Legislature(1997 - 1998)
05/06/1998 03:45 PM Senate RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE RESOURCES COMMITTEE
May 6, 1998
3:45 p.m.
MEMBERS PRESENT
Senator Rick Halford, Chairman
Senator Lyda Green, Vice Chairman
Senator Loren Leman
Senator Bert Sharp
Senator Robin Taylor
Senator John Torgerson
Senator Georgianna Lincoln
MEMBERS ABSENT
All members present
ALSO IN ATTENDANCE
Senator Jerry Ward
COMMITTEE CALENDAR
OVERSIGHT HEARING - FIBER OPTICS RIGHTS-OF-WAY
HOUSE BILL NO. 73
"An Act extending the termination dates of the salmon marketing
programs of the Alaska Seafood Marketing Institute and the salmon
marketing assessment; and providing for an effective date."
- SCHEDULED BUT NOT TAKEN UP
CS FOR HOUSE BILL NO. 204(RES)
"An Act revising the procedures and authority of the Alaska
Commercial Fisheries Entry Commission, the Board of Fisheries, and
the Department of Fish and Game to establish a moratorium on
participants or vessels, or both, participating in certain
fisheries; and providing for an effective date."
- SCHEDULED BUT NOT TAKEN UP
CS FOR HOUSE BILL NO. 284(FIN)
"An Act relating to infestations and diseases of timber."
- SCHEDULED BUT NOT TAKEN UP
PREVIOUS SENATE COMMITTEE ACTION
HB 73 - See Labor and Commerce minutes dated 2/24/98 and 3/3/98
and Resources Committee minutes dated 4/29/98.
HB 204 - See Resources Committee minutes dated 4/22/98, 4/28/98.
HB 284 - No previous action to record.
WITNESS REGISTER
Commissioner John Shively
Department of Natural Resources
400 Willoughby Ave.
Juneau, AK 99801-1724
Ron Duncan, President
GCI
2550 Denali St., Suite 1000
Anchorage, AK 99501
Lowell Humphrey, General Manager
KANAS Telecom, Inc.
Anchorage, AK
John Burns, Vice President, Alaska Projects
World Net Communications, Inc.
1029 West 3rd Ave.
Anchorage, AK 99501
Ms. Laurie Herman, Director
External Affairs
AT&T Alascom
210 E. Bluff Drive
Anchorage, AK 99501
ACTION NARRATIVE
TAPE 98-39, SIDE A
Number 001
CHAIRMAN HALFORD called the Senate Resources Committee meeting to
order at 3:45 p.m.
CHAIRMAN HALFORD stated the overview on the fiber optics rights-of-
way question was scheduled primarily based on a letter he received
from Governor Knowles on May 1. He then invited Commissioner
Shively to the table to address the committee.
COMMISSIONER JOHN SHIVELY, Department of Natural Resources, stated
he would present a brief overview of the situation and then respond
to questions from the committee. He noted it was actually the
third hearing held on the issue.
COMMISSIONER SHIVELY said there are a variety of state agencies
that can give rights-of-way, and fiber optics, because it is
somewhat new technology and because there is a lot of money
involved, has raised some interest on behalf of both the state
administration about how we go about giving rights-of-way to
private companies. Traditionally, the state has sought to
encourage infrastructure development, and a lot of law that's on
the books or regulations that are on the books lead towards
encouraging development.
He said that is one of the paths we can go down here, and the other
is maximizing revenue. There are least six state agencies that
could provide rights-of-way to fiber optics companies. Two of
those, the University of Alaska and the Mental Health Lands Trust,
generally do not have large pieces of land, and, therefore, aren't
big players here. The Alaska Railroad, which has negotiated some
very lucrative arrangements with a couple of companies, is another.
There are two parts of DNR: their general public lands and an
application for a right-of-way through Chugach State Park along the
power line. He said ordinarily they probably wouldn't lease in
parks, but because there is a utility right-of-way that existed
before the parks, they could do that. The final state agency is the
Department of Transportation and Public Facilities. DOT/PF is
basically prevented by law from charging for rights-of-way. They
can charge a one-time fee for the permit, which is essentially a
processing fee, but they cannot charge an annual rental rate.
