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Telecom companies might get tax relief for expanding rural broadband services

PIERRE - The Legislature is considering tax rebates for telecommunications companies to expand high-speed Internet service to under-served rural areas of South Dakota.

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South Dakota State Capitol

PIERRE – The Legislature is considering tax rebates for telecommunications companies to expand high-speed Internet service to under-served rural areas of South Dakota.

 

The state House of Representatives could take final action as early as Tuesday. A House committee gave its unanimous endorsement Monday.

 

State senators have already voted 34-0 for the proposal, SB 71, from Sen. Ernie Otten, R-Tea.

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His plan would make telecommunications companies eligible for tax refunds, known as reinvestment payments, that some other types of businesses can receive for projects.

 

Companies may apply to the state Board of Economic Development for repayments of some or all of sales taxes on goods and services for a project. The board decides the amounts, if any.

 

State Public Utilities Commission member Chris Nelson said Otten has identified “a glaring shortfall” in proper broadband service in South Dakota. Nelson said Otten is offering a good approach.

 

“This bill helps to solve that problem,” Nelson said.

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South Dakota has “perhaps world-class broadband” on one side of a gravel road and no broadband on the other side of the same road, according to Nelson. He said 20 percent of South Dakota’s census blocs don’t have proper broadband service.

 

Nelson recalled a conversation in Avon about the school system’s rising enrollment because strong broadband encourages telecommuting. “I believe, in twenty-first century South Dakota, we owe it to the people,” Nelson said.

 

The goal of Otten’s plan is for companies to have a little more money to seek a little more assistance from several pots of money held by the Federal Communications Commission.

 

Lobbyists for CenturyLink, ATT, the South Dakota Telecommunications Association and the Aberdeen Development Corporation also spoke for the bill, as did Scott Stern, state commissioner for the Governor’s Office of Economic Development.

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Nelson said South Dakota telecom companies currently are taking as much as possible from the federal program. Nelson said the legislation puts more South Dakota funds into the mix so the companies can access more of the federal money.

 

Greg Dean, representing the South Dakota Telecommunications Association, said it can cost $10,000 to $20,000 per mile to lay fiber and there is further cost for the technology to power it.

 

“Thank you so much,” Otten said as he reached out to shake Nelson’s hand as they left the room.

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