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The Digital Desert
by Andrew Haeg
February 18, 2000
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Access to high-speed communications is becoming increasingly important for business and consumers. But some people, including Governor Jesse Ventura, say the state's laws governing telephone and cable television companies are badly out of date. That's why the Legislature is considering competing proposals aimed at bringing Minnesotans lower prices and more services.

IT'S FAR FROM CERTAIN ANY of four bills on offer will become law this year. Not only are competing interest groups gearing up to influence the legislative process, state lawmakers are also struggling to draft language adequate to the highly technical subject matter.

Taken as a whole, the dueling proposals would dramatically change the way the state regulates telephone and cable companies. But basic questions remain such as, would phone bills go up or down if any bill passed. Another unknown is how much access for rural residents would be improved, as the legislation intends.

DFL Senator Steve Kelley wrote one bill that would remove many existing controls on telecom firms. He believes if companies are allowed to compete, the result will be lower prices and added services.
Kelley: We have to create those opportunities. And I've come to the conclusion that to create them we need to deregulate. Because I don't think there's a state regulator who is smart enough to anticipate all these changes in the marketplace and bring them about through the regulatory process.
"We don't want to be an area that in the extreme would be a kind of a digital desert in the north of the country."

- Milda Hedblom
It's not only the market that's changing. A technological revolution is putting phone, cable and even energy companies on a collision course, as they compete to offer the same services to consumers.

Supporters of revamping the telecommunications laws say not acting raises the danger Minnesota could be left behind.

Milda Hedblom is a senior associate at the Humphrey Institute's State and Local Policy Program.
Hedblom: Minnesota's going to have some good things happen in telecom information development because there's such a strong upsurge everywhere. But we should want be in a place where digital things happen because the laws are in place, the environment draws digital development. And right now that's not the case. I mean we don't want to be an area that in the extreme would be a kind of a digital desert in the north of the country.
Hedblom and others say they're concerned the current regulatory structure will not encourage companies to make the huge investments necessary.

And even if they do, will services be fairly distributed to all Minnesotans? According to one estimate, more than a third of the state's rural communities will have no access to high-speed Internet access by next year. Governor Ventura has made reforming the state's telecommunications system a priority of his administration. Touring Greater Minnesota last month, he spoke of the importance of bringing sophisticated services to rural communities.
Ventura: For industry to locate out in greater Minnesota they must have that telecommunications available to them, and so that's high on our list.
Three of the four bills under consideration would alter the current system of subsidies which enable rural residents to pay far less than the actual cost of providing service. Funds for the subsidy, which totals some $500 million a year, come from little-noticed fees consumers pay with their phone bills.

To generate the same amount of money, The Ventura administration's and Kelley's bills propose a levy on telephone, cable television, and Internet services. Senator Kelley.
Kelley: Any telco company is going to be sending bits of data down the wire. And my view is that we ought to be treating any company that's moving bits the same because if government regulates them differently, then we're giving one technology an advantage over another, and we don't know whether one technology, if any, should have an advantage in the marketplace.
He points out that cable TV companies already offer telephone service, and a Northern States Power subsidiary is providing high-speed Internet access.

Legislators may combine the four bills into one for consideration before the end of the session in April, or they could end up putting off action until next year. What's certain is that the longer they wait, the more archaic will laws now on the books become.