Traditionally, the Department of Natural Resources has done one of
two things with utility rights-of-way. One, which they are
required to do for nonprofits by law, and the other, which they
have sometimes done even for profit making utility companies, is to
charge a one-time 10 cents a linear foot fee. Recently, the
department has been more accustomed to charging an annual rate
based on a value of land or the right in land that they are giving
away, and that, by regulation, equates right now to about $100 an
acre. That equates to about six cents a foot, although that is for
about a 20-foot wide right-of-way. If people wanted a wider right-
of-way, it would be more.
COMMISSIONER SHIVELY related that the Alaska Railroad has
negotiated rights-of-way that basically started around 47 and 48
cents, and then they have some ability to share revenues. DNR has
never, at least on public lands, thought that they really
negotiate; they have the ability to set this fee. The department
has another ability, by regulation, which they have never used
before, and that is to make a value of use. And here the value of
the right and the land to put in a cable, particularly because a
big portion of this is across the bottom of Prince William Sound,
can equate to around $100 an acre or six cents a linear foot, but
they believe that if that was valued on the use to the customer, in
this case the fiber optics people, and based on what they've seen
at the railroad, they could get that up to 50 cents a foot.
CHAIRMAN HALFORD asked what he meant about a recently changed
attitude. COMMISSIONER SHIVELY said in the last three years, as
the Alaska Railroad negotiated these more lucrative deals, it
caused DNR to relook at what they were doing.
CHAIRMAN HALFORD asked the difference to the state in fiber optics
and putting up 500 paired phone cables. COMMISSIONER SHIVELY
responded that there is no difference to the state. Fiber optics,
because so much can go across it, is a much more lucrative use of
the land, so you are basically trying to determine what that use
could be.
COMMISSIONER SHIVELY said DNR is not convinced that the 50 cents
would necessarily survive an appraisal. If they had set the 50-
cent per foot rate for whichever of the three companies that are
in front of them, they would have the right to come in and do an
appraisal, and so it could be lower. What they ultimately chose to
do was do is what they have traditionally done, which was to take
the $100 an acre. He related he received a letter from the four
Finance Committee co-chairs in February that indicated that was an
appropriate amount.
COMMISSIONER SHIVELY said after the correspondence that transpired
between the Governor and the Legislature and the two hearings that
took place, they just wanted to make it clear to the Legislature
where they were. In March, it was initially spelled out that it
was their intent to proceed using what they traditionally use,
which was $100 an acre for public lands. In their letter they
agreed, as had been suggested in a Sense of the House motion, to
put together a group in the interim to look at setting what is
called a consistent state policy, and that they would issue the
rights-of-way at their existing rate for a period of five years.
CHAIRMAN HALFORD noted in a letter from Speaker Phillips to the
Governor, she urged equal treatment for all, and he asked how that
compared to a previous communication from the Legislature.
COMMISSIONER SHIVELY replied that he didn't believe it was possible
unless the Legislature wants to set a state policy for all state
lands, and it means amending DOT statutes, DNR statutes, railroad
statutes, etc.
CHAIRMAN HALFORD said his concern is with getting a letter on May
1 effecting a major resource policy to get changed with an
adjournment date 12 days away, and yet he doesn't want to be tied
to the communication of individual legislators as that being the
policy of the Legislature.
Number 220
SENATOR WARD asked if any thought has been given to other options
to resolve this issue. COMMISSIONER SHIVELY replied there are a
variety of ways to solve this, and they believe the appropriate
method is to bring the various state interests together in the
interim and make a recommendation to the next Legislature.
CHAIRMAN HALFORD asked if they feel that they have to issue leases
under the existing policy. COMMISSIONER SHIVELY responded that if
the existing policy is the $100 an acre fee, he has the option of
doing that or the option of doing a use value and subject
themselves to an appraisal. They have chosen to do what they have
traditionally done. He added that DOT has no option to do anything
else than what they've already done.
In discussing the issue of the use of fair market value,
COMMISSIONER SHIVELY said they have traditionally used the value
of the land to determine the fair market value. The value of the
use is another way to get to fair market value. They believe that
would get a higher rate, although that can't be guaranteed because
they have never seen an appraisal done on that.
SENATOR TAYLOR asked if when it came to Powerline Pass and Chugach
State Park, were they charging for the use of the land or the land
value, because there they charged well above 50 cents a foot and
then required installation of a conduit large enough that it could
handle future users that might want to go up through that same
area. He concluded that DNR land right along side of the park gets
charged six cents, but if it is in the park, it is 50 cents plus a
conduit that is very expensive to put in. COMMISSIONER SHIVELY
explained that although they were required to put in an extra
conduit, they will get credit off of the 50 cents for putting that
in. That agreement has not been finalized, but that is the concept
of it. He added that he does believe that the park land is more
valuable.
