Best internet service in Texas? It might be in tiny Mont...

MONT BELVIEU - Ask Ismael Martinez what it took to get internet access at his home in years past, and you’ll get an earful.

There was the satellite-based service that was so slow, streaming Netflix was impossible and even simple email was agony. Then there was a cable internet adventure in which the provider would only run a line to the edge of his 1-acre property. He had to jury-rig a wireless connection for the final 700 feet to his house.

But ask Martinez, pastor of Iglesia Cristo Viene in nearby Baytown, about his current provider, and he waxes rhapsodic.

“You know, I could go stand on a mountain in Mexico in the middle of nowhere and get a better internet signal than I was getting before,” he says. “Now, it’s beautiful. We can stream video, my children can play games, everything is much, much faster.”

His new internet provider is MB Link, which has only been in business for about a year, offering 1-gigabit-per-second service to every residence in town. It’s run by the City of Mont Belvieu, a municipal broadband system in a state where many assume such an operation is forbidden by law.

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But the city’s administrators, who say they could not get existing internet providers to expand service or step up their speeds, went to court in 2017 and got a state district judge to rule that broadband internet is a utility on a par with electricity and water service. So-called “home rule” cities in Texas have the power to operate utilities, so the judge’s declaration opened the door.

Now, with MB Link up and running to rave reviews from residents, other small towns in Texas that struggle with subpar online access are expressing interest in Mont Belvieu’s approach.

“We were at a Broadband Communities conference in Austin, and people came up to us and said, ‘How did you do that?’” said Nathan Watkins, Mont Belvieu’s city manager. “But we stressed that our approach may not work for everyone.”

Mont Belvieu residents pay $75 a month for 1-gigabit-per-second service. That’s the only tier available to residential customers, though a recently launched business-class service offers slower tiers of service and more extensive support. There are no data caps and no throttling of service if residents use too much data.

In comparison, AT&T’s fiber-optic service in Houston sells for $70 a month, but it’s not full fiber-to-the-modem. The same with Comcast’s 1-Gbps service, which sells for $90 a month. Both services have data caps.

Uneven access

Mont Belvieu is about 30 miles east of Houston on Interstate 10, a small town of about 7,800 that sits at the confluence of hundreds of oil and natural gas pipelines that terminate on the upper Texas coast. It’s also known for the salt dome beneath it, one of the world’s largest. There are multiple petrochemical plants in the area.

Industrial tax revenue has made Mont Belvieu a fairly affluent city, yet city leaders couldn’t lure private communications companies to invest in building out or improving its internet infrastructure.

“We even told providers we’d pay to get cable to the front of the neighborhood, we’d lay it ourselves, but that was too far outside their business model,” Watkins said. “We offered to pay for fiber and lay it, and provide right-of-way.”

This is a common issue in rural America, where the lack of population density isn’t enough for telephone and cable companies to see a decent return on the investment of stringing wires or laying fiber-optic cable.

That, in turn, poses larger problems.

“Rural communities may not compete for 21st century workers and jobs,” said Chris Lewis, vice president of Public Knowledge, an advocacy group that promotes investment in rural broadband. “Young people seeking a career may need to go elsewhere, even though more companies allow you to work from home, wherever you are.”

He added that small towns without fast connections can’t take advantage of “innovative services for public works, or smart grids for traffic or sewer systems.”

“Basically, rural communities become disconnected from economic opportunities,” Lewis said.

Seeking a solution, the 2019 Texas Legislature approved the creation of a broadband council overseen by the governor to find ways to improve rural internet access. The bill awaits the governor’s signature at this writing.

Mont Belvieu’s offers to get incumbent providers to improve service were generous because the situation was dire. Residents complained of slow speeds. In 2014, when the city began exploring its options, telephone-based DSL service from Verizon averaged around 1.5 megabits a second, while cable-based service from SuddenLink was only a little better, at 5 Mbps.

“A lot of residents complained that, even if they had service, it was unreliable and went out all the time,” Watkins said.

And that was if residents could get internet access at all. Some parts of town were digital deserts. Those who sought refuge in satellite-based service — like Martinez — found it frustratingly slow and expensive.

A 2016 survey by the city found that 60 percent of residents and 79 percent of businesses weren’t happy with their internet service. And 90 percent of residents and 100 percent of businesses considered broadband internet access to be as important in the 21st century as electricity and water — services often provided by small municipalities like Mont Belvieu.

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There was a hurdle to addressing this problem. A Texas communications law passed in 1995 — and reaffirmed in 2005 — banned municipalities and electric utilities from offering telecommunications and video services.But Mont Belvieu officials believed that telecommunications did not apply to internet access. Watkins said the city’s reading of the law was that telecommunications means telephone services, which the city had no interest in providing.

Headed to court

City officials decided to hang their hats on another state statute — the same one that, in the early 1900s, allowed home rule cities to provide electrical service. Mont Belvieu opted to go to court and ask a judge to declare that internet access was as critical to modern life as electricity, essentially making it a utility they could provide to residents.

