Pushing up costs

Mandates imposed by the state upon broadband internet providers are increasing costs for companies such as Slic Network Solutions. Watertown Daily Times

Rather than enhance broadband coverage, state mandates imposed upon internet providers will likely suppress efforts to ensure everyone has access.

As part of the 2021-22 state budget approved and signed into law last week, lawmakers included a provision that compels internet providers to offer services to eligible low-income families for $15 per month. This applies to companies with at least 20,000 subscribers.

“New York broadband providers are slow to react to the details of a new state program requiring mid-sized and large companies to provide internet service for low-income families for $15 per month,” according to a story published Saturday by the Watertown Daily Times. “The state’s historic $212 billion budget, which the Legislature adopted nearly a week late Wednesday night, mandated a new program requiring companies that provide internet connection to 20,000 households or more to offer broadband service of at least 25 Mbps at the discounted rate of $15 per month to state households in need.”

This directive is shortsighted.

Larger internet firms are less likely to take on projects to expand broadband access in more sparsely populated areas like Northern New York. This opens markets to smaller companies, which is good for them.

But in taking on this work, will they increase their subscriber base to the point where they’re forced to comply with this new program? Or will they need to limit expansion efforts to avoid subsidizing service they can’t afford? This would defeat the state’s goal of expanding access to as many new households as possible.

One north country legislator articulated the problem with this state mandate.

“The state budget included funding for an updated map that will show gaps in broadband coverage, but local lawmakers are concerned a requirement for subsidizing the rates of low-income residents will drive up the cost of expanding access,” according to a story published Thursday in the Post-Star in Glens Falls. “The budget includes $1 million for the Public Service Commission to create a map of areas that lack reliable broadband coverage. The map must be completed within one year. Also included was a provision that would allow low-income residents to receive broadband at a subsidized rate of $15 per month.

“Assemblyman Matt Simpson, R-Horicon, said he is concerned the provision duplicates a federal program that provides discounted rates — up to $50 a month — for low-income residents. He worried about the impact on smaller internet service providers in the north country, such as Slic Network Solutions,” the article reported. “One of the key issues, according to Simpson, is that about 25% of the monthly cost for these broadband providers goes toward taxes. The state assesses taxes on the infrastructure and for laying lines in the right of way. An effort to repeal that did not move forward in the Legislature. … The bill contained a provision to limit the effects on smaller providers by exempting companies with fewer than 20,000 subscribers. But that puts a cap on how many people can be served, Simpson said.”

Last year, the state Department of Transportation “started charging fees to fiber optic line installers who build lines in a state-controlled highway right of way after the 2019-2020 state budget contained language that enacted a right of way tax or use and occupancy fee. The DOT requires installers enter annual fee-bearing permits to charge corporations per foot, per cable, for fiber optic lines they own. It does not apply to phone, water or sewer lines,” according to a story published July 4 by the Watertown Daily Times.

This fee disproportionately affects rural areas such as Northern New York because it is assessed per foot. For geographically dense areas, the overall cost is lower and the expense per user is far less, meaning providers can attempt to pass along the tax in terms of higher fees. But in rural areas where there are fewer users who are much farther apart, the fees are excessive.

Combined, these two mandates will thwart broadband expansion in regions with fewer residents. Democratic lawmakers who dominate the state Legislature said they consulted with large internet providers when drafting the requirement to offer service to low-income families for $15 per month.

But smaller companies were excluded from these conversations, and the details of the program reflect this lack of input. It doesn’t adequately take the needs of more sparsely populated areas into account.

This is a glaring example of downstate legislators failing to understand how rural communities are structured. James Wright, former executive director of the Development Authority of the North Country, wrote a letter dated Jan. 27, 2020, to the state DOT expressing concern over the fiber optic fee. DANC has been involved in work to expand high-speed internet here and understands the problems within rural regions very well.

Legislators need to re-examine these two mandates with a particular emphasis on how they affect rural areas. Simpson said that a “one size fits all” approach to expanding broadband service throughout the state does not work, and he’s right.

The challenges faced by smaller communities must be studied to make this effort succeed, but so far the Legislature has not done this. Such an oversight will deflate any effort to extend service to all households.

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Johnson Newspapers 7.1

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