Determining whether municipal broadband is feasible in Rochester will require another $47,000 in study. Peter Hogan, Rochester Public Utilities director of corporate services, said that was the finding of Kansas City, Mo.-based consulting firm Burns and McDonnell. The further study would investigate whether a city-owned internet service could be sustained in the current market and what options exist for operating the service, which could include adding it to RPU’s lineup, creating a new department or seeking a private entity to provide oversight.
City began tentatively looking at municipal broadband in August 20151. At the time, it came with a $42 million estimate. In July 20162, research from Alcatel-Lucent was reviewed and the expected capital investment was determined to be about $53 million. Since the funds would need to be borrowed with bonds being issued, the city’s total investment over time would be nearly $67 million. Alcatel-Lucent’s estimates were based on the new public utility securing 30 percent of Rochester’s internet customers.
Id that happens, the company projected a city-owned utility would see positive cashflow within about four years, depending on whether phone and cable services were included. The additional study discussed Monday would seek to determine whether the local market makes the effort feasible. Council Member Ed Hruska said he was hoping to have more answers before spending additional city funds on the prospect of municipal broadband.
“I guess I was expecting a little bit more detail,” he said.
The council is expected to consider the funding request during its April 17 meeting.
Discussion of creating a municipal broadband service in Rochester will continue Monday afternoon. The council is slated to discuss a potential next step during its weekly committee of the whole meeting at 3:30 p.m. in room 104 of City Hall, 201 Fourth St. SE. In July, the council received a report1 estimating a cost of $53 million to install the needed infrastructure, including fiber optic cables.
It’s a price that would require issuing bonds to pay the expense over time, raising the total investment to nearly $67 million. Alcatel-Lucent, the private company that prepared the estimate, reported assumptions were based on the new public utility securing a 30 percent market share of internet customers. While a low-cost and lower service option would see some customers pay about $10 per month for broadband service, the study indicated about 58 percent would pay $50 or more per month for service. Council members indicated they wanted more information before going forward. A market study would provide more accurate information on how many customers the city could capture.
Unlike the Alcatel-Lucent study, the more-detailed effort would be paid for by the city and conducted by a third party. Monday’s presentation is slated to present details on what the market research would cost, according to Tony Benson, communications coordinator for RPU. The council meeting also will include the continuation of the April 3 regular council meeting, a discussion of the city’s herbicide use policy and the police department’s annual review.
Rural Republican lawmakers are proposing millions more in funding to improve internet access statewide.
State Rep. Romaine Quinn, R-Rice Lake, and state Sen. Howard Marklein, R-Spring Green, are circulating a bill in the Legislature that would add $15.5 million to the Rural Broadband Expansion Grant program, a fund administered by the Public Service Commission to reimburse companies for expenses of extending internet service in rural areas.
Money for the grants would come from transferring $6 million from the Universal Service Fund1, which offers help to low-income residents who live in parts of the state where phone and internet service rates are high. Another $5 million would come from federal money the state receives to fund technology at schools and libraries. The rest would come from other USF program surpluses, according to the bill draft. Katy Prange, a spokeswoman for Marklein’s office, said in an email Wednesday that the funding from USF will not result in any cuts to its other programs. All USF programs are fully funded, she said.
“(This) bill goes a step further to make sure our money is spent wisely, sets clear priorities that mark out the areas of real need and directs projects specifically to those areas,” Quinn said. Quinn joined other lawmakers from rural districts Tuesday at the Capitol to outline the legislative priorities of the Rural Wisconsin Initiative, a group of Republican assemblymen who aim to advance bills that address health care, education, workforce development and broadband challenges affecting rural residents. The broadband bill would also add $7.5 million to the Technology for Education Achievement (TEACH) program, a statewide initiative run by the Department of Administration that subsidizes technology improvements at schools and libraries.
“This bill is the product of hundreds of hours of hard work and study by many dedicated people in Wisconsin,” Marklein said in a statement. “We took the funding ideas from the governor and combined them with the Rural Broadband Study Committee’s recommendations to produce legislation that will make an immediate, significant impact on rural broadband in Wisconsin.”
But accountability for the grant money and how it is reallocated is a concern for some. One critic said the funds ultimately boost the bottom line of large telecommunications companies that decide which projects to fund.
“The problem I have with it is … that it goes primarily to existing carriers who use it for their existing capital expense budget. There’s no hard oversight,” said Barry Orton3, a professor emeritus at the University of Wisconsin-Madison, who has tracked the telecommunications industry in Wisconsin for more than 25 years. The broadband bill would also require the Public Service Commission, an independent agency that regulates the telecommunications industry statewide, to prioritize underserved regions when awarding grants.
The commission would determine what constitutes an underserved area, but would be required to consider additional factors when awarding grants. Those factors include whether the proposed project affects the ability of people to access health care services, and students to do homework or research for school, in their homes. Though companies would have to adhere to requirements laid out by the PSC, the requirements are not specific enough, Orton said.
“I don’t see the PSC having any experience in measuring that or getting that down to more details,” he said. “It’s feel-good generalities.”
Improving internet access is one piece of a broader, ongoing campaign by rural Republicans to advance legislation that focus on issues that disproportionately affect rural residents. Several lawmakers from the group, now in its second Legislative session, emphasized their commitment to rural issues Tuesday.
“We must prioritize investment in our rural communities to keep them strong and to keep our state strong,” said state Sen. Pat Testin, R-Stevens Point.
The group said it also aims to create a grant program to support clinical training for nurses and physician assistants in rural communities and increase funding for the state’s Rural Residency Assistance Program. The residency program offers loan forgiveness for medical students who opt to do their residency in a rural community with the hope they will stay and practice there long term. It would prohibit the state Department of Natural Resources or the Department of Transportation from charging fees before granting an easement or a permit for companies to build broadband infrastructure in designated underserved areas.
How to fund rural roads remains a sticking point among Republicans4 and Gov. Scott Walker. In Walker’s budget last week, he proposed more borrowing5 to fund road improvements. Quinn, for one, said he does not support that plan. Neither Quinn nor other lawmakers at the press conference Tuesday would explicitly say whether they support a tax on gasoline to fund road improvements.
A gas tax is an option that Assembly Speaker Robin Vos, R-Rochester, has left on the table, along with fee increases or tolls, to fund road projects. In 2015, a group of Republican lawmakers wrote a letter to Walker opposing any cuts to funding for rural roads. The governor has repeatedly pledged to veto any budget that include a gas tax or vehicle registration fee increase without a corresponding decrease elsewhere.
Vos said it is not responsible to “continue to kick the can down the road and put more and more spending on the state credit card.”
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