February 12, 2021 | By Kurt Anderson, Director of Development and Strategy-Ithaca Area Economic Development
In 2015, New York State (NYS) launched an ambitious $500 million Broadband for All initiative. The goal was statewide connectivity by 2018. While the initiative generated awareness and modest progress to that end, especially in urban areas, rural regions lag behind. Coverage estimates across the Southern Tier range from 40-98%. In Tompkins County, approximately 13.6% of households and small businesses lack high-speed internet access.
Confounding capital improvement projects aimed at improving connectivity is PERM 75, a NYS Department of Transportation (DOT) permitting requirement that became effective in November 2020. PERM 75 authorizes the DOT to enact a “use and occupancy fee” on fiberoptic cable that run along state-owned rights-of-way (ROW).
Under PERM 75, the DOT may charge: (1) A “build tax”, including additional survey, design and engineering requirements, on average $15,000 per mile; and (2) A $0.26-0.80 per foot per year annual rental fee. Fees vary depending on whether the fiber is buried, aerial, or crosses a state ROW; they increase by 2% annually and may also be adjusted any time DOT renews a permit. Annual rental fees apply to new installations and retroactively to existing fiberoptic lines.
Inexplicably, PERM 75 pertains only to fiber networks, not other utilities, such as water, sewer, or telephone. PERM 75 is expected to raise as much as $30 million annually, but is counterproductive to the Broadband for All initiative’s goal by disincentivizing broadband network expansion.
Southern Tier Network, a non-profit Open Access Network provider operating across the region, estimates Perm 75 would increase network costs by $400,000 per year plus an additional $10,000-20,000 per mile on new fiber construction. Likewise, Ithaca Area Economic Development’s (IAED) “Cayuga Data Juice–Broadband Connectivity” project can be expected to incur a $250,000 “build tax” and an annual fee of $40,000, effectively swamping the $800,000 budget. A similar $1.6 million fee has stalled a large broadband project in the North Country.
PERM 75 disproportionately affects rural regions since it is assessed per foot. In geographically dense areas, the overall cost passed by providers onto subscribers is distributed over a larger base. Conversely, rural users are fewer, farther apart, and less equipped to absorb additive costs imparted by a provider.
Assembly Bill A10932 and Senate Bill S8858 represent a bipartisan effort to rescind PERM 75. Given persistent budget woes in Albany, however, PERM 75 is likely to stay. In lieu of a repeal, IAED and others are lobbying for an exemption for federal grant awards that support broadband infrastructure similar to an existing waiver for projects awarded funding by through the New NY Broadband Program.
The outcome of these efforts to neutralize PERM 75 will determine the pace at which communities across the Southern Tier can enjoy widespread broadband access and its resultant economic, educational, and public health and service benefits.