Rural broadband service aided by federal spending

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In 1999, Gov. Bill Owens signed House Bill 1102, the Beanpole Bill, legislation that designated about $4.8 million for the purchase of rural telecommunications systems.

In 2000, the state awarded U.S. West (now Qwest) a $37-million, 10-year contract to build a digital voice, video and data network, referred to as the multi-use network technology (MNT), to provide high-speed links to state offices and all 64 Colorado counties.

But after five years, with the original appropriation long since spent and future appropriations less than likely, the question remains as to whether government should have ever been involved in subsidizing a business venture that surely would have been addressed by the private sector given the laws of supply and demand? The answer of course depends on who you ask.

Gary Mellor, the deputy director of the division of information technologies, which is located within the Colorado Department of Personnel and Administration, said the Beanpole Bill and the MNT were hand to glove. The bill passed in 1999, and the state sealed the deal with Qwest in June 2000. “It took a bit longer because it was the same year that U.S. West merged with Qwest,” Mellor said.

The Beanpole legislation’s intent was to provide money to local governments to “get wired” to the MNT, said Charlie Unseld, the director of local government services, a division of the Department of Local Affairs. “The architecture of the legislation involved county and municipal governments, school districts and special districts,” Unseld said.

“Each county seat would have an access point and other local governments could hook up through that point. The Beanpole legislation was the government piece, and the MNT allowed private citizens or businesses to access the network as well.”

In May 2000, Owens allocated $161,440 in state money to the department of local affairs to distribute the grants to various counties, including San Miguel, Pitkin, Summit and Eagle.

In November 2000, counties including Fremont and Custer received $449,800 for fiber-optic connectivity.

Unseld said Qwest has a presence in every county, but getting wired to the access points has been difficult because of location and terrain for some counties, such as San Juan, Silverton and the San Luis Valley.

The state’s push for rural broadband services follows suit with President Bush’s federal broadband initiative, the Rural Broadband Access and Loan Guarantee Program, which provides government dollars for construction costs, facilities acquisition and improvement and equipment for rural broadband services. Bush’s Community OrientedConnectivity Broadband Grant Program directs government funding to rural areas where broadband service does not exist. The grants are awarded on a competitive basis to entities serving communities of up to 20,000 residents.

In July and August, the U.S. Department of Agriculture allocated more than $140 million to pay for broadband services to rural cities in Oklahoma, New Hampshire, Georgia, Iowa, Indiana and Oregon.

In remarks to the U.S. Department of Commerce in June, Bush said broadband is critical to the productivity of a high-speed economy. The president said that affording all Americans, no matter where they choose to live or work — urban or rural – access to broadband services is necessary to foster economic growth, provide quality education and health care opportunities and enhance public safety programs.

Mellor said the federal broadband initiative is a loan program, and he wonders how the already struggling rural cities are going to repay the government loans.

Under the Colorado MNT, everyone pays a monthly fee for the service, Mellor said. “Some have accused the state of being in the phone business, but we’re not — we contracted with the private sector,” he said. “All the state did was oversee the bid process.”

However, it’s not about being in the phone business to some. The question keeps coming back to, “should the state be spending tax dollars for providing broadband services to rural areas?”

Tom Larsen is a lawyer and the vice-president of law and public policy for Adelphia, a private company that offers high-speed Internet access and cable television. By year’s end, Adelphia will offer voice services including the conversion of telephone calls to e-mails. Larsen said broadband, in simple terms, allows multiple services through one line. And he said that private business, not government, should be extending those multiple services to rural communities.

“I believe in capitalism, and I don’t think the taxpayers should be footing the billfor rural broadband services,” Larsen said. “You don’t always need the government to pay for these services when there is a market for them. Private business will get out to the rural areas if it makes sense.”

Adelphia spent about $80 million during the last three years upgrading its facilities to provide broadband services to rural areas of El Paso County and the western slope towns of Mt. Crested Butte, Crested Butte, Gunnison and Telluride. Adelphia also provides broadband services to Trinidad.

“If there are enough people who want our product, then we are going to build it,” Larsen said. “If there is a company like Adelphia or Sunwest Communications willing to invest private money in a city or town, why would the government pump money into this? It doesn’t make sense for taxpayers to fund the project. It’s best if there is competition in the marketplace and that competition is private.”

But Mellor said everything looked different in 1998 and 1999. “No one was doing it (providing high-speed services), and those folks (broadband providers) needed to be stimulated. Dial-up is slower than molasses in January, and the MNT has been like the anchor tenant in a shopping center,” he said.

“My understanding is the Beanpole legislation and the MNT are economic development tools allowing access to high-speed broadband,” Unseld said. “If you can get the broadband to rural areas, businesses there would be able to grow and other businesses might locate to the area.”

The MNT benefits rural residents as well. An April 2000 news release from the governor’s office stated that Colorado residents will be able to use the network to access Internet applications that “allow residents to confer with their doctors online” or “allow parents to check their children’s homework online.”

Although Beanpole monies were granted so that state agencies and local governments could hook up to broadband services, Unseld said much of the MNT project was driven by private sector demand. However, what should the rural private sector be demanding from its government?

A few years ago, the El Paso County Board of Commissioners adopted the Code of the West, which spelled out standards-of-service expectations for rural dwellers. In Colorado, anything outside Denver is considered rural. The county’s Code of the West addresses issues such as road service, utilities and zoning and building codes. For example, county residents, who do not live in subdivisions or special districts, cannot expect their roads to be the first plowed in a snowstorm.

Rural taxes do not equal the services provided to rural residents, said Terry Harris, El Paso County administrator. He said urban areas subsidize rural areas. “That’s just the way it is across America, and the city dwellers are willing to do that because of the farm-to-market concept.” Are taxpayers willing to subsidize broadband services in rural areas for what government officials, including Owens and Bush, say is a catalyst for economic development? Are taxpayers willing to pay for a parent in rural Colorado to access hisor her child’s homework?

“If you’re counterpart in Springfield did not have access to broadband, it would make his job more difficult — he
or she should have the same choices,” Unseld said.

Larsen agrees with choices. “At the end of the day, it’s the customer’s choice, he said. “But it’s about supply and demand,” which Larsen said drives business, not government.