SENATOR TAYLOR asked how they came up with the 50-cent rate.
COMMISSIONER SHIVELY answered that it was a negotiated rate, and
they looked at what they thought the market was, but they did it
because it was park land. It was A different situation, and it was
not a fee schedule the way that there is a fee schedule in their
regulations for general public use lands. They don't have a fee
schedule for utilities across park lands because they basically
don't do it. The right-of-way was negotiated between the park
people and GCI.
SENATOR TAYLOR said his concern is that each of these decisions
make huge dollar differences for the applicant, and he suggested
that maybe that needs some semblance of stability or review of
policy other than just a two or three-day window. COMMISSIONER
SHIVELY responded that the issue was discussed for several months,
not two or three days.
CHAIRMAN HALFORD noted that the Governor's May 1 letter indicated
it was stated it was the Administration's intent to go ahead with
the six-cent rate for a period of five years, and he asked why a
five-year rate was picked. COMMISSIONER SHIVELY replied that DNR
has traditionally reappraised their rights-of-way at the end of
five years. CHAIRMAN HALFORD concluded that if the Legislature
were actually going to do something next year, and there was a
committee that was going to work on it in the interim, they might
choose to issue leases and have a two-year reopener, for example.
COMMISSIONER SHIVELY agreed that was in the realm of possibility.
Number 465
RON DUNCAN, President of GCI, said there are three principle things
that need to be looked at. The first thing is three key issues
with respect to rights-of-way: (1) the importance of fiber optic
facilities; (2) the fact that not all rights-of-way are the same;
and (3) the fact that policy and tax stability are real important
to industry investment.
MR. DUNCAN said fiber optics is a tremendously important
infrastructure for the state, providing the back bone of the modern
communications systems. The availability of fiber optics and the
consequent low cost is becoming critically important to the
economic development of the state's infrastructure. He noted that
in merely two years, the Telecommunications Information Council,
in their assessment of state telecom policy, suggested that perhaps
the state was going to have to subsidize, by as much as $50
million, the installation of the next fiber optic cable into Alaska
because the participants in the marketplace didn't appear to able
to make the market economics work and the state had a critical
need for the fiber optic infrastructure. So in the space of 24
months, the state has come from a state that had a
telecommunications policy concern where perhaps it was going to
have subsidize fiber optics to a situation where the state is now
saying that maybe it should be heavily taxing these things by going
to some sort of a value of use phenomena.
CHAIRMAN HALFORD inquired if there were any operational fiber
optics right now. MR. DUNCAN replied that the line along the
railroad is operational, but he didn't know if it was carrying any
paying traffic as yet.
MR. DUNCAN said the second point on rights-of-way is that not all
rights-of-way are the same, with seven different granting agencies
within the state, and different rights-of-way also have different
characteristics. Those different characteristics create differing
values in those rights-of-way to users. They look at construction
costs, security, maintainability, and market size. He noted the
installation process on a railroad has relatively high efficiency
and relatively low unit cost, and there is less chance of a cable
being dug up as can happen with highway rights-of-way. Remote
rights-of-way are somewhat more secure although access to them can
be a very significant problem if an outage occurs. Maintainability
is really the issue of what is the response time to repair.
Terrestrial rights-of-way have a tremendous advantage over under
sea rights-of-way where the maintenance cost is much higher. The
market size in Alaska is potentially much smaller than in other
parts of the U.S.
MR. DUNCAN said in Alaska there is the situation of where
exclusivity creates a potential value to the owner of a right-of-
way. If there is only one right-of-way available and there are
potentially multiple users for that same right-of-way, that right-
of-way has a lot more value than a situation where there are an
unlimited number of rights-of-way and a very limited number of
users. He said you have to be very careful in how you are valuing
the fiber optic rights-of-way and what you are saying the market
value of that right-of-way is. This issue has been largely raised
by World Net who is attempting to persuade people that the 50 cents
a foot, if they really paid 50 cents a foot along the railroad,
sets a price that should be used defacto for all other rights-of-
way. Doing that artificially raises the price of other rights-of-
way, which are essentially in infinite supply, and by raising the
price it chokes off consumption. He suggested in addressing the
World Net issue, you have to address first of all what they are
paying, and second of all what is parity. World Net negotiated
one-on-one with the railroad without any public policy input from
anyone, without any knowledge from competitors that this was going
on, and they paid whatever they thought it was worth. Now they're
saying the terms and conditions negotiated in private by one
company to meet their specific interests now becomes the defacto
standard to be imposed on all other companies.
