The governor’s new Connect ME Authority is looking for public feedback on its proposed rules to spend a quarter of a percentage point tax on cable TV, Internet, satellite and land-line phone service to help fund broadband projects to deliver high-speed Internet to rural Maine.
The proposed tax, which would be 12.5 cents on an average $50 bill, is expected to raise $1.5 to $2.2 million annually. It was approved by the Legislature this past session, but won’t be imposed until rules on the best way to spend it are adopted.
The Connect ME Authority is proposing the money be used to fund competitive grants to companies with plans to extend broadband or Internet access to un-served and under-served parts of the state. One of the goals is to give businesses access to a high-speed network.
According to a survey done a year ago, 14 percent of the state still doesn’t have broadband service fast enough for most business uses.
A public hearing on the plan will be held Oct. 18 at the Statehouse, starting at 9 a.m., before the newly formed Connect ME Authority.
At least one of those authority members, Mitch Davis, the chief information officer at Bowdoin College, hopes another way besides taxes can be found to encourage broadband access.
“I can’t accept an additional tax as the only way to fund this, and a business alliance may actually be more constructive for the long term,” Davis said.
While Connect ME became known as the “Can you hear me now?” initiative after Gov. John Baldacci introduced it in his state of the state address in 2005, the focus has shifted from cell phones to broadband.
Cell phone companies successfully lobbied the Legislature’s Utilities and Energy Committee this past session to get out of the proposed tax. They said their bills already are overloaded with surcharges from both the state and federal government, and competition is a better driver than state grants to expand coverage.
Taxes already tacked onto land line and cell phone bills include:
Maine School and Library Fund Charge, which pays for Internet connection for every public school and library in the state.
Maine Universal Service Fund Charge, which subsidizes high telephone rates in rural Maine.
Federal Universal Service Charge, which also subsidizes rural service and service to low-income residents.
A 50-cent per month charge on every land line or cell phone number to fund 911 emergency service.
Cell phone companies, along with other telecommunications businesses, will be eligible for a sales tax break under the plan for equipment purchased to expand cell or broadband service into rural Maine. The proposal allows up to $500,000 annually in tax breaks, which would cover $10 million in new investments.
Sen. Phil Bartlett, the Senate chairman of the Utilities and Energy Commission, said the decision to let cell phone companies out of the tax was based on the need to keep new taxes to a minimum.
“The emphasis on the broadband part was a way to try to narrow the focus a little,” he said.
The Connect ME Authority will continue to monitor cell phone service, however, and part of the new rules would require cell phone companies to give the state more information about where there is a strong signal and where there is only minimum coverage or no service.
“We may find there’s a lot more need in urban and suburban areas than we thought,” for improved cell service, Bartlett said. “None of us had a real good picture about what the problem and potential cost is. We need a good assessment and a plan.”
A study done last year by a subcommittee under the Connect ME initiative overstated cell phone coverage in the state by using a weak signal strength – negative 95 decibels – that only worked on good days with some phones, according to Phil Lindley of the Public Utilities Commission.
“It looks like a big chunk of the state has coverage,” Lindley said. “The caveat is, that’s with the better phones on a clear day without obstruction.”
The new rules will ask cell phone companies to show where they have a stronger signal – measured at negative 85 decibels – and the Connect ME Authority will then redraw the map.
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