A bill that could put up to a hundred million dollars into financing rural broadband cleared the Colorado Senate Thursday morning with changes its sponsors say will speed up the process.
Senate Bill 2 would take dollars from a fund that currently pays for landlines and shifts that over five years to pay for internet service to rural communities left out of Colorado’s economic boom. The Senate sent the bill on to the House with a 30-5 vote.
The money that would go to rural broadband would come from what’s known as the High Cost Support Mechanism (HCSM), a state fund that takes in a 2.6 percent surchange on phone bills. The fund’s support has dwindled in the past few years as more people shift away from landlines and exclusively toward cell phone service. However, the HCSM still takes in about $35 million per year. Most of those dollars, around $30 million per year, currently go to CenturyLink.
In addition to financing broadband service to unserved or underserved areas, the bill also sets a floor for broadband speed of 10 download and one upload. That’s far below the recommended speeds set by the Federal Communications Commission of 25 up and 3 down. But the bill’s proponents, including Sen. Don Coram of Montrose and Senate President Pro tem Jerry Sonnenberg of Sterling, both Republicans, told a Senate committee last week that the priority for HCSM grants should be to get basic service to rural communities first and faster service second.
As introduced, the bill would transfer 20 percent of the dollars CenturyLink gets from the HCSM per year and into a broadband deployment fund. The bill’s sponsors tried to persuade the Senate Business, Labor and Technology to speed up the timeline last week, with 60 percent going to the broadband fund in the first year and 10 percent for the next four years. That failed, but the sponsors won the second round, when the Senate Wednesday approved that change.
The bill also resolves, although not to every provider’s satisfaction, the issue of what’s known as effective competition. For example, one telecom company might be providing service to one portion of a town and another carrier wants to come in and provide service where it doesn’t exist. That second carrier can provide service to the entire area, but won’t get funding to cover the portion that already has service from the original carrier.
Coram told Colorado Politics Thursday that southwestern Colorado has been largely ignored on almost every facet of state growth. The lack of broadband service is a “huge factor in places like LaPlata and Archuleta counties,” where the service is just horrendous, Coram explained. That has economic impact for towns like Pagosa Springs, where tourism is a big factor. Coram said someone might be looking for a place for a second home, and broadband service, or the lack thereof, may influence that decision.
Not everyone got what they wanted with SB2, Coram said, but “this is the best bill we can put forward for all of rural Colorado.”
The bill is a good start but won’t finance the complete build-out of broadband service, Coram said, which could cost upwards of $400 million to $500 million. The state may eventually have to devote general fund dollars to broadband expansion, but that’s a fight for another day, he indicated.
A second broadband bill, that would allow the state to apply for an FCC waiver to obtain federal Connect America funds, won preliminary approval from the Senate, also on Thursday.
Senate Bill 104 would allow the broadband deployment fund to apply for that federal waiver after the next Connect America grant cycle and for future opportunities, according to Sen. Kerry Donavan, a Vail Democrat. A date for the phase two Connect America auction, which provides grants to telecom providers, has not been set but is expected to take place sometime in the first quarter of 2018. A similar bill that would allow the broadband board to apply for the waiver before the phase two auction was signed into law last week by Gov. John Hickenlooper.