Could a state cell phone tax power Pa.’s rural broadband expansion?

By: - January 9, 2020 4:47 pm

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One Pennsylvania farmer’s group has an idea to pay for expanding rural broadband access — a tax on cell phone bills.

The proposal was floated this week at the annual Pennsylvania Farm Show in Harrisburg on back-to-back days by Pennsylvania State Grange president Wayne Campbell.

As a starting point, Campbell suggested that a $.75 to $1 surcharge per-month on every cell phone user could finance small, matching state grants for local broadband projects.

While expanding the access and quality of rural internet access is a bipartisan goal, little has actually been done to address “the elephant in the room,” Campbell said. 

And that’s “simply how to pay for it,” he said Wednesday.

Gov. Tom Wolf has his own proposal: A multi-billion dollar bond program, funded by 20 years of a state severance tax on natural gas production, to pay for a host of statewide infrastructure projects. 

But it’s been stalled by a Republican-controlled General Assembly hostile to both new taxes and additional debt. House Speaker Mike Turzai, R-Allegheny, called the proposal a “debt-financed slush fund.” 

The money raised for the initiative would not only be for broadband, but split among competing priorities, from highway repairs to natural gas pipes.

“We don’t endorse any one way of funding it, what we do endorse is the government looking at every possibility,” Campbell said Thursday.

Suggestions to move from rhetoric to action on high-speed internet access to all, even absent big state dollars, came Thursday during a panel discussion hosted by the Grange at the Farm Show Complex.

Since 2011, the federal government under former President Barack Obama and current President Donald Trump have made federal funds available to expand broadband’ reach through the Connect America Program.

The first phase, under Obama, gave out $114 million dollars to 37 states. Pennsylvania was not one of them.

The Trump administration announced a second phase in 2018, which will spend $2 billion over the next decade on rural broadband access. A separate U.S. Department of Agriculture program will put another $600 million in play.

But these dollars don’t always go far. 

Speaking at Thursday’s panel, Rural Maryland Council Executive Director Charlotte Davis cited an estimated $200 million price tag to provide every inch of the state with some level of internet connectivity. Half of the dollars will come from state or local governments.

That’s for a state one fourth the size of Pennsylvania, where 36 percent of people do not have access to high speed internet at federal standards  — 25 mbps download speeds and 3 mbps upload speeds.

A 2019 Penn State study, financed by the commonwealth, found that no Pennsylvania county has more than 50 percent of their population connected at 25 and 3.

Maryland Gov. Larry Hogan, a Republican, had made universal internet access a top priority for his administration, Davis said.

The state first invests in areas with no internet access, to avoid overbuilding or competition with existing providers. Davis added that coalitions that include public and private entities, not a “lone wolf” company or county going it alone, are better funding targets.

But public dollars are needed, Davis added, because “everybody agrees in Maryland we have market failure” when some residents can’t access reliable internet.

A study from the council found four of five Marylanders said their current internet service was too slow and too expensive.

There hasn’t been a Pennsylvania-wide initiative on broadband yet, but one group in the state’s Northern Tier is hoping it can build show a path forward.

The Tri-County Rural Electric Cooperative has started an estimated $77 million project to bring high speed internet access to parts of its 5,000 square mile coverage area, according to top cooperative staffer Rachel Hauser. 

Tri-County currently provides electricity to Tioga, Potter, Bradford, Lycoming, McKean, Cameron and Clinton counties.

Hauser said financial aid from the federal government and state government was helping to make their investment possible — including $15.7 million from the state.

While there is a big upfront cost, Hauser said the hope is a bigger down the road payoff.

For example, when it’s finished, Tri-County hopes to offer internet speeds 100 times faster than what area residents “can currently expect on the best day ever.”

“This is going to have a drastic effect on economic and community development,” Hauser said.

But that’s only if localities act on time. With 5G internet already poised to once again boast internet speeds, Maryland’s Davis wants her state to invest before the current tech is obsolete.

It isn’t clear if Pennsylvania will keep up. 

Davis mentioned the importance of piggybacking broadband infrastructure on existing state infrastructure. 

That’s a fight Rep. Pam Snyder, D-Greene, has taken up. In June, the state House approved a Snyder-authored bill calling for a study of state property for broadband opportunities. It passed before the Wolf administration independently sought in October to rent spare government property to internet providers.

But Grange president Campbell’s original point around funding is still an open question, especially with state Republicans reticent to increase state revenues.

Also at the panel was another rural lawmaker, Rep. Rich Irvin, R-Huntingdon. He looked to the feds to set a strong rural broadband expansion agenda by providing funding similar to New Deal investments in rural electrification.

But if state funding is called for, Irvin expressed skepticism that his GOP colleagues could stomach even a small cell phone bill surcharge.

For example, he pointed to a sharp inter-caucus debate over a 2015 bill that increased a phone surcharge by less than a dollar per month to fund 9-11 call centers. Irvin was a yes on the proposal.

The problem, Irvin said, is “not something our state is going to be able to tax our way out of.”

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Stephen Caruso
Stephen Caruso

Stephen Caruso is a former senior reporter with Pennsylvania Capital-Star. Before working with the Capital-Star he covered Pennsylvania state government for The PLS Reporter.