted in the grant.

If Dardenne rejects the appeal, Cable One has the right to appeal to the 19th Judicial District Court. An appeal in District Court would delay the project's start even further.

Cable One is now seeking a modification of the grant to Conexon. "We have received an inquiry from one of the parties—Cable One—to see whether other parties would be interested in discussing the consensual modification of protested areas," stated a November 10 email from an attorney with the state Division of Administration's Office of General Counsel. The email was sent to dozens of people; Chambers shared it with Ars.

On November 14, another email from the Office of General Counsel said Dardenne has delayed his ruling on Cable One's appeal until December 9 to give the parties time to discuss "the possibility of an amicable resolution to these protested areas." The December 9 deadline may be extended further "if necessary," the email said.

"In the meantime, OBC [Office of Broadband Development and Connectivity] may take the necessary steps to try to resolve the protested areas," an Office of General Counsel attorney wrote.

Cable One defends challenge

When contacted by Ars, Cable One defended its strategy of challenging grants. A spokesperson told us:

Cable One has been fairly vocal in local and national media and in other public forums over the past several months about our strong belief in the importance of the challenge process. Cable One believes its good-faith participation in challenge processes is important for two reasons: 1) to ensure that limited public funding is used for the purpose intended extending critical broadband services to unserved/underserved areas; and 2) to protect the network/infrastructure and customer service investments of companies already providing qualifying service in the area.

Cable One also pointed to cable lobby group ACA Connects' argument that "establishing a challenge process that has integrity is essential" for expanding broadband access. "Funding 'served' locations would be counterproductive, undermining broadband investment and future government programs," the group said.

Chambers sees things differently. He wrote an article in September calling the challenge process a "ruse" because "incumbents have been caught repeatedly misrepresenting their service areas and service levels."

State and federal agencies have "fallen into this trap" of "mak[ing] sure that not a single dollar ever goes to a single location where somebody claims to have service," Chambers said in our phone interview.

US broadband maps often inaccurate

Conexon relied on the Federal Communications Commission's broadband availability data, plus speed tests and testimonials from residents, to make the case that East Carroll Parish doesn't have enough broadband access and should get a government-subsidized network.

"We used everything that was publicly available at the time," Chambers said. Cable One and other ISPs that challenge grants should have to "prove that the publicly available data is incorrect, and they should prove it using some recognized valid protocol, not just a 'because I said so' point," he said.

The FCC has been collecting detailed broadband maps from ISPs for the first time ever in what is supposed to be a big upgrade over the current data that essentially lets ISPs count an entire census block as served if the ISP can serve just one home in the area. The new maps will be used to help distribute $42.45 billion from the Broadband Equity, Access, and Deployment program created by Congress in the Infrastructure Investment and Jobs Act.

But the first version of the FCC maps that are being released this week will undergo a challenge process to correct errors, and there are indications that the first version will have many inaccuracies.

"If you think the new FCC broadband map is going to solve all this, you know, I've got a bridge in Brooklyn to sell you," Chambers said.

Conexon deploys 1,000 miles of fiber a week

Chambers said Conexon has built or is in the process of building about 75 networks around the US. "We build over 1,000 linear miles of fiber optic network each week. This year we'll have built between 50,000 and 60,000 miles of fiber—all in rural America. Population density on average is between 5 and 10 homes per mile," Chambers said.