In response to the increased reliance on connectivity precipitated by the Covid-19 pandemic, the Minnesota Legislature is working on legislation to improve access to broadband, online education, and telehealth services throughout the state.

The Senate passed their version of the bipartisan funding bill, SF 4494, earlier this week, and the House has two similar pieces of legislation, HF 1507 and HF 3029, currently under consideration. If the bills are passed and signed into law, there would be a total of $20 million to $27 million (depending on how the different versions are reconciled) available in grants to support distance learning, telemedicine programs, and broadband deployment. Bill authors designed the legislation to prioritize the use of federal money for the grant programs before pulling from the state’s general fund.

Broadband Bills in House and Senate

The Minnesota Senate passed its version of the legislation, SF 4494, on May 4 in a unanimous vote. Representatives in the House have rolled the grant programs into a larger coronavirus relief package that is under consideration, HF 1507. This is in addition to keeping a separate House bill with the broadband funding provisions, HF 3029, alive in case HF 1507 fails to pass.

As state lawmakers debate in committee rooms and Capitol chambers around the country, various broadband and Internet network infrastructure bills are appearing on agendas. Some are good news for local communities interested in developing publicly owned networks while other preemption bills make projects more difficult to plan, fund, and execute. We've gathered together some notable bills from several states that merit watching - good, bad, and possibly both.

New Hampshire

For years, local communities were not allowed to bond to develop publicly owned broadband infrastructure in New Hampshire. Last year, the state adopted SB 170, which opened the door a crack so that municipalities can bond to develop infrastructure for public-private partnerships (PPPs) in "unserved" areas. This year, the New Hampshire General Court has the opportunity to push open the door a bit wider with SB 459.

SB 459 allows local communities to potentially define "unserved" areas themselves by putting more responsibility on Internet access providers. Municipalities must currently engage in a request for information process in which they must reach out to all Internet service providers operating in the community. SB 459, if adopted, would allow a community to consider areas "unserved" if a provider does not respond to such a request to clarify which premises are unserved. With the "unserved" designation, municipalities can bond to develop infrastructure to serve those premises.

The bill has bipartisan support and is scheduled for a March 11th hearing in the Senate Election Law and Municipal Affairs Committee. Read the text of SB 459 here [PDF] and follow its progress here.

Pennsylvania

The open access network in Ammon, Idaho, has been celebrated as visionary and viewed as a potential model for other communities seeking competitive local Internet access markets. A bill in the state legislature, however, aims to restrict local communities' ability to reproduce the Ammon Model, or any other publicly owned network, by imposing new restrictions on local efforts.

Read the text of the bill here.

Removing a Local Funding Option

H 490, introduced by Rep. Ron Mendive from Coeur d'Alene, states specifically that local governments have the authority to take the necessary steps to develop Internet networks and to offer services to the general public. Provisions in the bill that dictate how projects are financed, operated, and managed, however, transform the bill into a "muni killer" says Bruce Patterson, Ammon's technology director.

In a recent Idaho Business Review article (subscription required), Patterson described the language of H 490:

“On its face, it claims to authorize cities to have the authority to finance, build, and operate a communications network and offer a communications service, but each of the restrictions that follow make it impossible for a city to actually do those things. It is like telling your child: ‘Sure, you can play outside, just don’t leave the house.'”

At the end of 2019, Congress passed the Revitalizing Underdeveloped Rural Areas and Lands (RURAL) Act, fixing a tax law change that threatened to raise rates and delay the expansion of broadband for rural cooperative members across the country.

Passage of the RURAL Act ensures that cooperatives can accept federal funds for broadband deployment, disaster relief, and other efforts without risking their nonprofit tax exempt status. A change in the 2017 tax law would have labeled these funds as revenue for the first time, potentially causing co-ops to exceed the allowable percentage of non-member income they must maintain to remain tax exempt.

After Senators Tina Smith (D-Minn.) and Rob Portman(R-Ohio) and Representatives Adrian Smith (R-) and Terri Sewell (D-Ala.) introduced the bipartisan bill in April, it attracted 55 additional cosponsors in the Senate and more than 300 in the House. It was eventually incorporated into the consolidated appropriations act and signed into law in December.

“Obstacles From the Federal Government”

We described the possible impact of the 2017 tax law change on rural cooperatives over a year ago, when Senator Smith first brought the issue to our attention.

Failure to remedy it would have forced some co-ops to choose between continuing with desperately needed broadband and disaster recovery projects and increasing their members’ rates. Northwestern Electric Cooperative CEO Tyson Littau described the difficulty of that decision to the National Rural Electric Cooperative Association (NRECA):

Do we rebuild and try to strengthen our distribution system and pay the taxes, or do we delay the mitigation project that would improve 1,200 miles of line throughout our territory? I think we have a responsibility to the membership to improve the system for the future.

Despite state laws requiring referenda and public reporting, Iowa is home to successful municipal networks, which have been undeterred by these potential stumbling blocks. A bill in the Iowa Senate, however, may present a new barrier discouraging new networks in places where Iowans need it the most. In communities where Internet access companies aren't offering the caliber of services residents and businesses need, the proposal would restrict the possibility of competition.

Sweeping Impact

Earlier this month, State Senator Dan Dawson, R-Council Bluffs, introduced Senate Study Bill 3009, which is supported by Mediacom, a national cable company that offers connectivity to nearly two-thirds of Iowans. The bill threatens cities’ access to financing for municipal broadband networks and challenges their ability to set competitive prices. This would impact cities with long established networks, like Cedar Falls and Coon Rapids, as well as communities that have recently decided to move forward with broadband plans, like Fort Dodge, Vinton, and Waterloo.

Tim Whipple, General Counsel for the Iowa Association of Municipal Utilities, which opposes SSB 3009, wrote in an email:

While community-owned broadband may not work for all communities, cities should have the opportunity to begin providing these services without having undue restrictions placed on them . . . especially in areas where incumbent providers aren’t properly investing.

Bill Brings New Barriers

Senator Dawson chairs the state Commerce Committee and introduced SSB 3009 as a proposed committee bill.

When Vermont passed legislation to establish "communications union districts" in 2015, funding options expanded for regional community network ECFiber. Since then, other states trying to expand access to broadband in rural areas have looked at the success of ECFiber as a possible model. Now, New Hampshire is considering establishing a similar option as a way for local communities to improve local connectivity.

Waiting for Session

Democratic State Senator Jeanne Dietsch from Peterborough has drafted legislation she intends to introduce in the 2020 session. The bill will allow communities to establish "communications districts" to develop broadband infrastructure, similar to the way they band together in order to create sewer districts for necessary infrastructure. The entities are able to finance projects by applying for grants, loans, issuing bonds, and charging user fees, but are not able to tax.

In a recent GovTech article, Dietsch said:

“We modeled it on New Hampshire sewer districts just because that is language that’s already familiar to our legislators, and it’ll be much easier for them to pass it that way than to try to make it look like Vermont.”

The lawmaker was reflecting on difficulties the legislature had passing Senate Bill 103, which allows municipalities to work together for "multi-town bonding projects." Special interest lobbyists, whose job it is to maintain ISP monopolies, leveled their efforts at the bill when it appeared fearing the competition it might bring. Dietsch wants to avoid a similar fight with the communications district proposal, so has carefully crafted the language of the bill.

If passed, the new authority will allow cities to develop the infrastructure in order to work with private sector partners. ECFiber offers fast, affordable, reliable Internet access directly to the public, rather than providing fiber optic infrastructure for Internet access companies to use.

ECFiber