The third point on rights-of-way is that policy and tax stability
are important. In February 1997, KANAS, the company building the
fiber optic cable along the pipeline corridor, was in the same box
GCI is in today. They had applied for their permits eight or ten
months before then, and the state failed to issue those permits in
a timely manner. When it finally came down to the point that they
had to have the permits or lose the project, the state came to them
with a offer to pay them more than they are entitled to under the
regulations or to give the state some free capacity in its fiber
optic cable.
TAPE 98-39, SIDE B
Number 585
MR. DUNCAN said now this issue comes up again when GCI happens to
be in the same box that KANAS was in where they have a $130 million
project, which they've spent more than half on, there is no way to
back out at this point, but they don't have their permits yet.
These permits have been in the process for eight months, and now
they are in a political trap of where now that they are underway
with the project, they ought to raise the price of the permits.
He said that's not policy stability. It is a tax stability issue
too, because the value of use is essentially an excise tax or a
royalty and it is an opportunity to stick industry for a little
more money, and maybe even more still now that they are in a box
where they have already spent $60 million starting this project.
He said that is not the kind of stability that is going to induce
the economic investment that the state said two years ago it was
willing to subsidize to the tune of $50 million.
MR. DUNCAN said with respect to the existing cable, they are in
box. GCI has spent almost $80 million on the cable to Seattle and,
while it is a certain this may result in endless litigation, that
cable is going to be constructed at this point because there is no
way to back away from that project. He questioned if that is
reasonable and sends good signals to the industry. He said when
GCI clearly was encouraged to plan this project under existing
structures, they expected to pay $97,000 a year for their right-of-
way, and it is now being suggested that right-of-way should cost
perhaps as much as $800,000 a year. Had GCI known that in advance,
they would have designed a very different route. If they'd known
that the state was thinking of charging 50 cents a foot, they would
have dropped Valdez and Juneau from the construction program
because $30 million extra in cost to run the cable into those two
locations, combined with an $800,000 increase in operating costs,
would have simply wiped those markets off the economic feasibility
scale.
MR. DUNCAN said this situation makes a big difference for what
happens next. Within five to six years, GCI will be building a
second cable, not because the first will be out of capacity, but
because there won't be an adequate capacity to back up the first
cable. Even though they won't make any more money by building a
second cable, GCI will need to construct and the state will need to
have a second cable so that if one of the two is cut the
communications can run around in the other direction. This second
route would run from Anchorage to Seattle and include all of
Southeast Alaska in a looped system. Under the existing
regulations, that system would cost GCI $121,000 in rights-of-way,
however, under the proposed 50 cents a foot rate, that system would
cost more than $1,000,000 dollars a year in rights-of-way, which
would clearly sink the project.
MR. DUNCAN said if the state wants single thread into Juneau, and
it's going to get Juneau only because it didn't change the rates in
time, then it ought to go ahead and bill with this market value of
use price. If the state wants a solid, redundant
telecommunications infrastructure, it should go with the policy
that the Governor is proposing, which is a policy of keeping the
rates low to induce investment.
In his closing comments, MR. DUNCAN said what is going on is phone
wars, and phone wars are always all about competition. World Net
wants less competition, and they want to stop GCI from building
this year. World Net is saying they are going to build a cable to
Seattle, but he doesn't believe they have the customers or the
financing for that cable yet. He said what is going on is an
effort to stop the issuance of the permits or condition them in a
way that GCI doesn't make this year's construction season thus
buying World Net what it really wants, which is another year to
decide to build to Seattle.
Number 463
CHAIRMAN HALFORD asked if it would do any harm if the Governor were
to go forward and issue these permits with a relatively short-term
reopener. MR. DUNCAN replied that it doesn't do the state any harm
in the sense that it is going to get the current cable because GCI
is in a corner that it can't get out of. However, it isn't
consistent with the message that the Legislature has on other
fronts attempted to send to industry that it's going to invite
investment by offering stable tax and investment policies. He said
it is unfair to GCI who planned the project based on rate and is
now being asked to take an open-ended exposure for as much as a ten
times increase in that rate. He did say that GCI would go along
with a reopener if that reopener was nondiscriminatory across all
utilities.
