Gov. John Hickenlooper signed legislation Friday that reroutes part of a $54 million annual ratepayer subsidy to telecom companies into a broadband fund to provide service in rural areas.
"This is a first step to really bridging that digital divide," Hickenlooper said.
The subsidy goes back to the early 1990s when most people had landlines and few provider options. The fund was designed to help providers service hard-to-reach areas in the state.
"It is no longer needed in the areas where we have effective competition," said Rep. Angela Williams, D-Denver, one of the sponsors of the legislation.
The plan is to phase out the ratepayer subsidy — known as the "Colorado High Cost Support Mechanism" — in 10 years. In the meantime, areas with few telecom provider options will continue to get money from the fund. But in places with more than three providers, the money will be redirected to deploy broadband in rural areas.
The governor signed the bill along with three others dealing with updating the state's decades-old telecommunication laws.
Colorado's high-cost fund is one of the largest in the country. Consumers pay 2.9 percent of their phone bills toward the fund, or close to $1 for a $30 bill. The fund is administered by the Colorado Public Utilities Commission.
The signing of the package of bills is a culmination of years of attempts by lawmakers to update the state's telecommunications laws. Previous plans failed, even with bipartisan support, amid the competing interests of telecommunication companies and disagreement from legislators about how to implement a broadband fund.
This time, Williams said it helped to break out several components of the telecommunications overhaul into different pieces. For instance, a bill updating telecom terminology was separate from the measure to phase out the high-cost fund.
"In the past, we tried to put all of these subjects into one bill, an omnibus bill," Williams said. "And going through that process and trying to negotiate all of the different moving pieces was just kind of difficult. It was difficult when you work with over 50 or 60 stakeholders."
Hickenlooper also pressed lawmakers during his State of the State address in January to pass telecom legislation. He praised the passage of the bills last month.
"Broadband internet is an essential piece of our state's infrastructure. It is critical to maximizing Colorado's chances for continued economic success and growth," he said in a statement. "Many rural areas of our state have gone without broadband internet access, or the service has not been what our rural residents deserve."