Kansas companies worked to pull the plug Monday on legislation mandating internet service providers as well as internet content providers such as Netflix, pornography websites or online newspapers pay into a state fund to subsidize expansion of broadband in rural areas of the state.
The initiative sponsored by Rep. Tom Sloan, a Lawrence Republican, was designed to improve access to reliable, speedy internet service in all but the most densely populated counties in Kansas. Poor connectivity to the internet undermines operation of businesses, filing of government documents, school research projects, viewing of entertainment and other day-to-day activities, he said.
“Rural residents lack the same broadband opportunities as urban residents because of the high cost to serve low-population density areas,” Sloan said. “We have a classic case of rising customer expectations for capabilities delivered through a broadband communications system and a fiscally stressed telecommunications provider network’s ability to serve high-cost rural customers.”
Under House Bill 2563 under review by the House Energy, Utilities and Telecommunications Committee, broadband internet service and content companies would contribute to the Kansas Universal Service Fund. Currently, the KUSF is supported by telecommunications companies. About $40 million annually is allocated from the fund to improve communications in hard-to-serve parts of the state.
If adopted by lawmakers, more than 90 counties with population density of less than 100 people per square mile, excluding the county seat, would be eligible for broadband subsidies. Companies applying for the subsidy would pay 40 percent of project costs.
The fee charged new KUSF contributors would be tied to a company's in-state revenues. It's unclear what that would mean to a typical consumer.
Catherine Moyer, chief executive officer of Pioneer Communications in Ulysses, opposed the bill on behalf of the State Independent Telephone Association fo Kansas and the Kansas Rural Independent Telecommunications Coalition.
“Lots of people have lots of ideas about how to expand broadband deployment. We have actually done it,” Moyer said.
She said rural independent companies plunged into markets other providers passed over because the population was too sparse, topography too challenging or towns too far from urban centers. These community-based firms did so with assurances from the federal and state governments there would be adequate resources for cost recovery of private investments, she said.
The bill proposed by Sloan would weaken the KUSF model that improved -- not resolved -- broadband service issues in rural Kansas, Moyer said.
Patrick Fucik, national director of legislative affairs for Sprint Corp. in Overland Park, said legislation imposing a KUSF assessment on content providers would violate federal law. The state of Kansas doesn’t, he said, have authority to charge providers such as Netflix, Hulu and others.
John Idoux, lobbyist with CenturyLink, which serves more than 100 communities with fewer than 1,000 residents, said adoption of the bill “will certainly result in prolonged legal challenges all while creating false hope of rural broadband availability.”
He said reform to the KUSF shouldn't direct public funding to areas already served by a fixed broadband provider.
“It makes no sense to use public money to compete with private investment,” Idoux said.
Rep. Joe Seiwert, a Pretty Prairie Republican and chairman of the House committee, introduced a bill that would create a broadband expansion task force. The committee took no action on House Bill 2563.