State senator wants Frankfort utility to sell its internet service; utility questions why

Draft bill requires local elected officials to make decision on internet service

By: - December 8, 2023 5:00 am
A billboard with the words, "OUR COMMUNITY IS NOT FOR SALE" with the logos of the Frankfort Plant Board and Cable 10 below it.

A billboard that the Frankfort Plant Board put up opposing state Sen. Gex Williams’ efforts. (Kentucky Lantern photo by Liam Niemeyer)

FRANKFORT — Walking to his office in the state capitol annex last month, state Sen. Gex Williams pulled out his phone to show a photo of a billboard that appeared in Frankfort weeks earlier.

The billboard along a well-traveled street displays in bold, white font the words, “OUR COMMUNITY IS NOT FOR SALE,” along with logos for the city’s utility, the Frankfort Plant Board and its public access television channel. 

“I want to make sure they put my name on that poster board up there,” Williams said jokingly, using his fingers to zoom in on the photo.

The billboard is part of a larger push against legislation that Williams plans to introduce during the session that begins next month. The Frankfort Plant Board (FPB) asserts that Williams is out to force the utility to sell its telecommunications services — cable, landline, and, significantly, its growing broadband services — to a private company. 

“Why is an outsider from Boone County proposing to take away customer control from this community?” FPB asks on its website.

Sen. Gex Williams speaking at a legislative committee hearing in November. (Kentucky Lantern photo by Liam Niemeyer)

Williams, a Republican from Verona, was elected last year from a newly created 20th Senate District that stretches north from Frankfort and Franklin County through Gallatin, Carroll and Owen counties to southwest Kenton and southern Boone counties. Williams, who served in the legislature in the 1990s before losing a race for U.S. Congress in 1998, defeated Democrat Teresa Barton, a former Franklin County judge-executive. 

Williams says his goal is to “rein in” the FPB, which he calls a “runaway” government body that isn’t accountable enough to city officials. He also wants to encourage, not force, the Frankfort City Commission to sell the FPB’s telecom assets and then invest the proceeds into developing downtown Frankfort. 

Constituent feedback criticizing FPB’s internet service and the utility in general, he said, combined with his desire to bring economic development to downtown Frankfort is what is motivating him to bring forth the bill.

Standing in his office, Williams pointed out how FPB’s webpage opposing his legislation urged customers to call their Frankfort city commissioners. 

“They’re not intimidating me. They’re intimidating them,” Williams said.

Williams shared a draft of his bill with the Lantern and plans to speak before the Frankfort City Commission and Frankfort Plant Board at public meetings early next week about his legislation. 

FPB board chair John Cubine said he’s seen Williams’ draft bill but doesn’t want to comment on it until FPB’s legal counsel has reviewed it. Still, Cubine said he sees the senator’s efforts as an unwanted intrusion into the operations of a utility that doesn’t need fixing and potentially a threat to a community-owned asset.

Williams’ discussions with local public officials and a column he’s written in Frankfort’s newspaper have fueled speculation about his motives and left at least a couple of local elected officials skeptical about selling off FPB’s telecommunications division.

City commissioner Kyle Thompson said he “can not even imagine” that the commission would want to “take on an issue that essentially would have half of the community ready to show up with pitchforks and torches.” 

A growing — and potentially valuable — broadband business 

The Frankfort Plant Board is one of 12 municipal utilities in Kentucky that offer internet services, according to the Kentucky League of Cities. Frankfort appears to be the only one of the 12 that would be affected by Williams’ proposal because it is the only one that was created under a 1940s law that Williams wants to change.       

 The Frankfort utility has been investing millions of dollars to build out its broadband offerings in Frankfort and Franklin County, particularly with its “NEXTBAND” fiber-to-home internet service. FPB last year received about $8 million worth of grants from the state to build out fiber optic cable internet connection into Franklin County to at least 884 homes.

 Williams’ draft, which he said could change, would require FPB’s board to seek an independent appraisal of its “public projects” that go beyond electric and water services. 

The bill would give the Frankfort City Commission a deadline of Dec. 31, 2024 to vote on one of two choices: to “transfer” the appraised public projects from FPB to the city or sell it. It’s unclear whether FPB telecommunications staff would still operate such services if they were moved from the FPB to city government. 

Williams said ultimately he wants the city commissioners to decide what to do with the telecommunications services.

The bill would also: 

  • Require FPB to seek approval from the city commission before paying off various expenses; 
  • Give control to the city commission over any surplus revenues generated by FPB; 
  • Require FPB to made payments in lieu of taxes to the city, school districts and counties when such payments were optional in the past

Williams said the state legislature has made efforts in the past to regulate what are known as special purpose governmental entities (SPGE) which are quasi-governmental or governmental agencies that provide a limited number of services. The FPB falls into that category.

Williams asserts FPB is run by an “unelected board” that can make decisions on what to do with surpluses from its operations along with issuing bonds without the approval of the city.

“I’m not saying they’ve done anything illegal,” Williams adds.

Cubine, the FPB board chairman, doesn’t agree with Williams that FPB is unaccountable. He said board members, who are appointed by the elected mayor of Frankfort and ratified by the city commission, are limited to two four-year terms. The board’s public meetings are televised, and the utility is subject to the open records law. FPB’s annual financial audits and budgets are available to the public online. 

