Access to fast, reliable broadband and internet services is vital for every Minnesotan. From schoolwork to work from home, access to digital tools is an essential part of day-to-day life, not a luxury. Unfortunately, Minnesota lawmakers are proposing wrong-headed legislation that will give local governments authority to hike the price of essential internet and broadband services by as much as 8% – costing consumers more and threatening to halt the great progress made toward affordable, universal broadband access across the state.
The legislation currently moving through the House, which we refer to as the “Internet Tax bill,” will authorize local governments to enact what are essentially new taxes – which they call franchise fees – on broadband service providers. Decisions to add these new taxes to consumer bills and how that revenue will be spent would be made with very little transparency to consumers. Minnesotans are tired of additional fees and taxes being added to their bills. Ironically, this proposal allowing local governments to tack on new “fees” to internet bills comes while legislators are promoting other bills to ban junk fees.
So, what do these new taxes mean for Minnesotans? It means duplicative, burdensome taxes can be levied on consumers, making access to essential internet services inaccessible for many. Consumers won’t be getting a better or improved product — they’ll just be paying more for it.
When inflation is hitting family budgets harder than ever, and as the Biden Administration is stepping up efforts with billions in investments to close the digital divide, it begs the question of why Minnesota lawmakers want to put these onerous new taxes on essential internet and broadband-enabled services and move our state backward?
Moreover, this legislation comes at a time when more than 240,000 low-income Minnesota households are losing access to a federal $30/month broadband subsidy that is running out at the end of April. Why do state lawmakers want to compound this issue further and risk putting access to affordable internet, perhaps permanently out of reach for thousands of people, by adding layers of new fees to broadband bills? Low-income, BIPOC and underserved communities will be harmed the most by this legislation.
Supporters of this legislation claim that this will provide accelerated broadband access to rural communities. They’ve even had the nerve to call it the Equal Access to Broadband Act. Don’t be taken by that title. In reality, this legislation will halt development in underserved parts of the state. If enacted, the bill would make it illegal for providers to provide broadband service in communities until they negotiate a franchise agreement with each and every city, town and township. Franchise negotiations can take months or even years, and many small communities and hometown providers don’t have the resources or capacity for those additional layers of new bureaucracy.
Supporters also say that new fees are being proposed because local governments need hundreds of millions of dollars, which would be raised by these new taxes, to pay for maintaining public rights of way and providing local cable access channels. However, broadband and video service providers already pay communities for using the road rights of way and consumers already pay a 5% fee on their cable bill to fund local access channels. The truth is that this is an open-ended slush fund for local governments at the expense of consumers.
Adding multiple layers of new taxes and regulations will hinder efforts to achieve universal broadband availability in Minnesota. The digital divide will be widened by devaluing the hundreds of millions of dollars of private and public investment taking place in local communities across our state. All of this means the cost of a child doing online school, a parent working from home, a rural patient utilizing telehealth services, or a grandma checking in on her family will all increase.
Minnesotans can’t afford to widen the digital divide. If the proposed bill becomes law, it will cost consumers and our state more than we can afford, reversing years of hard work to close the digital divide.
Melissa Wolf is the executive director of the Minnesota Cable Communications Association and Brent Christensen is the president and CEO of the Minnesota Telecom Alliance.