SENATOR TAYLOR expressed his displeasure with Mr. Duncan blaming
the Legislature for trapping GCI in a box. He said there wasn't
one person in the room who did that, and he should be placing the
blame on the Governor's office on the third floor. He said he
personally wants to see something that is flat, equal and open for
every single person out there that wants to build a cable.
MR. DUNCAN apologized for using the word "you" when he should have
stated "the state," however, he did add that there are people in
the Legislature who have made efforts to hold them up on their
project. He agreed that there have been disagreements within the
bureaucracy as to the appropriate amount to charge, but he pointed
out that at this point, this is a case where the Governor is trying
to do the right thing by keeping the rates low to induce
investments.
Number 380
LOWELL HUMPHREY, General Manager, KANAS Telecom, Inc., explained
that three years ago, KANAS, which is made up of three Native
Corporations and MFS Network Technologies, made decisions on the
financing of their projects, and pursued the Alyeska long-term
project. In order to win that job, they had to bid a 15-year hard
dollar price, which they did at that time based on the state's
historical approach to rights-of-way cost and all the associated
risks with the project. There were delays by DOT/PF from the
beginning of the project, and it was suggested by them to allow
the use of some of KANAS's fibers so that the state could put in
their own network in direct competition to them. It was finally
agreed that DOT/PF would stick with what their regulations said,
and KANAS got their permits for DOT lands. Close to half of their
right-of-way is DOT, and they have 840 miles of fiber in the ground
today, and they will be starting traffic on that the first of
September. The total DNR right-of-way mileage is approximately 260
miles.
KANAS believed that the state would follow its historical approach
on appraisal so they proceeded with the project accepting the fact
that the appraisal would happen at the conclusion of the project.
They are now at the point of beginning the appraisal process since
their route is now in the ground and ready to go forward. He said
it would be a pretty devastating financial hit to KANAS to go from
the historical, just on the DNR lands where they expected
historically that it would be under $20,000 for the DNR rights-of-
way, and now at the 50 cents, they are looking at closer to
$800,000 for rights-of-way.
MR. HUMPHREY related that KANAS has been looking at some other
projects to expand and serve the other communities where they have
their existing system in place, but if they have to spend for real
expensive rights-of-way to get to these other smaller communities,
they are going to be very reluctant to spend it and they probably
would not be able to bank the job.
MR. HUMPHREY said at $100 an acre, it would cost KANAS
approximately $60,000 a year, which is an acceptable increase to
them, but an $800,000 increase is not. He said KANAS has said in
writing that everyone should be charged consistently.
Concluding, MR. HUMPHREY said the current statement by the
Administration that they would use the $100 an acre for five years
is something KANAS believes they can live with.
Number 265
CHAIRMAN HALFORD asked if he would object the five years being two
or three years. MR. HUMPHREY responded that if it includes all
state agencies, all the utilities, all the people who desire
rights-of way, and everybody is even-handed, then he would be all
for it.
Number 254
SENATOR TAYLOR said Mr. Humphrey had made reference to going
through an appraisal process, and he asked what he assumed the
words "appraisal process" meant. MR. HUMPHREY replied it wasn't
like they had never done an appraisal, it was traditionally the way
an appraisal was done and what the value of the land was. KANAS
looked at the land and anticipated that some of the land might come
in at more than $100 an acre, but they thought a lot of it would
come in under $100 an acre. Their expectation was that their
rights-of-way cost, just for the DNR lands, would be around
$20,000.
SENATOR TAYLOR suggested that KANAS may well be better off to have
this Legislature grant them an interim permit for two years, to get
a committee to look at what this is really worth, do some kind of
an appraisal and come up some kind of number. He said he thinks
they would be better off in that fashion and couldn't be held
hostage by the Administration in coming up with whatever they want
to come up with.
Number 166
JOHN BURNS, Vice President for Alaska Projects, World Net
Communications, Inc., testifying via teleconference from Anchorage,
said through their investment in Alaska Fiber Star, World Net
participated in the construction of a high capacity fiber optic
cable from Anchorage to Fairbanks last summer. An affiliated
company is currently constructing a high capacity fiber optic
project between Alaska and Oregon. Altogether, they have committed
over $150 million for Alaska telecommunications projects.