The city filed suit in early 2017 in the 344th State District Court in Chambers County, seeking the right to issue certificates of obligation to build and operate a fiber-optic broadband internet-access service. Watkins said the Texas Attorney General’s office didn’t really contest the matter.

“They basically told the judge that they also wanted a clarification on whether home-rule cities could offer internet access,” Watkins said. The attorney general’s office did not respond to a request for more detail.

State District Judge Randy McDonald ruled in Mont Belvieu’s favor on April 20, 2017, telling the plaintiffs that, if the fiber-optic system was as good as they promised it would be, he’d consider moving there himself.

And with that, MB Link was born.

Building a system

Talk to any of Mont Belvieu’s administrators about the hero behind their internet service and they’ll say it’s Dwight Thomas. A veteran communications network engineer who’s quick to tell you “I’ve worked for all the big boys” like Time Warner Cable and Sprint, he designed the network and oversaw its construction.

Thomas, who lived in East Texas most of his life, had left corporate life and gone into consulting. But he got tired of traveling and wanted a job where he could stay close to home. When Mont Belvieu began looking for a manager to oversee MB Link, he jumped at the job.

“We went with all fiber-optics because it’s simple, easy to maintain and we can grow it quickly,” said Thomas, who designed the network and chose its hardware.

Mont Belvieu’s fiber now passes every residence in town, covering 65 miles of road. Paid for with $13 million in bonds, the network now has seven employees, including a customer service department. It’s a small operation, and everyone helps where they can.

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Thomas says the network is capable of as much as 2.5 Gbps, but is currently limited to 1 Gbps because of limitations in the modems given to MB Link customers.

Watkins said MB Link has “blown out of the water” the city’s original projections. They expected to have 400 households signed up in the first year, but as the 1-year mark in June nears there are more than 1,200. They anticipated 60 percent penetration in three years, and MB Link is already at that point.

Assistant City Manager Scott E. Swigert said revenue from MB Link was more than $79,000 in April, more than double projected revenue at the one-year point of $30,000. Mont Belvieu will make a bond payment this year of $477,586.76. Swigert said payments for the first two years were originally structured as interest-only, anticipating fewer paying customers.

Industry pushback

Customers may be happy with MB Link, but traditional telecom companies and internet providers have done what they can across the country to discourage and, in many cases, lobby for bans of municipal broadband. They argue that, among other things, it’s unfair for a government entity to compete against a commercial provider of internet or telecommunications access.

According to BroadbandNow, a broadband advocacy group, 26 states including Texas have some kind of statute that restricts or blocks municipalities from offering internet and communications services.

Among the groups opposed to municipal broadband efforts is USTelecom, a trade association for the telecommunications industry. Jonathan Spalter, its president and chief executive, said in an interview that municipalities like Mont Belvieu run the risk of cost overruns and maintenance issues when they go it alone with their own broadband service.

“They are far better off in the longer term by structuring partnerships with communications companies to actually deliver and deploy that service,” Spalter said.

That’s how it’s being done in Shenandoah, a town of about 3,000 just north of The Woodlands on Interstate 45. Despite its proximity to the larger suburb, Shenandoah also suffers from poor or, in many locations, no internet access.

Joseph Peart, director of public works, said Shenandoah hired a contractor to install fiber-optic cable. Tachus, an internet provider with experience in fiber networks, will maintain and operate the network once it’s built. After 20 years, the entire operation will be turned over to the city to run.

In the case of Mont Belvieu, such a partnership was sought, to no avail. Christopher Mitchell, director of Community Broadband Networks, said incumbent providers who can’t or won’t provide adequate service essentially forfeit the right to complain about cities getting into the internet business.

“I strongly believe in competitive markets,” Mitchell said. “But here it is in 2019, and we were having this conversation (about rural internet services) in 2012. The telcos have had 10 years to build out broadband and they haven’t done it.”

Opening the door

The Mont Belvieu success story may have sparked a movement in Texas. Brian Ligon, the city’s director of communications and marketing, said four Houston-area towns have contacted Mont Belvieu for information on MB Link, though he declined to name them.

Mont Belvieu also has heard from three near Dallas: Celina, Lucas and Farmersville.

“Slow, inconsistent, unreliable,” is what Ben White, Farmersville’s city manager, hears from the residents of that town of 3,700 about internet access there. He has had a tour of the MB Link’s system and is now putting together the same kind of residents’ survey that got Mont Belvieu’s ball rolling.

Like Mont Belvieu, Farmersville seeks to own and operate its own network, but White is not sure if his town will need to file suit to do so. Senate Bill 14, which was approved by both chambers of the Texas Legislature in the session that just concluded, gives electric cooperatives the ability to launch fiber-optic internet networks. White said Farmersville operates one of those, and if signed by the governor the bill could make the path smoother.

“If you are outside of a big metro, you don’t get the attention from the AT&Ts, Spectrums and Time Warners of the world,” he said. “They are just not coming to your community.”

dwight.silverman@chron.com