Lawmakers make another attempt at closing the state’s digital divide
Legislation to boost investments in Internet infrastructure is widely supported, but it could increase telephone rates for certain rural customers, one telecom provider warns
This story was originally published on Feb. 2 and updated on April 2 after Gov. John Hickenlooper signed the bill into law.
For Senator Don Coram, the lack of adequate Internet at his home in Montrose means using data on his cell phone to work on legislation, which not by chance, included a bill aimed at boosting investments in rural Internet infrastructure. And when the Senate was debating that bill in February, he said he received a text from his wife that reaffirmed the importance of the issue.
“She had several phone calls from people who actually wanted to listen in this morning to the debate but they had no Internet,” Coram told Senate lawmakers.
To address this issue, Gov. John Hickenlooper on Monday signed into law a bipartisan measure that helps pay for connecting rural homes to the Internet. In rural Colorado, about 23 percent of residents’ Internet is either non-existent or too slow for web browsing and streaming.
These residents are not reaping the benefits of a high-tech economy where opportunities to work, learn and seek health care can be found online. Even lawmakers along the Front Range, where the Internet is relatively zippy, view the issue as one of fairness and equity.
Since 2014, when lawmakers first passed a law creating a specific fund for broadband grants, about $10.9 million has been used to fund Internet projects for homes and businesses across the state. This is well short of the $300 million the Colorado Broadband Office estimates is needed to bring rural residents Internet with a minimum of 25 megabits per second download and 3 mbps upload.
To help close this gap, the plan is to take money raised from a voice service surcharge on phone bills currently being used to subsidize the cost of telephone service in rural areas of the state and instead use it to deliver Internet service in similar areas. Companies could use the subsidy to help cover the high cost of serving these hard-to-reach areas of the state.
The legislation won support from Republican leadership in the Senate and Democratic leadership in the House. Hickenlooper has repeatedly called on lawmakers to pump money into broadband.
But CenturyLink, a multinational telecommunications company, relies on the money from this surcharge to keep the costs down for rural landline telephone customers. The loss of this money could drive up telephone rates for about 250,000 rural customers, the company says, and affect the jobs of the union-backed workers that build the infrastructure.
“It will harshly impact our rural customers,” Mark Soltes, assistant vice president of government affairs for CenturyLink, told The Colorado Independent when asked about the bill. “It could cause significant rate increases.”
But lawmakers were not too fazed by this concern. The legislation targets CenturyLink’s share of the High Cost Support Mechanism fund, of which CenturyLink gets about 90 percent of each year due to their customer base. This equals about $30.25 million per year, according to reports by the Public Utilities Commission.
The company said it wanted a slow transition of these funds. But lawmakers wanted to get more money out the door for basic Internet service as quickly as possible. The legislation transfers 60 percent of CenturyLink’s share of this fund into a broadband fund in 2019. After the initial 60 percent transfer next year, the bill would move over an additional 10 percent each year for four years until it is all transferred, generating tens of millions of dollars for broadband projects and nearly eliminating subsidies for phone line maintenance.
The Hickenlooper administration pressed to get money out the door faster, too. Stephanie Copeland, executive director of the Office of Economic Development, told lawmakers that accelerating the transfer of funds is important because the state has been tackling the issue in a marginal way for years.
The surcharge revenue is declining as more users go wireless. Total contributions to the fund were $43.3 million in 2015 and are estimated to be $38.4 million in 2016, according to the Joint Budget Committee report. But that decline nearly leveled out last year, according to reports on the fund.
The legislation will make about $6.5 million available for grants next year after Viaero, a telecommunications provider in eastern Colorado, agreed to drop a lawsuit against the state in exchange for the state releasing money that is currently held in an escrow account.
From left to right: Sen. Don Coram, R-Montrose, Senate President Pro Tem Jerry Sonnenberg, R-Sterling, Minority Leader Lucia Guzman, D-Denver, and Sen. Angela Williams, D-Denver, consider amendments on a bill dealing with rural Internet subsidies on the Senate floor on Wednesday. Photo by John Herrick.
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