“In terms of accountability, I don’t know where else you go with that,” Cubine said. “I’d like to understand where he says it’s a runaway operation.” 

Current law allows Frankfort residents to dissolve FPB in a vote if they choose to; Williams’ draft bill would keep that option but allow the city commission the option to also dissolve the utility with a majority vote. 

Cubine says the decisions about FPB should be made by Frankfort residents. His concerns about a potential sale of FPB’s telecommunications division go beyond just the utility’s expanding internet services. The division also runs Cable 10, the public access television channel that broadcasts local school sporting events, government meetings and more. 

He worries about what would be lost if that went away, something he doesn’t believe a private company would provide to Frankfort. 

“Once you lose a public asset — it’s gone. And once you spend your one-time cash, whether it’s for the riverfront or anything else — your cash is gone,” Cubine said.

He also said utility rates for other services like electric and water would be higher if FPB’s telecommunications were sold, as customer bases for the services would have to be consolidated. Rates for telecom services would go up, he said.

Williams disputes many of these points, saying that a franchise fee billed to a telecom company could pay for a student-run television service and that there’s enough competition among companies to keep telecom rates low. 

The senator lauds the work FPB has done building out its internet services. But he doesn’t believe FPB can compete with the prices and service offered by large, corporate internet providers such as AT&T and Charter Communications.

“There is no way that this little, itty bitty community can compete against AT&T and Charter and all these big guys that are going to be operating on very thin margins but over a lot of people,” Williams said. 

He says Frankfort has an opportunity to sell off FPB’s telecommunications services while it’s still a valuable asset. 

“You bring $50 million to the table from selling your plant board, I can — we can build a nice convention center, we can develop the river. We need to develop all this,” Williams said. “You have to look at this as an asset conversion, OK? Not as a sale.” 

When asked who in Franklin County, constituents or elected officials, agreed with his idea to sell FPB’s telecommunications division, Williams said he had talked with constituents about it and that he would release a draft of his bill to elected officials “and see what they say.” 

Cubine, the FPB board chairman, strongly disagrees that FPB is at a disadvantage in terms of competing with private telecommunications corporations like AT&T. He said the utility offers competitive products at competitive rates with a customer support staff that’s local. 

“AT&T and them are here in Frankfort today in the same neighborhoods we’re in,” Cubine said. “We don’t see the logic that if we’re worth a fortune and yet we’re obsolete — we don’t see the connect there.”  

According to the Federal Communications Commission’s National Broadband Map, AT&T offers competing fiber internet service to some of the same addresses that FPB services. At one residence on the west side of Frankfort, AT&T is offering up to 1,000 megabits per second of upload and download speed for $85 a month through the first 12 months of service. FPB plans to keep a flat rate of $90 a month through fiscal year 2028 for its fiber internet service that offers the same speed. 

A line of white bucket trucks with extending arms for utility linemen to work from in a parking lot.
Some of the bucket trucks operated by the Frankfort Plant Board. (Kentucky Lantern photo by Liam Niemeyer)

Skepticism by some local officials

At least two city commissioners who would vote on a potential sale of FPB’s telecommunications division are skeptical of the idea. 

Thompson said he’s spoken with Williams about the legislation and is sympathetic to the idea of the commission having more control and oversight of FPB to “protect the ratepayers,” with the hope that FPB could continue to manage its own operations. 

He worries the city wouldn’t have the infrastructure and manpower to manage FPB finances and that if a big telecom company took over that residents would miss the local utility’s accessibility. 

“If I call the plant board, you know, I’m Mr. Thompson,” he said. “That kind of means a lot to a small community, and I can understand the trepidation.” 

Williams’ aggressive push — “out of left field for us all of a sudden” — makes Commissioner Katrisha Waldridge also skeptical. As a lawmaker, she said, he could seek state funding for projects he wants built in downtown Frankfort. 

“Why all the sudden it’s just such a huge push right now?” Waldridge said. “We’re the freaking capital. I mean, why does money have to come from our municipality?” 

Williams said he doesn’t believe a decision on whether to sell FPB’s telecommunications services will be made by the current city commission, but he hopes the bill can provide information on the value of FPB’s telecommunications for a future decision. 

“This is not a knee jerk issue. This is about making an informed decision,” Williams said. “I’m going to pick a number, whatever it is — it’s $50 million or it’s $100 million or it’s $20 million. Are we better off having that in an internet service or having it in a convention center or a sports complex?” 

Williams has made clear he is only targeting Frankfort’s utility with his legislation. But Cubine worries such a bill could set a precedent for aiming at other municipal utilities and their assets, which are also defined and regulated through Kentucky law.

“The locals aren’t asking for the change. Then why’s the General Assembly stepping into it?” Cubine said.

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

Liam Niemeyer
Liam Niemeyer

Liam covers government and policy in Kentucky and its impacts throughout the Commonwealth for the Kentucky Lantern. He most recently spent four years reporting award-winning stories for WKMS Public Radio in Murray.

MORE FROM AUTHOR