Under the Arizona Digital Highway Act, signed into law April 5, private companies are able to install fiber optic cable alongside highways, but state officials charged with coordinating the effort say there is still a lot of work to be done before anyone can start breaking ground.
The act, SB1402, is part of a larger statewide push to bring high- speed Internet into every school in Arizona, to create a federally mandated public safety broadband network, and to promote economic development in rural parts of the state.
Last week, the Digital Arizona Council, composed of state officials and rural and telecommunications stakeholders, met to discuss a draft of the state’s plan for expanding Internet capacity in the state.
During the meeting, Chairman Aaron Sandeen, who is the state’s chief information officer and oversees the Arizona Strategic Enterprise Technology office housed in the Department of Administration, said that according to a 2009 study from the Organization for Economic Cooperation and Development, the United States ranks 14th in the world for reading, math and science proficiency in education and 14th in the world for broadband penetration versus Gross Domestic Product.
“Think there is any correlation?” he asked the assembled group of rural community leaders, technology company executives, medical professionals and educators.
“If we aren’t moving fast enough with education, if we are not investing into our people, if we are not investing into our infrastructure, are we going to continue to remain where we are or are we going to go down?… It really comes down to better Internet,” Sandeen said.
Mike Keeling, a member of the council and lobbyist for the Arizona Telecommunications and Information Council, said that SB1402, which passed without any registered opposition, was drafted after broadband providers across the state were asked what it would take to make it plausible for them to expand into the less populated areas of the state.
The response from providers was overwhelmingly that the biggest challenge is obtaining the rights-of-way to run the so-called “middle mile” of fiber — which spans gaps between major Internet hubs like the Phoenix area and more remote towns — can be expensive, complicated and time-consuming. Keeling said companies have to go through state and federal permitting, negotiations with individual landowners, and environmental and archeological impact studies before they can begin installing the fiber-optic cables.
“If we could make a difference here in terms of the cost of the right- of-way, then that would fundamentally move the needle in obtaining broadband,” Keeling said.
The state already has numerous rights-of-way for state highways, but those are only negotiated for transportation uses. SB1402 opens those ready-made agreements for use by broadband providers by expanding the definition of transportation to include information. It also adds conduit — the casing that protects buried communications cable — as an accepted means of transportation.
For small towns, SB1402 is hugely important for being able to attract faster Internet speeds into the community, said Soren Stoutner, who serves as IT consultant for the town of Wickenburg. Wickenburg’s single biggest problem, he said, is not being able to get enough Internet speed.
Stoutner said the legislation makes it much easier for communities to make a business case for why providers should bring in faster service.
“It is tremendously difficult right now to get new fiber laid anywhere because it involves years worth of paperwork and it takes ‘x’ millions of dollars to do that paperwork,” he said.
Wickenburg, which just started receiving much faster service in the past few weeks after brokering a deal with Cox Communications, has actually missed out on economic development opportunities because the Internet speeds were just not fast enough, Stoutner said.
Wickenburg convinced Cox to invest $80,000 in additional infrastructure, and the town’s fire department, police department, hospital and school districts agreed to pay a combined $3,000 a month for the service. Once the town made the initial investment, Cox was able to extend better service to residents.
“Businesses won’t come in until it’s there… If the town of Wickenburg hadn’t stepped up, it would have been another seven years before anything happened,” he said.
But the passage of SB1402 doesn’t mean that companies will be able to start using the rights-of-way immediately, Keeling said. Arizona’s gift clause doesn’t allow for the state to just give away something of value without a tangible return for taxpayers. That is why SB1402 requires that private companies reimburse the state for the cost of obtaining the right-of-way and of installing the conduit by leasing the conduit from the state at a cost-based rate.
“When all is said and done, ADOT (the Arizona Department of Transportation) can’t have spent any state money on installing the conduit. They can expend state money in the meantime, but they will get restitution in the end,” Keeling said.
Mike Golden, director of digital planning for the Arizona Strategic Enterprise Technology office that oversees the Digital Arizona Council, said that the state’s financial hands-off approach is what makes Arizona’s project unique among similar efforts in other states.
The state will be using public-private agreements to negotiate financing for the right-of-way and installing conduit, but it won’t be spending any money to get fiber in the ground, he said.
“This is Arizona, so we are not recommending that the state spend its taxpayers’ money on doing this,” Golden said.
Both Keeling and Golden said that the state’s role is mostly that of a facilitator and they argued that the requirement that this all be privately funded avoids the potential that the state ends up laying “fiber to nowhere.”
To get better service, small towns are going to have to make a good business pitch, Golden said. But for those areas in Arizona that are too remote and have too small of a population to make a realistic pitch to broadband providers, Golden said the state is hoping to expand broadband to those areas using some of the $7 billion in federal money recently set aside by Congress to create a national public safety network.
It is also unclear whether just changing the definition of transportation will automatically allow for laying conduit through land where the state has an easement agreement with other entities like federal agencies or Indian tribes.
Keeling said there are two legal interns with the Arizona Telecommunications and Information Council sifting through thousands of rights-of-way agreements to see whether they will have to be renegotiated if, for example, the state is prohibited from subleasing the easement.
To complicate matters further, Golden said that some providers feel threatened by the idea of additional infrastructure being available, because it could dilute their current hold on their markets. Golden wouldn’t say who the state is currently in talks with for brokering the first right-of-way deal, but he did say that all of the potential providers are from out of state.
“When we hear reservations from in-state existing providers, we try to understand what those reservations are and see if we can’t use that as a seed for conversations with all of the interested parties,” Golden told attendees of a recent forum about the state’s broadband initiatives.
“That’s a tall order because there are some people who don’t believe there is a problem with the availability of bandwidth in rural Arizona and they believe that nearly religiously,” he said.
Keeling and Golden said that the state is in talks right now with rural communities, broadband providers and investors, but said the first public-private agreement for placing fiber conduit on a state right-of-way is still about a year away.
Though he didn’t give his own time estimation, Floyd Roehrich, deputy director of policy with ADOT, was much more cautious about the progress of the program.
Roehrich said there are still so many details to work out that no one has a really good idea of how this kind of a public-private partnership will work.
The “strategic plan” that the Digital Arizona Council put forward earlier this month, he said, looks more like a “visionary plan” because it doesn’t lay out any specific methods for things like funding initial construction or leasing the rights-of-way.
Even after those details are nailed down, he said, opening the rights- of-way to the transportation of information doesn’t eliminate state and federal permitting that will still need to happen before construction can begin, Roehrich said.
“Because this law was passed, everyone thinks … that we should be able to do this now, but other laws didn’t change,” he said.
Another concern is that the council and ADOT don’t seem to agree on when ADOT should be reimbursed for digging trenches and installing conduit. Under ADOT’s current reading of the statute, Roehrich said it looks like ADOT can’t move forward on a project until it has 100 percent of the funding in hand, while the current plan is to lease the conduit to companies to recover the full cost over time.
Roehrich, who is a member of the Digital Arizona Council, said that the qualms he often brings up at meetings might have earned ADOT the perception that the agency isn’t behind the project, but he said that isn’t the case.
“Our director is 100 percent behind this. We all support it… but there is so much that still needs to be worked out.”