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The Federal Communications Commission announced on Monday that more than $408 million of a $9.2 billion national broadband grant program would be spent over 10 years on developing high-speed internet in rural Minnesota.
That $408 million is the fourth largest sum for any one state, putting Minnesota behind only California, Mississippi and Arkansas.
While local broadband advocates celebrated the infusion of cash, the grant awards also raised some eyebrows. That’s because one relatively small company with Minnesota ties came away with the vast majority of the federal money for the state: LTD Broadband.
The company won nearly $312 million to develop high-speed internet in Minnesota, which is far more than was granted to other competitors, including larger companies like CenturyLink and local cooperatives like Arrowhead Electric. LTD Broadband’s success stretched beyond Minnesota, too. The company was awarded $1.32 billion in total for projects across 15 states, the highest amount of cash for any company in the FCC’s round of grants.
In an interview, Corey Hauer, LTD Broadband’s CEO, said he was confident his company could grow fast and meet the challenge. But local competitors and broadband experts said they were concerned LTD could not deliver what it promised, especially since the company has focused primarily on wireless internet technology while it now promises fiber-optic connections.
“I have no knowledge of their ability, whether they can pull this off or not, or how that’s going to work,” said Bill Coleman, a Minnesota broadband development consultant who runs the company Community Technology Advisors. “I don’t really know them at all.”
FCC grants promise big broadband development
The grant money distributed by the FCC was the first part of a $20.4 billion initiative to increase the availability of high-speed internet in rural parts of the country. The money comes from telecom companies and is largely collected through a fee on phone bills.
Big swaths of Minnesota have trouble accessing broadband, an issue that hampers economic development, but also education and quality of life for rural residents. The problem has become even more apparent during the pandemic as schools were forced to adopt online classes.
The FCC allocated the first $9.2 billion of its Rural Digital Opportunity Fund through a “reverse auction” system, in which companies apply for money by making the case that they can deliver the best service to an area at the lowest price. The money is aimed at areas without internet that carries download speeds of at least 25 megabits per second (Mbps) and upload speeds of 3 Mbps. A 2018 state report found 79 percent of rural Minnesotans have access to internet with 25/3 speeds.
About 99.7 percent of the grant money is for developing internet with 100/20 Mbps speeds and more than 85 percent of locations will get gigabit speeds, which is roughly 1,000 Mbps.
Nationwide, LTD Broadband was awarded $1.32 billion and assigned 528,088 locations to serve, such as houses and businesses. Second in grant money was Charter Communications, at $1.22 billion for 1,057,695 locations, and third was the Rural Electric Cooperative Consortium at $1.10 billion for 618,476 locations.
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| Company | Amount awarded |
|---|---|
| LTD Broadband LLC | $1,320,920,719 |
| CCO Holdings, LLC (Charter Communications) | 1,222,613,870 |
| Rural Electric Cooperative Consortium | 1,104,395,953 |
| Space Exploration Technologies Corp. | 885,509,638 |
| Windstream Services LLC, Debtor-In-Possession | 522,888,780 |
| AMG Technology Investment Group LLC | 429,228,073 |
| Frontier Communications Corporation, DIP | 370,900,833 |
| Resound Networks, LLC | 310,681,609 |
| Connect Everyone LLC | 268,851,316 |
| CenturyLink, Inc. | 262,367,614 |
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In Minnesota, LTD Broadband is supposed to serve 102,005 customers with its $312 million. Arrowhead Electric Cooperative in Cook County, meanwhile, was awarded $18.4 million, the second most money in the state, and Paul Bunyan Rural Telephone Cooperative in Bemidji won $16.3 million. Elon Musk’s SpaceX, which runs the satellite internet service Starlink, was awarded $8.42 million in Minnesota, and CenturyLink got $15.64 million.
