MaxxSouth Sues To Block Grant Funding For Broadband

JACKSON – MaxxSouth Broadband has filed a lawsuit in Hinds County Chancery Court petitioning the court to reverse a decision by the Office of Broadband Expansion and Accessibility of Mississippi (BEAM) allocating funding for broadband build-outs to provide high-speed internet for five projects across the state including Water Valley.  The lawsuit was filed on Sept. 3, just over a week after the BEAM office announced funding was approved for nine projects totaling $21.6 million to expand internet service to approximately 12,300 households in communities across the state. MaxxSouth provides internet service, cable tv and phone service in Water Valley.

The BEAM allocations included an award to Tallahatchie Valley Electric Power Association (TVEPA) for $3.8 million to help fund broadband buildout to 811 unserved and underserved locations in the Water Valley Electric Department’s coverage area and in southern Panola County, according to a press release from Governor Tate Reeves on August 26.  Funding for BEAM is provided from the U.S. Department of the Treasury Coronavirus Capital Projects Fund (CPF) as part of the American Rescue Plan.

Defendants named in the lawsuit are TVEPA, BEAM, AT&T, and First Light Fiber, LLC, doing business as ACE Fiber.

According to the lawsuit, BEAM’s interactive map indicated that awards of grants were being made to provide or expand service in some of the same counties where MaxxSouth’s broadband services are already deployed.
“MaxxSouth built out its broadband network at considerable expense using its own capital,” the lawsuit states.

“That investment represents a valuable property right that would be taken, in whole or in part, should competitors be allowed to build new networks over MaxxSouth’s existing networks using grants.”

The lawsuit states that MaxxSouth submitted challenges, or objections, in January for the five project locations after the BEAM office announced preliminary awards for applications submitted by TVEPA for locations in Yalobusha County; ACE Fiber for locations in Hickory Flat, North Haven and Blue Springs; and AT&T for locations in Marshall County.

“At that time, MaxxSouth provided BEAM with geographic data… showing the MaxxSouth footprint and filed objections to the projects impacting the existing MaxxSouth infrastructure,” the lawsuit continues. “BEAM had the requisite information to verify that MaxxSouth is either currently providing service or could, within 10 days provide service to customers within each of the five projects identified in the MaxxSouth Challenge.”

The lawsuit also states that the BEAM office had access to the National Broadband Map published by the Federal Communications Commission to verify that MaxxSouth provided service in the challenged areas.
The lawsuit continues, noting that MaxxSouth received correspondence from BEAM on June 28 requesting information on addresses within the five preliminary award determinations to which MaxxSouth previously objected including average upload and download internet speeds.

MaxxSouth reviewed the addresses provided by BEAM and identified the locations where it was either currently providing broadband service to customers or locations where it does not currently have a subscriber but has access to existing infrastructure, according to the lawsuit. The lawsuits also states that the company used its Network Management System to provide information about average upload and download speeds and submitted the information to BEAM on July 12.

“Of the 3,238 homes associated with the objections filed by MaxxSouth, it objected only to the 1,377 where its broadband was deployed, including 248 existing customers. MaxxSouth did not object to any of the homes that could not be served by the existing network infrastructure,” the lawsuit continues.

The lawsuit states that MaxxSouth received notice from BEAM on August 2 that its challenges had been rejected, with BEAM citing that MaxxSouth had provided insufficient support that service is provided to the locations in question. The suit notes that the response from BEAM stated “that the average upload and download speed data by MaxxSouth for actively served addresses is identical for each reported active user suggesting the data is not live or accurate.”

MaxxSouth’s allegations state that although BEAM had requested average speeds from MaxxSouth’s Network Management System, it apparently wanted live speed test data from MaxxSouth’s customers.

“The bandwidth is the same for any customer on a particular line across the entire MaxxSouth network. The actual performance achieved by the customers is dependent primarily on the customer’s hardware and whether the customer uses a wired or wireless internet connection. If connected over wireless, external factors including, but not limited to, strength of wireless signal, interference from other devices in the home, and the quality of wireless access point hardware could impact their performance. If MaxxSouth customers have the proper network equipment, however, they can expect to see network performance very close to the bandwidth being delivered, which in most cases is orders of magnitude great than the thresholds required by the BEAM program,” the suit continues.

MaxxSouth also stated in the lawsuit that it does not provide the network router hardware to most customers and does not have access to the customers’ network to measure each customers’ performance without sending a technician to each location.

“Obtaining this data from MaxxSouth’s existing customers was impossible within the time provided,” the lawsuit stated, a reference to the June 28 request from the BEAM office.

Request For A  Preliminary Injunction

The lawsuit also requests a preliminary injunction from the court to prohibit the BEAM office from awarding any grant or making any disbursement on any of the five projects that are subject to the MaxxSouth Challenges, unless those projects are first modified to exclude the objected addresses.

The lawsuit states that the Mississippi legislature recognized potential harm if broadband competitors are allowed to build new networks over MaxxSouth’s existing networks using government grants.

“The Mississippi legislature recognized this potential harm… when it imposed the requirement that grants be denied where ‘the proposed project includes an area where broadband services currently are deployed,’” the suit continues.

“In denying MaxxSouth’s objections and making grants where ‘the proposed project includes an area where broadband services currently are deployed’ in contravention of the law, BEAM also violated MaxxSouth’s substantive due process rights,” the suit states. “There is substantial likelihood that MaxxSouth will prevail on the merits. BEAM awarded grants in contravention of its statutory authority, in violation of the Administrative Procedures acts, and in a manner that deprived MaxxSouth of its right to procedural due process.”