Bill Summary – FastDemocracy

LEGISLATIVE SERVICES AGENCY
                OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
                                     200 W. Washington St., Suite 301
                                          Indianapolis, IN 46204
                                              (317) 233-0696
                                                 iga.in.gov
                                FISCAL IMPACT STATEMENT
LS 6332                                                             NOTE PREPARED: Dec 11, 2019
BILL NUMBER: HB 1304                                                BILL AMENDED:
SUBJECT: Broadband Development.
FIRST AUTHOR: Rep. Prescott                                         BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED: X GENERAL                                           IMPACT: State & Local
                X DEDICATED
                  FEDERAL
Summary of Legislation: Indiana Utility Regulatory Commission (IURC):The bill provides that the Indiana
Utility Regulatory Commission (IURC) may adopt rules necessary to administer the Indiana Universal
Service Fund (IUSF), including rules to: (1) adjust the amount of the surcharge percentage required to be
collected by communications service providers and remitted to the IUSF; and (2) establish the types of
communications service providers that are required to assess a surcharge for remittance to the IUSF. The bill
provides that the IURC may, to the extent not prohibited by federal law, require a provider of interconnected
Voice over Internet Protocol (VOIP) service to collect and remit to the IUSF a surcharge on the provider's
revenue from intrastate use of the provider's interconnected VOIP service.
Communications Service Provider: The bill provides that a communications service provider, including a
provider of broadband service through fiber optic cable, has access to public rights-of-way as a public utility
for purposes of federal law exempting public utilities from payment of fair market value for use of public
rights-of-way acquired with federal mass transportation funds.
I-Light: The bill allows use of the I-Light network for provision of communications service to unserved areas,
subject to rules adopted by the Office of Community and Rural Affairs to: (1) define unserved areas for
purposes of the rules; and (2) establish an application process to receive and evaluate proposals by
communications service providers for use of I-Light to provide communications service to unserved areas.
Right-of-Way or Easement: The bill provides that a fee owner of a right-of-way or a possessor of an
easement: (1) is not entitled to compensation; (2) may not charge a fee of any kind; and (3) may not
unreasonably deny authorization; for construction, operation, or maintenance of infrastructure by public and
municipally owned utilities, including communications service providers, to the extent that the construction,
HB 1304                                               1
operation, or maintenance does not interfere with the ordinary and normal use of the right-of-way or
easement.
Indiana Department of Transportation (INDOT):The bill provides that the Department of Transportation,
when issuing a permit for excavation or obstruction of a street, highway, or right-of-way: (1) may not require
provision of a bond or cash deposit in an amount greater than $10,000 for each area designated in the permit;
and (2) must accept a blanket bond in satisfaction of the bond requirement.
The bill also makes a technical correction.
Effective Date: July 1, 2020.
Explanation of State Expenditures: I-Light: The bill expands the use of I-Light to provide communications
service to public and private entities in unserved areas. I-Light is a high-speed fiber optic research and
education network. Currently, I-Light provides internet to colleges and universities, Indiana Public
Broadcasting Stations, the Indiana Office of Technology (IOT), and Michiana Hematology and Oncology.
If expanding I-Light to unserved areas results in increased rates for other I-Light users, costs for state
educational institutions and the IOT could be impacted.
Indiana Department of Transportation (INDOT): The bill limits bond or cash payments required to be paid
before receiving a permit to do construction projects in right-of-way areas controlled by INDOT to $10,000
for each place designated in a permit. Currently, the requirement is the greater of $10,000 for up to 5,000
feet, $10,000 per mile, and the total cost of the construction project. The permit holder is still required to pay
the expense of restoring the highway or street. The change in bond amount could impact INDOT (and
provide more security) in cases that the permit holder does not complete the work or restore the road to its
previous condition and forfeits the bond.
Office of Community and Rural Affairs: Requiring the OCRA to adopt rules related to defining unserved
areas and developing a process to receive and evaluate proposals by communications service providers for
use of I-Light represents an additional workload on the agency. Existing staffing and resource levels, if
currently being used at capacity, may be insufficient for full implementation. Ultimately, the source of funds
and resources required to satisfy the requirements of this bill will depend on legislative and administrative
actions.