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| Company | Amount awarded |
|---|---|
| LTD Broadband LLC | $311,877,936 |
| Arrowhead Electric Cooperative | 18,462,273 |
| Paul Bunyan Rural Telephone Cooperative | 16,307,892 |
| CenturyLink | 15,646,093 |
| Space Exploration Technologies Corp. | 8,424,808 |
| Consortium of AEG and Heron Broadband I | 6,709,428 |
| Windstream Services LLC, Debtor-in-Possession | 6,548,964 |
| Savage Communications | 6,090,479 |
| Midcontinent Communications | 4,453,804 |
| AMG Technology Investment Group | 3,736,316 |
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A small company with Minnesota ties wins big
LTD Broadband is about a decade old, is based in Nevada, and operates in six states — Minnesota, Iowa, South Dakota, Nebraska, Illinois and Wisconsin. The company plans to be in North Dakota by the end of January. Hauer, the company’s CEO, said LTD has about 100 employees, most of whom are in Minnesota. Hauer was born and raised in Minnesota but now lives in Nevada.
The company currently provides service across much of southern Minnesota. Hauer wouldn’t say how many customers LTD has, but said the company has the ability to reach more users in rural Minnesota with high-speed internet than any company in the state.
LTD uses an internet technology called fixed wireless, where homes get service from a signal placed high on a structure, such as a water tower or a silo. It can be delivered cheaper than fiber-optic cables, which require physical connections to houses.
State officials in Minnesota prefer fiber projects in their own grant programs because they say the technology is more reliable and delivers faster speeds.
Hauer said Minnesota officials have been reluctant to support fixed wireless, which he says can meet essentially every need of home customers and businesses besides unusual tasks like downloading large games.
Still, Hauer said LTD has done fiber projects and will actually be obligated to build fiber in the grant areas. He said there may be a component of fixed wireless in broadband development for the grant program, but declined to go into details, saying the FCC prohibits divulging of certain development plans for grant-winners for now.
The company will be required to offer gigabit internet, which has speeds far above what Minnesota considers to be high-speed broadband. Hauer also contends LTD can spend less to grow their coverage, giving the feds more bang for their buck.
With the grant money, LTD plans to expand rapidly and will serve 15 total states.
A map of FCC grant winners created by the Menahga company Cooperative Network Services, which helps develop broadband, shows LTD Broadband aims to grow broadband service in a huge portion of the state with the grants, including chunks of St. Louis County, central Minnesota around the Wisconsin border and big pockets of southern Minnesota stretching to the Iowa border.
Arrowhead Electric is set to work in Cook County, while Paul Bunyan will develop services in parts of Aitkin, Itasca and Cass counties.
Skeptics of LTD share concerns
Coleman, the broadband consultant, said the FCC grants are “quite a bit of money” that will have a “big impact on broadband in rural Minnesota.” But he also said there has been “a lot of surprise at the results.”
Coleman said he figured telephone cooperatives would have won a lot of the money and would use it to expand their local service areas. He said those organizations have been successful at building fiber-optic internet. Coleman said he’s not aware of fixed-wireless technology that could offer gigabit speed, and said a jump to fiber would be “a big leap up” for LTD.
The broad areas of rural Minnesota that LTD will develop make the task even more challenging, especially for a small company, Coleman said. “This looks like just an incredible lift, so I wish them good luck,” Coleman said.
The well-known companies CenturyLink and Frontier have been major recipients of past federal broadband grants in Minnesota (and struggled to meet goals), though Hauer said LTD has won awards and delivered service before.
Joe Buttweiler, director of business development for Consolidated Telecommunications Company (CTC), which is headquartered in Brainerd, said there is “a lot of anxiousness right now about the results.”
Auction winners must submit a longer application in coming months that gives more detail on their broadband plans, finances and technology to the FCC.
Buttweiler said many in the industry don’t believe LTD can offer gigabit speeds with fixed-wireless technology, but said if they intend to use fiber, “we’d love to see the plans that they’re going to provide to the FCC.”
Buttweiler said building a “full-fiber network throughout all of Minnesota” will be an expensive task that could be hard to fulfill at the cheap price LTD has promised. “I just have a really difficult time believing they can do it for that amount of money,” he said.
Buttweiler’s CTC is a member of the Minnesota Rural Broadband Coalition, while LTD is not. CTC also is a competitor. The company was awarded $2.04 million from the FCC grants.
Hauer, for his part, characterized his company as forward-thinking and innovative, one that is growing at an “extraordinary” pace not matched by many internet carriers in the country. LTD will deliver gigabit speeds at all times, he said.
“We’re going to put proof in the pudding,” Hauer said. “I understand there’s naysayers and naysayers can be proven wrong.”
