Financing Rural Broadband Deployment

Telecommunications - broadband deployment grants - use of high cost support mechanism money for project grants. Section 1 of the act amends the definition of "broadband network" to increase the speed of downstream broadband internet service from at least 4 megabits per second to at least 10 megabits per second and the definition of "unserved area" to refer to an area that is unincorporated, or is a city with a population of fewer than 7,500 inhabitants, and that consists of households that lack access to at least one broadband network provider using satellite technology and at least one provider using nonsatellite technology.

Sections 2 and 5 repeal the public utilities commission's (commission) functions of administering the high cost support mechanism (HCSM) on September 1, 2024, subject to the department of regulatory agencies' review of the functions through its sunset review process.

Section 2 also requires the commission, for each quarter in 2019, to allocate 60% of the total amount of HCSM money that the nonrural incumbent local exchange carrier would receive to the HCSM account dedicated to broadband deployment, and to allocate an additional 10% of the total money that the nonrural incumbent local exchange carrier would receive in each quarter of each subsequent year until, in 2023, all of the money that the nonrural incumbent local exchange carrier would receive is allocated to the HCSM account dedicated to broadband deployment. Section 2 also removes a requirement that the commission reduce the rate of the HCSM surcharge by a certain percentage of the money transferred from the HCSM to the broadband fund for the deployment of broadband into rural areas. Section 2 requires that the HCSM surcharge rate that existed on January 1, 2018, be maintained; except that, on and after July 1, 2023, the commission may reduce the rate to ensure that the amount of money collected does not exceed $25 million in 2024. For the period of January 1, 2019, through December 1, 2023, section 2 maintains the amount of support received by rural telecommunications providers for basic service at the level of support they received on January 1, 2017. Section 2 also prohibits the commission from making effective competition determinations in 2019 through 2023 with respect to making distributions of high cost support mechanism money. Finally, section 2 requires the commission, on or before December 31, 2018, to establish a plan to eliminate, on an exchange-area-by-exchange-area basis, provider-of-last-resort obligations consistent with the reductions in the HCSM distributions for basic service.

Section 4 updates language regarding the use of money from the HCSM for broadband deployment grant applications approved by the broadband deployment board (board) to have money transferred directly from the HCSM to approved broadband deployment grant applicants. Section 4 changes the membership of the board, adding one member representing the broadband industry and removing one member representing the public and requiring one of the members who represents a local entity to have a background in broadband and expertise in rural economic development, education, or telemedicine. Section 4 clarifies conflict-of-interest procedures that a board member must follow . Section 4 also defines the terms "incumbent broadband provider" and "overbuild". Section 4, with regard to the board's grant application process, also:

• Allows a grant applicant to apply for grants for multiple projects in a single year;
• Prohibits the board from funding a proposed project that overbuilds an existing broadband project;
• Prioritizes proposed projects that will serve areas that lack high-speed internet access at measurable speeds of at least 10 megabits per second downstream and one megabit per second upstream;
• Requires the board to grant an incumbent broadband provider's appeal if the incumbent broadband provider demonstrates, by a preponderance of the evidence, that an area covered by an application does not qualify as an unserved area; and
• Allows an applicant to amend the applicant's application at any time to remove coverage of an area that does not qualify as an unserved area.
  (Note: This summary applies to this bill as enacted.)