Broadband Bumped To 2002 Session

May 20, 2002
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LANSING — Gov. Engler’s plan to speed broadband deployment in Michigan, as outlined in Senate Bills 880 and 881, is undergoing some revision and won’t get a hearing until next year, though he had hoped to see the bills pass the Legislature this year.

On Dec. 6 there was an extensive, all-day negotiating session among a number of parties that have been involved in the issue, such as the Michigan Municipal League, AT&T and MCI, who came together to shape a revised package that clarifies some issues and calls for a lower rate, said Dave Waymire, spokesperson for the Michigan Competitive Telecommunications Providers Association (MCTPA).

The MCTPA, a coalition of long-distance telecom providers that includes AT&T, Cellnet Communications, LCI International, MCI and Sprint, among others, was concerned with some of the language as well as the right-of-way permitting fee in the original bill.

“People walked away from that negotiating session making a commitment to examine this package carefully and come back with it early next year. Before the negotiating session there weren’t very many clear ‘yeses,’ there were several clear ‘no’s and a lot of people were in the middle, which would have made it very difficult to pass the legislation at this late date,” Waymire said.

Different drafts are now being circulated in Lansing, said Richard Studley, senior vice president of government relations for the Michigan Chamber of Commerce. The Committee on Technology and Energy hasn’t taken any action on the bills, so technically what is still before the Senate are the bills as introduced.

“At this stage of the legislative process there are probably several different versions of the legislation floating around,” he said.

Doug Rothwell, CEO of the Michigan Economic Development Corp., said Engler was hoping the bills could be fast tracked because he only has a year left as governor, and if the issue isn’t resolved by next spring, chances are it won’t be for several more years because no one is going to want to deal with it coming out of the gate as the new governor.

The MEDC raised the issue of making high-speed Internet access more broadly available and advocated a plan in May, called LinkMichigan, that Engler didn’t think went far enough fast enough, particularly in light of what has happened in the last six months in the telecom market, Rothwell said.

The governor’s idea was that the state endorse common right-of-way permitting, then put 50 percent of the money collected into a financing authority that would have exclusive power to assess fees for access to and use of public rights-of-way for the purpose of installing or using lines, conduits or other facilities to provide telecom services.

Under his plan, each telecom provider would pay the authority an annual maintenance fee of 7 cents per linear foot of rights-of-way occupied by the provider’s lines and facilities. The state financing authority, in turn, would provide the capital via grants and loans to assist private telecom companies in investing in underserved areas of Michigan where the return on investment isn’t going to materialize as fast.

The financing would be available to service any technology — cable, wireless, DSL or anything, Rothwell said.

Studley said the state chamber agrees with the MEDC that broadband deployment is an important issue and agrees with the Engler administration that state government should play a more active role in facilitating the development of Michigan’s telecommunications infrastructure.

But Senate bills 880 and 881 that were introduced at the request of the administration are dramatically different from the recommendations contained in the original LinkMichigan report, he said, and a lot of people still have more questions than answers about the legislation.

Unlike the bills, the LinkMichigan report did not recommend the creation of two new state agencies to deal with the issue, nor did it recommend a new fee or tax on telecom providers, or a multi-billion dollar bond issue for telecommunications, Studley pointed out.

It’s more important to do it right than do it fast, he said, adding that the first step should be removing the existing barriers to broadband deployment.

“Our members in the telecom industry tell us the two greatest barriers are, first, over-regulation and over-taxation by local government, and, second, disincentives in the current tax law at the state level that actually discourage telephone companies and others in investing in equipment and machinery.”

Under the governor’s plan, there would be a common application form statewide, the fee would be the same and the split between the state and local municipality would be the same. Therefore, a company that wanted to develop broadband infrastructure across a number of jurisdictions could avoid the patchwork of local regulations and fees now in place, Rothwell said.

Those opposed to the plan argue it’s a new statewide tax that isn’t assessed today.

Countering that argument, Rothwell said most local governments that do charge currently charge more than 7 cents per foot. And most local governments are probably going to end up charging something if they aren’t today because they look at it as a moneymaker, he added.

He refers to the 7-cent-per-mile fee as “rent.”

“These companies are using public right of ways to make private profit every month that wire is in the ground,” he said.

“It’s a rent payment not a tax; a tax is an assessment on an individual or corporation for general government services provided. This is not general government service; this is a specific profit they’re making off of a specific piece of public land that they want to use. Everyone pays the rent.”

Rothwell thinks the opposition isn’t about the fee. Rather, it’s about the threat of loss of incumbency to the dominant players in the market — the Ameritechs and Verizons — because the plan provides capital for other entrants to come into the market.

“That’s what this is all about,” he said. “This is really a defining issue for our state to give every community the chance to have an equal chance at economic growth and there’s probably no greater economic development strategy for poor areas in the state than high-speed telecommunications.”

Compared to other states, Michigan has come in dead last in investment per mile for the last two years, according to the MEDC, and some 37 percent of businesses aren’t conducting online business due to lack of high-speed accessibility.

The governor’s plan is a solution, but not the solution to the problem, Waymire said. More important would be for the governor’s office to state its opposition to the Tauzin-Dingell bill now before Congress, as the Public Service Commission has done, and for SBC Ameritech to get out of the way and let competitors do the job, he said.

“The reason we don’t have broadband right now is that SBC won’t do it because they’re waiting for Tauzin-Dingell to pass. If it passes, then they’ll be able to monopolize the DSL system in our state.,” Waymire said. “Right now they’re stiff-arming competition, refusing to do it themselves just to put more pressure on Congress to pass Tauzin-Dingell. If that bill is killed, they will start doing more rollout of availability.”

In addition, SBC takes step after step to block potential competitors, he said. Small competitors have arrangements and contracts with SBC to clear lines and make them ready for DSL use, but SBC doesn’t always show up to do the work, he said.

“When they do the work they do it poorly and they’re misbilling,” Waymire continued. “They are constantly in the way of small competitors that need to have access to the last mile of copper to provide DSL service to small businesses or even homes. SBC has to play a role in that because they’ve technically owned that last piece of wire since it was built.

“I would argue that the customer actually should be the one considered the owner because he has paid for it time after time in his phone bill. Until they get out of the way, it won’t matter what our right-of-way process is.”

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