Broadband grant program

A crew buries a fiber optic cable along County Road 8 in Sibley County as part of the RS Fiber Cooperative project. That project was supported in part through the first round of the state's Border-to-Border Broadband Development Grant Program. File photo

As state lawmakers work their way toward the end of the session next month, they'll have to deal with an increasing call for more broadband funding than ever before.

The problem is Democrats and Republicans can't agree on how much to spend, nor what to spend it on — all while falling short of a state task force's recommended funding proposal.

The Republican-controlled House of Representatives passed a budget bill Wednesday that included $40 million over the next two years for the state Office of Broadband's grant programs — $15 million this year and $25 million the year after.

Earlier Wednesday, rural Senate Democrats held a press conference promoting the Senate DFL's $85 million plan to fund broadband grants this year.

That's not the only difference between the two parties, however. Republicans are pushing for broadband money to go toward wireless communications equipment, while the Senate is pushing for fiber-to-the-premises network infrastructure.

Yet both plans are less than half of the $200 million needed for a jump-start on getting more high-speed Internet access to rural Minnesota, according to a state broadband task force report released earlier this year.

Area lawmakers say assigning $200 million in broadband is an unrealistic goal for this session, however.

"If we got $90 million to $100 million this year, it would be a real good start," said Rep. Jack Considine, DFL-Mankato.

From an economic standpoint, rural lobbyists say the Senate's plan is the only good option for outstate Minnesota, not just for a larger share of funding but for key language changes that would make it easier for rural cities to apply for project funding.

"There's more to this discussion than simply money," said Dan Dorman, executive director of Greater Minnesota Partnership, a fiscally minded off-shoot of the Coalition of Greater Minnesota Cities.

Dorman, a former Republican state representative from Albert Lea, likes to joke he's "to the left of Al Franken" on broadband infrastructure after seeing how large Greater Minnesota's need is for more broadband access.

"It bugs me that as a country we're behind Romania and Bulgaria," he said. "As a state we're behind North Dakota and Alaska."

Data troubles

Technically, almost all of Minnesota has Internet access in some form or fashion.

Yet there are still parts of the state, even parts of south-central Minnesota, that run on the kind of dial-up Internet people used in the 1990s. 

Larger cities in the region such as Mankato, Waseca, New Ulm and St. Peter have broadband access that meets Minnesota's Internet goals — download speeds of at least 10 mbps and upload speeds of at least 5 mbps.

That's not true for many rural areas, however, according to 2015 data from the state Department of Employment and Economic Development. Much of Blue Earth, Waseca and Nicollet counties don't have infrastructure that provides those speeds, and usually there's only one Internet provider to serve rural areas.

While broadband in the state has rapidly expanded over the past 10 years, only about 4 out of 5 homes in Greater Minnesota have access to some form of broadband, according to the Governor's Task Force on Broadband. The task force released its annual report in February, where the group highlighted challenges the state faced in expanding broadband access and recommended Minnesota increase its broadband access goals to at least 25 mbps download speed and 3 mbps upload speed.

The 20 percent or so without suitable Internet access adds up to about 144,000 Minnesotans.

It's not easy to expand access to those remaining residents. Companies have to be willing to provide higher broadband speeds if infrastructure is built, and there are few funding sources for communities to draw from to build these projects.

Gov. Mark Dayton created the state Office of Broadband in 2013 to dole out grants for infrastructure projects, but the grant program has been severely underfunded. Lawmakers assigned $20 million to broadband grants in 2014 and $10 million last year.

The Office of Broadband received more than $29 million in requests for funding in 2015, almost three times as much as the fund had.

"There's not a lot of grants for this type of project, period," said Toby Brummer general manager of RS Fiber Cooperative. "It doesn't matter what source you're talking about."

RS Fiber was started in 2010 when residents in Renville and Sibley counties came together to seek funding for a data fiber infrastructure network. That network will one day include 10 cities and 17 townships within the two counties.

The group found a willing partner in Hiawatha Broadband Communications out of Red Wing, which will operate RS Fiber's infrastructure. The network's first phase of construction connecting the 10 cities started last year.

RS Fiber was one of the state's first grant recipients, as they received $1 million after applying in 2014. That's only a small part of the estimated $45 million needed for the project, however.

Minnesota may need up to $1 billion to put in broadband infrastructure across the state, not just for unserved areas but for underserved rural towns. 

Several communities and regions like Renville and Sibley counties have formed plans to install data fiber infrastructure, but not all of those projects qualify for state funding.

That's in part because there are already providers who offer some broadband access, though residents in those communities may not feel like they're properly served. State broadband grants require projects to address unserved rural areas, which leaves out towns and cities with less-than-stellar Internet access.

That turns into an economic development issue for rural cities, said Dorman, which is why he and other lobbyists have pushed lawmakers to change the requirements to dedicate a portion of broadband funding to go toward underserved areas.

"It's not as sexy as asking for $100 million," he said. "It's a little more nuanced, but it's important."

Yet changing those requirements could bring more problems than solutions. Rep. John Petersburg, R-Waseca, said it's important for the Legislature to ensure they don't create an unfair advantage for larger communities or companies.

"We have to be a little bit careful not to subsidize one company over another," he said. "We have to make sure that everybody can access broadband without one community getting a better deal over another."

What to buy

Industry professionals and broadband experts say more money would obviously help Minnesota's broadband situation, but the way it's spent and the technology state money buys is perhaps more important than the funding itself.

Republicans have expressed concerns about the cost of fiber infrastructure in the past, and several lawmakers say technology's evolution could render fiber obsolete in a few years. In addition, some Republican lawmakers have pushed for money to buy wireless hotspots for rural areas.

Earlier this week, the House passed a $7 million bill to provide wireless hotspots for rural school districts.

Yet Democrats and industry professionals say spending money on fiber infrastructure is the best use of public money. Providers can boost data speeds through fiber networks once that infrastructure is in place, which proponents say is a one-time cost rather than continuous maintenance.

"Once you bury it into the ground, the cable itself, that's going to be good for decades," said Bill Eckles, CEO of BEVCOMM, a telecommunications provider based in Faribault County. "The speed you get off of wireless networks for today, it barely works for today's needs. It certainly isn't going to be good for 10 years."

Yet companies like BEVCOMM and community groups like RS Fiber say they would be better served with continuous secured funding over several years instead of the Legislature's current habit of funding broadband on an annual, uneven basis.

"Companies can then sort of plan out when they want to apply for grants," Eckles said. 

BEVCOMM received just shy of $300,000 in grants from the state this year for two projects in Faribault and Freeborn counties. Those grants account for about 40 percent of each project's total cost, however.

Lawmakers will likely work broadband funding out during conference committee meetings between the House and Senate during the next few weeks. While it's unclear how much funding broadband projects will actually receive, lawmakers appear to agree on more funding than ever before — something industry experts welcome.

"The more money they put out there, the more it's going to benefit the people across the state," Brummer said. "It's a necessary thing and it's a proven economic boost for areas."

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