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Broadband projects take a bumpy ride

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Kevin Beyer
Kevin Beyer, general manager for Farmers Mutual Telephone Co., in Bellingham, Minn., stands among an assortment of spools containing fiber optic cable near Dawson in western Minnesota on Friday, March 23, 2012. This $10 million project is being funded with stimulus dollars to increase broadband capacity in Lac qui Parle County.
Photo by Ann Arbor Miller for MPR News

A project to bring high-speed Internet access to 1,500 homes in Lac qui Parle County in western Minnesota was supposed to be well under way by now. It had federal approval and millions in federal stimulus dollars at the ready, but last spring the project hit a snag. Farmers Mutual, the local telephone company building the network, couldn't lay its hands on the necessary fiber optic cable.

That was one example of how almost two years after more than $200 million in federal dollars were awarded to 18 broadband projects in Minnesota, some have encountered difficulties, including a dearth of fiber.

A cable drought has been caused by high demand from a crush of stimulus-induced broadband projects nationwide coupled with a Japanese earthquake a year ago that destroyed a major fiber manufacturing plant. Farmers Mutual finally obtained the fiber it needed, but not until last October, which didn't leave much time for construction before winter set in.

"[T]he fiber that did show up went to the folks who order more large quantities on a regular basis," said Farmers general manager Kevin Beyer.  In other words, the $10 million western Minnesota project couldn't compete with bigger players with more clout. "The first orders filled should have been ours since we ordered ahead of others," he said. "But the game got changed a bit. There was a reshuffling of who mattered." Completion of the project could be delayed by as much as a year, he said, to 2015.

Kevin Beyer
Kevin Beyer, general manager for Farmers Mutual Telephone Co., in Bellingham, Minn., holds a roll of warning tape in a staging area southeast of Dawson, Minn., on Friday, March 23, 2012. Sections of the tape, which is normally bright orange, have faded due to sun exposure.
Photo by Ann Arbor Miller for MPR News

There is a drive in Minnesota to bring high-speed Internet to the far reaches of the state, from Cook County in the Arrowhead to Freeborn County in the south, so rural areas can reap benefits related to economic development, education,  high-tech medical services and more. Ideally, they would be completed as soon as possible, both for the sake of consumers and because broadband stimulus dollars come with deadlines.

Eighteen local construction projects won federal grants and loans as part of the Recovery Act of 2009 totaling almost $229 million. They come in all shapes and sizes. Some will be owned by the public, while others will be built and run by small phone companies and electric coops. And they are at various stages of completion. The federal government's Recovery.gov website lists 14 as less than 50 percent completed, two as more than 50 percent completed and two as not yet started.

"The first orders filled should have been ours since we ordered ahead of others. But the game got changed a bit."

Many have proceeded without hitches. But others have faced obstacles like difficulty obtaining building materials, opposition from incumbent providers, cost overruns, frustratingly slow bureaucracies and trouble clearing environmental hurdles.

Terry Wegener with the Winnebago telephone cooperative in Lake Mills, Iowa, which is building a fiber project that extends into southern Minnesota, said permitting delayed the project's start by months. "We wanted to start in April, but we didn't get to start until August because of the environmental permitting."

The project didn't have trouble landing fiber, he said, but the cost was higher because of the shortage.

PAPERWORK MOVES SLOWLY

Originally, stimulus-funded broadband projects had three years to cross the finish line from the date agreements were executed. But some awardees have been reluctant to start building for fear they couldn't meet the deadline. That led the Rural Utilities Service, a division of the U.S. Department of Agriculture managing stimulus broadband projects, to revamp and extend the ultimate timelines for many efforts. Now, all projects, no matter when they start, have until 2015.

In an email exchange with MPR News, a RUS representative indicated that some awardees were so concerned about the original deadlines, they considered canceling their deals. Extensions to 2015 were always possible, the representative said, and now projects won't be rushed. In October, RUS sent letters to awardees and hosted a webinar with the goal of speeding things along. The agency listed only six completed projects nationwide at the time, including two built by Halstad Telephone in northwestern Minnesota. The company is rolling out three networks over a territory that includes portions of Norman and Polk counties and reaches into North Dakota. The North Dakota networks are completed and the one in Minnesota, which will serve more than 1,000 households including farms, should be done by fall.

