OLYMPIA – Legislation that would allow public utility districts and rural port districts in underserved counties to provide telecommunications services directly to consumers is being met with strong opposition from lawmakers intent on leaving that service to private enterprise.

Rep. John McCoy, D-Tulalip, argues that the legislation, H.B. 1711, would provide an increasingly necessary service to those lacking it.

“Everybody agrees we have underserved areas,” McCoy said following a stakeholders’ meeting Thursday in Olympia. “But we do not have Internet service providers willing to go out to those extreme rural areas to deliver service. So the question is: How do we get them served?”

McCoy, the bill’s lead sponsor and chairman of the House Technology, Energy and Communications Committee in which the bill is being heard, said the answer is within his bill, which allows PUDs and rural port districts in counties with populations of less than 300,000 to offer service to individual households.

Rep. Cathy Dahlquist, R-Enumclaw, who also serves on the committee, subscribes to the “If you build it, they will come” outlook when it comes to PUDs, saying that districts investing in infrastructure would bring private companies.

“They currently have, under law, wholesale authority and they haven’t used it,” she said. “They don’t want to make that initial investment, because they’re worried [the providers] won’t come. Kind of the ‘build it and they will come’ theory. So I’m saying, fine, maybe we should mandate you having the wholesale, you do the build out and then have the small retailers come in.”

According to Erik Poulsen, government relations director of the Washington Public Utility Districts Association, PUDs have used the wholesale authority they were granted in 2000, laying 4,500 miles of fiber-optic cable, investing $300 million in infrastructure and partnering with 150 retail providers. However, he said it’s not possible to wholesale in certain parts of the state.

“The idea was that PUDs would build critical infrastructure and private companies would come in and provide direct service,” Poulsen said. “This wholesale arrangement serves many of our PUDs well. Others believe they need expanded authority to overcome some of the barriers that still exist.”

Dahlquist said she’s also concerned that PUDs, as government entities, would have an unfair competitive advantage over private companies since they can draw from taxpayer money to fund their retail operation.

“I feel like by allowing retail authority, PUDs can go out to ratepayers and they can go to their port districts and tax their constituency,” said the 31st District representative. “For government to get into a retail business, we’re going to have government compete. We’re going to put people out of business.

“They’re saying they’re creating jobs. Quite the contrary. Disagree with that.”

Rep. Maureen Walsh, R-Walla Walla, also opposes the bill even though she is a co-sponsor. She said she signed on because a Franklin County PUD employee whom she trusts told her that it would help provide access to her constituents.

“She expressed to me that this was a great bill that would help rural communities get high-speed internet access, at which point it sounded like a great idea,” Walsh said. “Ultimately what happened is the original intention of the bill got a little bit skewed.”

Walsh said she is not fond of the result of the process.

“Now we’ve got the PUDs in competition somewhat with some of the private providers of Internet services,” Walsh said. “And I don’t like that.”

The bill would have provisions to defend against such inequity, McCoy counters.

“In my opinion, I’ve taken care of that,” he said. “Yes, the PUD can borrow from its [revenue-based services] but they have to pay it back, so there’s some rate of return that they have to crank in there.  In order to get permission to do this, they have to hold public hearings with an extensive business plan that has to be approved by their ratepayers. They need to go through that process before they make a decision on whether they’re going to provide the service or not.”

The bill is scheduled for another hearing Jan. 17, 10 a.m. in the John L. O’Brien Building in Olympia, which may lead to a vote.

“I won’t know [about a vote] until I get there,” McCoy said.

Links to the original bill:

http://apps.leg.wa.gov/billinfo/summary.aspx?bill=1711&year=2011#documents

http://apps.leg.wa.gov/documents/billdocs/2011-12/Pdf/Bills/House%20Bills/1711.pdf)