SENATE BILL REPORT

SB 5679

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Brief Summary of Bill

Authorizes rural port districts to acquire and operate telecommunications facilities for the use of other public bodies and wholesale telecommunications services outside of their district.
Authorizes certain port districts to acquire and operate telecommunications facilities for: (1) their own internal use and the use of other public bodies; and (2) wholesale telecommunications services outside of their district.
Authorizes rural and certain port districts to select a telecommunications company as their sole provider of telecommunications services to end users.

Background: A rural port district in existence on June 8, 2000, may acquire and operate telecommunications facilities for their own internal telecommunications needs within and outside of its district and to provide wholesale telecommunications services within its district limits.

Rural port districts providing wholesale services must:

ensure that their rates, terms, and conditions are not unduly or unreasonably discriminatory or preferential;
keep accountings of revenues and expenditures of their wholesale telecommunications activities separate from their internal telecommunications operations;
dedicate the revenues from the wholesale activities to paying off the costs incurred in building and maintaining the telecommunications facilities; and
charge themselves the true and full value of telecommunications services provided by their separate telecommunications functions to the district.

Rural port districts may not exercise powers of eminent domain to acquire telecommunications facilities or contractual rights to such facilities.

A rural port district is defined as one located in a county with an average population density of less than 100 persons per square mile.

Summary of Bill: Rural port districts in existence on June 8, 2000, may acquire and operate telecommunications facilities for other public bodies' telecommunications needs and to provide wholesale telecommunications services outside their district limits.

Port districts within a county with at least one border along the southern, eastern, or northern border of the state may acquire and operate telecommunications facilities for their own internal use and for other public bodies' telecommunications needs, and to provide wholesale telecommunications services within and outside their district limits.

Port districts authorized to provide wholesale telecommunications must follow the same requirements as rural ports.

A rural port or port district authorized to provide wholesale telecommunications may select a telecommunications company to operate its telecommunications facilities. Under contract terms specified with the port district, the telecommunications company may be the exclusive provider of services to end users.

A telecommunications company is defined as any for-profit entity owned by investors that sells telecommunications services to end users.

Staff Summary of Public Testimony: PRO: This bill would give rural port districts the opportunity to provide internet, it is a big step. This would give schools and residents and businesses the connection to the outside world. Lacking basic broadband services is an economic development problem especially in rural areas. If you can't get a connection, you can't get a job. With innovations, the digital divide is getting larger every day. Without broadband, smaller businesses can’t compete, people can’t work from home, this includes telecommuting, telemedicine, and distance learning. Carriers serve urban areas because they can recoup their costs in a few years. The solution for rural areas is public/private partnerships where costs can be recouped in 15 years. This would provide carrier grade services to rural areas. In Skagit County, not all schools are connected or adequately connected. Companies want to grow but they are limited by lack of carrier grade broadband companies. Industry expects broadband. Ports would plan to build out the dark fiber and lease it while the private carriers would bring all the equipment and light the fiber. They have the true expertise.

CON: We are concerned with the interlocal agreements and authorizing ports to expand outside of their districts. We don't want to see the continuing overbuilding in urban areas when rural and underserved areas have been promised service. The bill needs to include a requirement to direct investments to occur in underserved areas first. This can't happen without subsidizing the build out. Cable companies are not eligible for any subsidies, although they provide a lot of internet service.

OTHER: Supportive of efforts that lead to the expansion of broadband in rural areas of the state. However, we are concerned that this legislation may allow the ports to cherry pick some of the private entities from telecommunications service providers.