Minnesotans raise their hands for FCC broadband money

Rural and small-town residents of Minnesota are waving their arms more fervently than just about anybody else in the country to latch on to federal help for better Internet service.

Small phone companies, electrical utilities, townships, cities and newly formed cooperatives have flooded the Federal Communications Commission with ready-made project ideas that would get fast broadband service where it's never been.

At the same time, three big national companies that provide phone and Internet service to much of rural Minnesota are going to make decisions in the coming months that could determine for years what the rural broadband landscape will look like.

broadband map 5-1-14
Internet speeds vary throughout Minnesota. Counties in yellow have the fewest households with high-speed access.

On both those fronts, the FCC is on a track that could substantially alter the landscape for high-speed Internet in rural Minnesota by the end of the year.

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Here's what's going on:

The FCC has a big pot of money known as the Connect America Fund, collected from telecommunications customers like you and me across the country as part of our phone bills.

The money used to be aimed at getting phone service to hard-to-reach areas; now it's targeted more for high-speed Internet access. Most of the people living in areas without good access are in the service areas of the nation's huge phone companies.

So the FCC is aiming a lot of the money at those companies to get them to improve service in their underserved areas.

In Minnesota, that's CenturyLink, Frontier and Windstream. In a few months, the FCC will make those companies an offer: Here's X million dollars to build out better service to Y thousand residents.

The FCC is still pinning things down but the total for those three is expected to be around $86 million a year to serve some 167,000 locations in the state, according to Tom Koutsky, chief policy counsel for Connected Nation, which hosted a Minnesota-targeted webinar Thursday on the topic.

If the companies take the deal, they will commit to a substantial improvement in Minnesota's rural broadband service.

If they don't, it's not the end of the story.

The FCC realizes some companies will refuse the deal, figuring the money isn't enough for the effort required. So in January, it announced it wanted to figure out how other organizations might be enticed to extend broadband service with the money the big companies don't claim.

It got more than 1,000 "expressions of interest," 62 of them from Minnesota, more than any other state. Some would get service to a few dozen people in the North Woods; others would string fiber to thousands throughout farm country.

It's not clear how much money would be available and it's not clear how the FCC will make choices. Those questions should be answered later this year, Koutsky said.

But if nothing else, given that the Minnesota Legislature is debating whether to make available $25 million in matching money for rural broadband projects, the list of Minnesota proposals speaks to the high demand for better broadband service.

Many of the proposals also speak to the frustration rural residents have expressed with their existing Internet providers, the big companies getting first crack at the Connect America Fund money.

Here are a few proposals that Minnesotans fired off to the FCC:

  • RS Fiber, a cooperative formed in Sibley and Renville counties to extend fiber services to farms and small towns, wants help with a $55 million project. Its letter of interest to the FCC mentions the existing Internet providers in the area, mainly CenturyLink, Frontier and Mediacom cable, noting that their service often falls short of advertised speeds and then stating flatly:

"The communities have approached all three providers and asked them to work with the communities to build the fiber network. They all refused. Then the communities offered to put up the money to construct the network and the providers could operate and eventually own the network. None of them were interested."

  • Lake Region Electric Cooperative is an electricity provider in the Pelican Rapids area that isn't in the telecommunications business but thinks it might like to take advantage of its rights of way and electric infrastructure to improve on what it considers poor broadband service in its area. Connexus Energy in Ramsey, is another electrical cooperative seeking support for a project.

  • The Leech Lake Band of Ojibwe wants to create a $10 million system to provide a fiber and wireless system for its reservation. It, too, took a slap at the existing provider, CenturyLink, and CenturyLink's predecessor. "Qwest/CenturyLink has historically been non‐responsive to tribal service requests," the band told the FCC.

  • Christensen Communications Co., the phone company in Madelia wants to embark on a $350,000 project to extend wireless broadband to the neighboring small towns of Lewisville, Darfur, Butterfield and Odin.

  • Federated Telephone, which has installed an extensive network of high-speed fiber in west central Minnesota, wants to extend that network and, in particular, invite area electrical utilities to the table so that the system could test "smart grid" technology for electrical customers, creating infrastructure for automatic metering, load control and smart home technology.

  • Arvig Enterprises, which provides phone and Internet services sent the FCC a number of small proposals serving as few as a dozen or two households in Todd, Stearns, Redwood, Hubbard and Otter Tail.

You can find a full FCC explanation of the project here. For a spreadsheet containing the full national list, click on the "List of Expressions of Interest." You can sort the data by state for a quicker understanding of Minnesota's proposals.

Koutsky said "Minnesota is punching above its weight" by offering a multitude of ready-to-go ideas with great variety.

In theory, the FCC could pay, say, CenturyLink in Minnesota and still finance a smaller operation proposed by someone else. But Koutsky said it would seem harder to convince the FCC to pay for a community project if it had just forked over millions to CenturyLink for improvements  in the same region.

Will the big companies in Minnesota take the money from the FCC?

Jack Phillips, director of regulatory and external affairs for Frontier Communciations, said he expected the company would participate, "but the devil is in the details."

The FCC's offer has to make financial sense for the company, he said. One big factor is whether the FCC will require new service to be at 10 megabits per second instead of its existing standard of 4 megabits per second. (You pretty much need 10 megabits if you have a big demand for file-sharing, video conference calls, heavy duty gaming.)

That would be more expensive to build, so the FCC offer would have to accommodate the increase, he said.

Phillips also said Frontier would "absolutely" be interested in participating in any Minnesota financing program but said the company worries that the state would include projects in areas that already have service.

As for the criticism Frontier and other big companies get in some rural areas, he said Frontier covers 95 percent of its territory with broadband but once you get a few miles outside towns, it's hard to make the business case that's a good investment.

(If CenturyLink responds, I'll update this post.)

Even if the Minnesota projects go nowhere with the FCC, they already may have had an impact here in the state.

For the first time, lawmakers here are considering whether to spend money on broadband infrastructure, and the idea has backing from Gov. Mark Dayton. But "there was concern from the governor and others there might not be enough interest," said Christopher Mitchell, analyst with the Institute for Local Self-Reliance. "This answers that."