Arkansas legislative committee hears about rural broadband cost issues

Ritter Communications Holdings President Alan Morse told a legislative committee Thursday (March 17) that infrastructure has a huge role in the expansion of broadband services, and expansion investment is tough to justify in rural areas of Arkansas.

Most of the focus of the legislative meeting was on the utilization of state and federal phone surcharge programs that help subsidy rural connectivity. Committee co-chairman Rep. Stephen Meeks, R-Greenbrier, and several lawmakers on the Joint Committee on Advanced Communications and Information Technology heard from Morse and other telecommunications officials during the hearing held at Arkansas State University. Also attending the hearing Thursday were Sen. Ronald Caldwell, R-Wynne, Sen. Greg Standridge, R-Russellville, Rep. Brandt Smith, R-Jonesboro, and Rep. Nelda Speaks, R-Mountain Home.

Morse said his Jonesboro-based company has been in business more than 100 years, serving residential customers in rural areas with telephone, television and Internet. However, the cost of installing broadband lines can be cost prohibitive in some areas, Morse said, adding that the company is working to expand its footprint in the state.

Morse said lines can be installed on utility poles or buried underground. The utility pole option, or wireless, can only be installed if the equipment has a direct line of sight. To bury a line underground, Morse said it costs between $35,000 and $40,000 a mile in Northeast Arkansas while costing up to $125,000 a mile in Northwest Arkansas. The higher cost is due to having to dig through granite and other rock underground in Northwest Arkansas, Morse told the committee.

“The Arkansas High Cost Fund has helped with funding. But the rugged terrain is an added obstacle,” Morse told the committee.

The fund, set up through the legislature, allows communications companies to collect money from landline phone and cell phone bills, to help pay to update equipment and provide services in rural areas in the state. The fund typically brings in about $40 million a year, Meeks said. A similar federal fee, the Federal Universal Service Fund, brought in $7.8 billion in 2014.

Michael Zarrilli, vice president for governmental relations at Suddenlink, told the committee his company spent nearly $260 million since 2006 to update systems around the country. The company spends about $25,000 to $30,000 a mile to put in aerial lines, Zarrilli said, noting his company spends about the same as Ritter in burying lines. St. Louis-based Suddenlink has 1.5 million residential and commercial customers in Arkansas, Louisiana, Missouri, North Carolina, Oklahoma, Texas and West Virginia.

“But as with anything, the key is the return on investment,” Zarrilli said.

Bart Rowe, information technology director for Paragould Light Water and Cable, told the committee the utility began offering dialup Internet service in 1997, then began updating equipment as technology began to flourish. With plans to upgrade in the future, Rowe said money often plays a role.

“Our biggest limitation is money,” Rowe said, especially talking about an upgrade to digital cable in 2015. “What we make on the Internet, we lose on cable.”

Meeks said the meeting Thursday (March 17) was to give lawmakers an opportunity to learn more about the complex issue. Comparing the initiative to plans to bring electricity and telephones to the state in the 1930’s, Meeks said the committee was looking at the infrastructure issue as well as working to make projects as economically viable as possible.

A plan to possibly aid funding for rural connectivity will be debated during the 2017 legislative session, Meeks said, noting officials are hopeful schools and state agencies can serve as anchor tenants for the initiative.