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During the 2022 legislative session in Tennessee, lawmakers unanimously passed the Tennessee Broadband Investment Maximization Act, which primarily benefits AT&T. This act grants a three-year sales tax exemption to broadband companies for the purchase of equipment to improve or expand high-speed internet networks. The estimated annual tax savings from this exemption is million per year. AT&T has been the state’s largest political spender since 2009, spending .6 million to influence state politics.

The tax bill’s passage sheds light on the power of AT&T in the Tennessee legislature. Initially, the bill included a provision to remove barriers for nonprofit electric cooperatives to build high-speed networks in rural areas. However, AT&T successfully lobbied for the bill to become solely a tax cut. This change likely benefits AT&T more than the nonprofit cooperatives that are not typically subject to sales tax.

The fight over broadband deployment in Tennessee has a complex history, including AT&T’s monopoly over phone lines and disputes over whether broadband should be treated as a public utility or private good. Currently, the state’s broadband policy involves a two-tiered system where private companies operate in profitable urban areas, while publicly-backed companies serve rural areas. However, this system leads to limited competition, higher prices, and lower quality service.

The COVID-19 pandemic highlighted the importance of broadband access, leading to a bipartisan recognition of the utility of broadband. The broadband investment act was prompted by this shift in perception and the federal bipartisan infrastructure bill that allocated over 0 million to bring broadband to rural communities in Tennessee. AT&T, Lundberg, and Vaughan argue that the tax exemption in the act helps make broadband investments more effective. However, electric cooperatives, which are expanding into rural areas and likely to receive federal broadband funds, may be at a disadvantage due to the exemption’s impact on sales tax payments.

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