Bill would give state tax break to firms that build rural broadband

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A bill in the state Legislature aims to prod telecom companies to expand rural broadband in Wisconsin with a tax break on new projects.

The GOP-backed measure, labeled Senate Bill 319, was introduced in July and got a public hearing Wednesday before the Senate Committee on Utilities and Housing. A companion bill in the state Assembly is before the Committee on Rules after passing through the Joint Finance Committee in October.

Telecom companies say it’s often not cost-effective to build broadband networks to serve rural areas. It’s a reality that’s contributed to a widespread lack of high-speed Internet in sparsely populated parts of the state.

The bill aims to give telecom companies that upgrade their rural broadband infrastructure a break on property taxes that they pay. An amendment to the bill specifies that broadband investments that qualify for the tax break would need to take place in a rural area with low population density.

“In general, this is a wonderful bill,” said Sen. Janet Bewley, D-Mason. “The amendment really focused it even more on the municipalities that need it the most.”

About a quarter of the state’s rural residents lack access to broadband, according a Federal Communication Commission report on rural access to the service released in May. That’s down from 2018, when the commission found 43 percent of rural residents didn’t have high-speed Internet.

The bill exempts telecom companies from paying a tax on property used to provide high-speed Internet access to a rural area. Telecom companies must install broadband infrastructure that meets download and upload speed standards set by the FCC to qualify for the credit. The bill defines rural areas as those with a population of less than 14,000.

A fiscal estimate with the bill from the Wisconsin Department of Revenue found the state collected about $27 million worth of taxes from telecom equipment in rural areas. The bill’s co-author, Sen. Howard Marklein, R-Spring Green, said an updated fiscal note finds the proposal would reduce property tax collections by about $1.5 million in its first year, a sum that would grow to about $13 million, then level off in 2025.

Marklein said the proposal rewards companies that have already been investing in rural high-speed Internet, and ensures that only those companies that build new infrastructure can claim the tax credit.

“Keep in mind that the growth in this fiscal estimate is kind of tied to how much they are going to be investing in our rural areas,” he said.

Telecommunications companies broadly back the proposal. The measure has also drawn support from wireless companies such as AT&T of Wisconsin, Wisconsin Manufacturers and Commerce, the Wisconsin Technology Council and a number of other groups.

During Wednesday’s hearing, Chad Young, CEO of Cable-based broadband provider Norvado, said the company serves a rural area of northwest Wisconsin that includes Price and Sawyer counties with “probably as many deer as we do have residents.” It’s costly for telecom companies to make investments in rural areas, he said.

“The business case to deploy fiber in our area is very poor,” Young said.

Jean Pauk, government affairs manager for TDS Telecom, said the company spent some $90 million in 2017 and 2018 on rural broadband and plans to spend about $100 million more in 2019 and 2020.

But it’s had public help in doing so. The company has so far applied for grants from the FCC and Wisconsin’s Public Service Commission to build out its rural broadband network, Pauk said. The tax break from the bill would further supplement the company’s efforts to expand high-speed Internet access.

“Any savings will be used to provide faster broadband,” Pauk said. “Our scarce capital investment dollars will just go further once we put the tax exemption in place.” Follow @natebeck9