Tech Policy

Efficient expansion of broadband requires responsible, targeted investment

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This week, lawmakers on Maine’s Energy, Utilities and Technology Committee will hold a public hearing on LD 1742, a bill sponsored by Rep. Nathan Wadsworth that would change the rules under which the ConnectME Authority awards grants and remove a portion of law that requires communications service providers to contribute up to 0.25 percent of revenues to the ConnectME Fund.

LD 1742 prioritizes public investment in broadband expansion in unserved and underserved areas of Maine. The bill defines unserved areas as a census block (or group of census blocks) without access to minimum broadband speeds of 25 megabits per second from the service provider to the customer and at least three megabits per second from the customer to the service provider. Underserved area is defined as a census block where less than 10 percent of households have access to broadband speeds of at least 50 megabits per second from the service provider to customer and 5 megabits per second from the customer to the broadband provider.

The bill establishes the Broadband Infrastructure Grant Program, which would provide grants to applicants looking to extend broadband infrastructure to unserved and underserved areas of the state. While the ConnectME Authority can already provide similar grants, LD 1742 narrows the definitions of unserved and underserved areas to focus the Authority’s efforts on the geographic locations that need broadband infrastructure the most.

The ConnectME Authority can currently establish criteria to define unserved and underserved areas, allowing the entity to expand or contract the definition as it sees fit. Rep. Wadsworth’s bill simply codifies these specific definitions in state statute rather than allowing ConnectME to alter the scope of its work.

LD 1742 also repeals the Municipal Gigabit Broadband Network Access Fund, which was created in 2015 during the 127th Maine Legislature to provide grants to communities, regional partnerships and municipalities to support public-private partnerships for the purpose of expanding broadband connectivity in Maine. As of the publication of ConnectME’s most recent annual report in January 2019, the fund remains unfunded and fails to serve its intended purpose.

This particular fund also has less stringent rules about funding projects in underserved areas of Maine. Because it has not served its purpose and its use would likely bolster the creation of government-owned networks (GONs), the Municipal Gigabit Broadband Network Access Fund should be repealed.

In fact, LD 1742 favors non-governmental broadband service providers, alleviating concerns that are present with GONs. When GONs are established, they discourage private entities that offer communications services from entering an area. Private companies typically offer their services to make a profit, whereas GONs are subsidized by taxpayers or other government entities and are not always concerned about profits. This results in the government establishing and maintaining a monopoly over broadband networks in the municipalities that deploy them.

After municipalities tried to establish GONs in other states, taxpayers were often left to pick up the pieces. A study from the University of Pennsylvania Law School found that, out of 20 municipal fiber projects where the results of their broadband operations were reported, 11 had a negative cash flow. Only seven of those municipalities were projected to recover the cost within 60 years or more – potentially long after this technology becomes obsolete.

Lastly, LD 1742 nixes the 0.25 percent assessment on the revenue collected or received for all communications services in the state. This assessment generates approximately $1.1 million annually for the ConnectME Authority. In its place, the Authority would be able to issue bonds through resolutions for the construction of advanced communications technology infrastructure outlined in the Broadband Infrastructure Grant Program. This would be consumer friendly because the small assessment would not be paid by rate-payers as a pass-through charge, and public funds would be targeted to truly unserved and underserved areas.

To bring Maine up to speed on broadband connectivity, our state needs to adopt rules that promote private investment in our infrastructure without passing new costs on to consumers. LD 1742 would undo ineffective programs that already exist within ConnectME while targeting broadband investment to underserved areas of the state that are falling behind in the digital economy.

About Adam Crepeau

Adam Crepeau serves as a policy analyst at The Maine Heritage Policy Center. He can be reached at acrepeau@mainepolicy.org.

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