On February 14, 2012, the House Energy and Technology Committee heard testimony on SB 499, a bill that would make it easier for data infrastructure providers to install facilities on state-controlled land now being used for rail trails. The bill, which was introduced by Senator Tom Casperson and approved by the Senate, could help companies bring broadband services to rural areas in both the Upper and Lower Peninsulas of Michigan.
Michigan Internet & Telecommunications Alliance’s Executive Director, John Liskey, submitted testimony supporting the bill. “SB 499 appears to strike a fair balance between telecommunications provider access and protecting the public’s enjoyment of these trail resources,” Mr. Liskey said.
Kendra Everett, Legislative Director for Senator Casperson, testified that telecom providers oftentimes face an extended application process at the Michigan Department of Natural Resources (DNR) to gain access to trails. Ms. Everett also said providers experienced unnecessarily high costs due in part to the variable fee structure imposed by the DNR. Under SB 499, the DNR would have 45 days to review an application and approve it. The application fee would be a one-time fee of $350, plus a one-time fee of five cents per linear foot of space to be occupied by the facilities. These fees would be deposited into a new Trailway Development Fund and used for maintenance of the rail trails. All facilities would be installed underground or attached to existing aboveground structures.
Ms. Everett testified that SB 499′s fee structure was generally patterned on the 2002 “METRO Act” (which created the Metropolitan Extension Telecommunication Rights-of-Way Oversight (METRO) Authority). However, while the METRO Act imposes the five cent fee on an annual basis, SB 499 provides for only a one-time fee. Ms. Everett said that the METRO Act contains a complicated offset arrangement applicable after the first year, but SB 499 simplifies this with a one-time fee, not an annual fee.
Also offering testimony at the meeting was Scott Stevenson of the Telecommunications Association of Michigan (TAM), testifying in support of the bill along with Jay Brogan, CEO of Hiawatha Communications. Mr. Stevenson said the bill, like the METRO Act before it, would bring “standards and certainty” and would create new opportunity for investment, consistent with Governor Snyder’s program to promote the availability of broadband services in remote areas. “Right now you don’t know what you’re going to have to pay,” Mr. Stevenson said.
Mr. Brogan added that using rail trails is potentially much more efficient than using routes along highways, where frequent maintenance gives rise to higher costs. Service providers would be able to expand their networks to unserved areas if this bill were passed. Use of the rail trails would be “another tool in our investment tool box,” Mr. Brogan said.
Also testifying in support of the bill was Bob Stewart of Frontier Communications. Mr. Stewart recommended three amendments: to insure that providers will have “on ramps and off ramps” from the trails; a mechanism for providers to gain around-the-clock access to the trails for repair; and to insure that the five cent fee would apply only to the initial installation, not to the installation of a second cable along the same route.
Several witnesses opposed the bill. Testifying on behalf of the Michigan DNR, Harold Herta and Dennis Knapp indicated that while the DNR supports the goal of making broadband available in rural areas, this bill takes a “broad brush approach” where a narrower measure would be more appropriate. DNR fears, in particular, that because the state does not own all of the land where trails exist, the bill would require DNR to authorize installations on land it does not actually own. The DNR also considers the five cent fee to be too low vis-à-vis actual market value, and voiced concern that the Trailway Development Fund will not function as intended.
Nancy Krupiarz, testifying on behalf of the Michigan Trails and Greenways Alliance, also voiced opposition to the bill. She advocated an annual fee, like the METRO Act, with an adjustment so that companies could take advantage of an offset after the first year. Under that method, the Trailway Development Fund would receive annual fees while the offset would come from a separate source, so more money could be devoted to the maintenance of the trails.
Also opposed to the bill is the Michigan Environmental Council (MEC), which advocates a market value based fee structure for access to the trails. James Clift, testifying on behalf of MEC, suggested that the bill simply “gives away state assets.” Mr. Clift also testified that the bill should authorize the DNR to renegotiate easements when current arrangements do not allow for access by telecommunications providers. He also raised the possibility that some trails could, theoretically, someday be returned to railroad use.
Committee members addressed numerous questions to each of the witnesses. Rep. Jeff Irwin, in a question to Mr. Clift of MEC, expressed concern that any fixed fee will one day become “stale,” and suggested that some mechanism requiring the Legislature to revisit the fee structure might be needed. Rep. Ed McBroom, whose district is located in the Upper Peninsula and who has not been able to secure broadband service at his home and farm, expressed particular concern that the five cent fee is excessive. Rep. McBroom stated that the trails should be made available at no cost. Rep. Paul Opsammer voiced concern about a “timber fee” that could potentially be assessed under existing legislation. Mr. Brogan of Hiawatha, addressing that concern, indicated that as a practical matter, there would be no timber to clear and, in fact, the use of trails would allow companies to avoid such costly operations as rock trenching.
Committee Chair Kenneth Horn made the point that underground installation of the cable takes relatively little time. “Once installed, you hardly know it’s there,” he said.
Although at the beginning of the meeting the Committee adopted a substitute bill for discussion purposes (with a minor variation from the Senate-passed version), no further vote has yet been scheduled.