Indiana Utility Regulatory Commission: The bill allows the IURC to adopt rules to adjust the surcharge rate
on intrastate communication, and to require Voice over Internet Protocol (VOIP) service providers to also
collect the surcharge. The bill’s requirements are within the IURC’s routine administrative functions and
should be able to be implemented with no additional appropriations, assuming near customary agency
staffing and resource levels.
Additional Information - The Indiana Universal Service Fund was established in 2004 by Commission Order.
A 1.09% surcharge is collected on monthly phone bills for local telephone calls, intrastate long distance, and
wireless carrier intrastate telecommunications. The fund is used to support universal telephone service in
rural areas. Revenue for traditional intrastate retail telecommunications has decreased as customers have
shifted to other means of communication such as VOIP, texting, emailing, and messaging. As a result,
revenue to the Indiana Universal Service Fund has decreased over the period, even as the surcharge rate has
doubled from 0.54% in 2008 to 1.09% in 2018.
HB 1304                                                 2
Explanation of State Revenues: Surcharge for VOIP: Requiring VOIP providers to collect a surcharge
from customers making intrastate calls would increase the revenue to the Indiana Universal Service Fund.
In 2018, revenue to the fund totaled $11.5 M.
INDOT: INDOT would be prohibited from assessing an access rate or any other charge or fee for
communications service providers, including for broadband or cellular infrastructure. This bill would limit
INDOT’s ability to collect revenue that would benefit the State Highway Fund. This prohibition could have
a significant fiscal impact on revenues from access fees. The broadband access permit fee is $55. The access
rate fee for installing fiber infrastructure is $2,500 per mile in an urban area and $1,500 per mile in a rural
area. The access fee for macro cell is $2,500 per month in urban areas and $1,500 per month in rural areas.
The access fee for micro cell is $2,200 per year for urban areas and $1,100 per year for rural areas. INDOT
received approximately $589,000 in FY 2019 from broadband access fees.
Right-of-Way or Easement: The bill would consider communications service providers (including broadband
and cell providers) as utilities with regards to public rights-of-way, and the providers therefore would not
be required to pay fair market price for access to public rights-of-way. Revenue could decrease to the extent
that broadband, cellular, and other communications service providers are currently required to pay fair
market price for access to public rights-of-way on state property. Such revenue, with certain exceptions,
would otherwise be deposited in the state treasury and credited to the fund from which the property was
purchased.
Explanation of Local Expenditures:
Explanation of Local Revenues: Right-of-Way or Easement: The bill would consider communications
service providers as utilities with regards to public rights-of-way, and therefore would not be required to pay
fair market price for access to public rights-of-way. Revenue to local units could decrease to the extent that
broadband, cellular, and other communications service providers are currently required to pay fair market
price for access to public rights-of-way.
State Agencies Affected: Indiana Department of Transportation; Indiana Utility Regulatory Commission;
Office of Community and Rural Affairs.
Local Agencies Affected:
Information Sources: Indiana Utility Regulatory Commission Staff, 2018 Report on the Indiana Universal
Service Fund & Broadband Deployment in Indiana; Kacey Crane, Legislative Affairs Director, Indiana
Department of Transportation; Indiana Department of Transportation: https://www.in.gov/indot/3685.htm;
I-Light: https://ilight.net/
Fiscal Analyst: Olivia Smith, 317-232-9869.
HB 1304                                               3
Statutes affected: 
1. Introduced House Bill (H): 8-1-2-1, 8-1-2.6-1, 8-1-2.6-1.1, 8-1-2.6-4, 8-1-2.6-13, 8-1-2.8-8, 8-1-17-13, 8-1-17.5-25, 8-1-32.3-4.2, 8-1-32.5-4, 8-1-32.5-6, 8-1-32.5-14, 8-1-32.7-5, 24-5-22-10