MR. BURNS said he wanted to address some misconceptions. First of
all, the Administration has said that six cents a linear foot is a
historic price, but it has been testified that there has never been
a fiber optic project along a substantial corridor that has ever
been priced at six cents a linear foot. MFS KANAS project
documents dating back to 1996 show that the notion of an appraisal
was first raised in the entry permit process and was committed to
for the balance of the project. In terms of historical
perspective, there other projects such as Alascom's permit with the
railroad in 1994 which was established by appraisal. Alascom chose
to get out of that permit the following year. Subsequently, Alaska
Fiber Star's permit, WCI's permit, GCI's permit with the railroad,
all have utilized the railroad's appraisal process.
MR. BURNS said a second misconception is the Administration saying
that an administrative act is needed to pursue anything other than
the six cents a foot proposal. He said this is not true, because
as was discussed earlier by the Commissioner, he does have the
means to use an appraisal with purely a decision between the
Commissioner and the Governor.
The third misconception is that Alaska Fiber Star is using an
exclusive right-of-way. The right-of-way language applied to the
Alaska Fiber Star project is specific. Within 25 feet other
utilities can be placed within 25 feet. The only exception is
fiber optics. The Alaska Railroad has a 200 foot right-of-way,
therefore, theoretically, as many as eight corridors could be
available.
The fourth misconception is that the pricing of six cents a foot
needs to be made a decision now because pricing is holding up the
development of projects is also untrue. He said projects have been
finished and are underway and all these decisions were made months
and months ago.
MR. BURNS said when World Net Communications came to Alaska and
decided to invest in the Alaska Fiber Star project, it believed
that Alaska provided opportunities to provide competitive
telecommunication services under a set of rules that applied to all
competitors, and, in fact, that is what the Telecommunications Act
of 1996 requires. Fairness is the key to competition, but it
appears that his spring, beginning in March, fairness will not be
offered in Alaska. The fact is that the AFS permit from the
railroad was established by an independent third-party appraisal
and will pay the railroad approximately $1.8 million a year in 35
years as a minimum, and there is the opportunity for the railroad
to earn much more. On the other hand, the MFS KANAS permit issued
by the Department of Natural Resources is only waiting for its
appraisal. They agreed to have that value set by appraisal. The
question of fairness is why in March, 1998 the Administration
intervened, setting aside valuation by appraisal and unilaterally
stated that all permits, including MFS KANAS permit, would be at
six cents a foot.
MR. BURNS said he wanted to correct another misconception stated
earlier by Mr. Duncan. He stated WCI would never recommend a
single figure and has not advocated a policy of 50 cents a foot.
WCI advocates a policy of appraisal, which, he said, is the only
true fair way to get a value for the state that is also fair to the
company that requests the right-of-way.
Concluding his testimony, MR. BURNS said before we finish with the
question of fairness, there is the issue of what is fair between
companies such as AFS and the state. When AFS wanted to utilize
public access to make their commercial project viable, they agreed
to pay a market-based fee because it was fair to the railroad and
the state, because any corridor between two commercially
significant locations is a valuable asset, and if happens to be
owned by the state, then the state should receive the appropriate
compensation.
CHAIRMAN HALFORD asked if the Alaska Railroad rates on Fiber Star,
on GCI, and on the old Alascom permit were all set by appraisal.
MR. BURNS responded that for AFS, GCI and World Net Communications
the rates were all set by appraisal. The old Alascom one was
before the railroad had instituted its appraisal process.
CHAIRMAN HALFORD asked what that Alascom rate was. MR. BURNS
answered that there is a permit rate plus provision to the railroad
of a spare fiber and copper wire.
CHAIRMAN HALFORD asked if that Alascom permit had expired. LAURIE
HERMAN, representing the AT&T Alascom, related that the Alaska
Railroad permit he was speaking to was between Anchorage and
Fairbanks. Alascom originally applied for a permit on the railroad
right-of-way between Anchorage and Fairbanks, and shortly after the
acquisition of Alascom by AT&T, they exercised their option not to
pursue that lease. There is an existing lease between Anchorage
and Seward where the North Pacific cable spur comes from Seward to
Anchorage. That is in existence today and is the lease that was
negotiated prior to there being an appraisal policy at the Alaska
Railroad.
CHAIRMAN HALFORD asked if the appraisal is based on the value of
land or an appraisal based on value of use. MR. BURNS replied that
it is an appraisal based upon the value of land that is simpled
into a corridor. The notion is that value to someone desiring the
corridor is based upon the two points or multiple points they chose
to connect.
CHAIRMAN HALFORD stated the Senate was about to go back into
session, and that discussion on fiber optic rights-of-way would
continue the following day. He adjourned the meeting at 5:15 p.m.
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