Halstad was selected early and chose not to wait for stimulus dollars to be in hand, therefore securing most of the needed fiber before the shortage took hold. "We just jumped on it," said Tim Maroney, Halstad's CEO. "We didn't wait for the money to come. We started the engineering and negotiations. We took a chance."

Some project delays are the fault of RUS itself, according to Doug Dawson, who owns a broadband project consulting company called CCG, with offices in Maryland and Louisiana. "My understanding is the grant paperwork was more complicated than expected and all projects are taking longer in RUS's office," he said. "They have these rigorous hoops you have to jump through. And there are not enough people at their end to get it approved. The holdup is on them. They weren't staffed for the work."

The RUS representative said that since the broadband programs are new, awards were made in the last months of the Recovery Act and had to get in line behind other infrastructure projects with regard to regulatory clearance. The email statement asserted no knowledge of RUS paperwork backlogs on projects proceeding under the original terms of their applications. Projects that have been altered may have required additional review.

In Cook County, the Arrowhead Electric cooperative has been waiting for months for final RUS approval of its fiber-to-the-home network. The delay is mainly due to a staff change at the agency, said Joe Buttweiler, Arrowhead's director of broadband projects. "We thought approval would be coming. We had a RUS field person, but that person left. . . . We got the new person in December. We didn't hear much between then and a few weeks ago."

That's when Buttweiler was told the co-op had to secure formal agreements with the partner companies who will help provide services through the fiber network, something he said they hadn't been told previously. Arrowhead is gathering the necessary paperwork and hopes the nod, and the dollars from RUS will come quickly.

"We had hoped it would be resolved by now," Buttweiler said, noting that it's hard to sit on his hands when spring has come so early. "It's unfortunate that out of all the years, when we have all this construction to do, we have this weather. Come on. What horrible luck. On the flip side, extra time to plan and make sure you're organized is not a bad thing either."

The project isn't behind--Arrowhead strung some aerial fiber last year, fronting the cost out-of-pocket--but completion by the end of 2012, as originally planned, is starting to look optimistic.

SCRAMBLING FOR FIBER

Dawson and CCG have managed the rollout of fiber projects in the Caribbean, Vietnam and just about every state in the U.S., including one here, in Monticello. They're hoping to build another local project in Sibley and Renville counties in western Minnesota. Local officials there are expected to vote in the coming weeks on whether to sell bonds to pay for the publicly-owned fiber project.

Dawson hopes the fiber shortage, which has driven prices up by 15 to 20 percent, won't be an issue by the time the project is ready to go. "We expect it to be back to normal next year, in 2013," he said. "We'll find the fiber somewhere for Sibley and Renville." He said he's taken steps to reserve the requisite cable, "but if somebody bigger and richer than us wants it, it's gone."

Broadband project managers have become crafty scavengers, Dawson said, sometimes piecing together remnants to make do, a mile of cable here and another there. "We've figured it out," he said. "We've gone to other people who have built and have a half a mile on the shelf. People are getting chummy." He says there is a lot of swapping and trading, especially among commercial clients.

Lake County, Cook County's neighbor to the west, won the largest broadband stimulus award in the state, $66 million to build a publicly-owned fiber network that will reach every home in Lake County and a few in St. Louis County . The project has been delayed for a variety of reasons, including a controversy that forced a change in the management team overseeing the project.

After that, Lake County had to make its way through the approval process at RUS. "We look at it this way," said Lake County Commissioner Paul Bergman, who has championed the project, "they got 300 approved applications and the great leaders in Congress didn't give them more people. There has been a strain on them but it's not really their fault. It's like a mob scene going into a concert and there is only one security person."

Now, with stimulus money finally in hand and construction season drawing near, Lake County is having trouble buying fiber optic cable. The wait, Bergman said, is 36 weeks. The county placed its order in February, which means the cable should arrive this fall. "We could have ordered it earlier, except the tough part was we didn't have the money in hand." He said the county was reluctant to spend dollars up front and wait for reimbursement "without [RUS] saying we had all our 'i's dotted and 't's crossed." 

In the meantime, Lake County will begin the above-ground phase of its project. It will have a groundbreaking at the end of April and start hanging an easier-to-get type of cable on poles. "As soon as that's here, we're going," Bergman said.