We have seen this before under Trump – a small, unqualified Trump-connected outfit gets a government contract. And the result is usually spectacular failure (ventilators, Puerto Rico recovery).
I was waiting for the part where this guy/company’s connections to Trump are flushed out. Do some actual journalism, Walker.
Pat, while Mr. Hauer at LTD has donated some small amounts of money to Republicans, I do not know of any connections to Trump. The company won a bidding process here, it wasn’t unilaterally awarded these grants at random.
And if that is the case, you should have put it in your story.
Again, there is a history of the Trump administration awarding contracts to small, seemingly unqualified companies. And the basis for those awards has been political favors, and the results have been disastrous.
The people you interviewed seem completely bewildered by the company getting the contract. Given the history with the Trump administration, the first question about contract like this being awarded should be whether this appears to be political favoritism. You wrote half a story.
So if there isn’t the connection you hoped it’s half a story?
Walker is a fine journalist doing some very good work, regularly here. If you are so ready to disparage him and claim this is some crony boondoggle, surely you are capable of finding a link or two yourself to support your claims? I found this article very informative insofar as the scope of the information was concerned.
An alternative would be to rephrase your insinuation and your disparagement into a simple, respectful question, inviting further research, such as, “The Trump administration has a history of handing out such contracts to companies that abuse the resources, and Ajit Pai at the FCC has a tendency to favor monopoly and private/corporate over cooperative/local interests. Could you look into this please?”
The distinction you are making is how polite I should have been in asking Walker to do his job.
I might not have said anything about this piece alone, but its a pattern. The piece on the Qanon candidate running in western Minnesota was just awful journalism.
It sounds to me like you expect Walker to be a Dem Party Warrior, rather than a journalist. A lot of people make that mistake. Hopefully in the future he will pay close attention to how that money is spent, and hold the company accountable.
Now can we agree better internet for all of America is a good thing?
I have no opinion on what his story finds as long as its accurate. My complaint is that he left out an obvious part of the story out.
And of course better internet is very important in rural Minnesota. The lack of it is part of the reason rural areas are falling so far behind the metro. Which is exactly why I concerned about the people interviewed thinking this company is unqualified. That hasn’t worked out very well in other situations where small long-shots got big contracts.
William, you should know by now we are in a post fact world, from both sides of the political spectrum. Make an accusation,without support as pat has done, throw in the name Trump,and no evidence is needed.
The vehement anti trumper is the other side of the same coinas the trumper
Indeed, Greg. A good lesson from history, when most people head in one direction, do the opposite, or something different at least. If most people mistake advocacy and propaganda for facts, head for the facts. If most people default to condemnation, be good, kind and respectful.
I have been contemplating a move from Minneapolis to a rural portion of Ottertail County, but I have not done so in part because, though the land is close to two major highways and between two different lakes areas, there is no meaningful internet to speak of, which would make commerce and communicating with friends/family/clients a serious problem.
Here is hoping this money is used well and wisely, and that there is some accountability if it is not.
How can a company with 100 employees be “growing at an extraordinary pace”? What exactly is growing at an extraordinary pace?
It appears the FCC is betting on the cheaper technology here. We’ll see if the billions being spent turns out to be penny-wise and pound-foolish, and where we are at on this crucial piece of economic development in 5 years.
Also interesting that these crucial grants are being made in the final weeks of a failed lame duck administration.
Well, that is another really stupid decision. Bet a lot on an unproven technology from a company that’s not built out into communities to serve the people who’ve already waited way too long for access, instead of investing in the distributed co-ops that already exist in the areas. Sounds like a plan!
I also will not be surprised to find out that there is some ulterior motive (such as political donations or family connections) behind this weird decision, but it also could just be taking a flyer on what appears to be the cheaper “innovative” approach. But as some of the voices in the article say, they “don’t believe LTD can offer gigabit speeds with fixed-wireless technology.” Nice to gamble our tax dollars and rural people’s time waiting on this small company’s guessing and promises.
The timing of this grant certainly does raise a lot of questions. As does the fact it’s to a firm that doesn’t seem to be capable of any near term implementation of broadband on such scale given its size.
I appreciate that the grant here was awarded on the basis of an auction and supposedly competitive bidding. But the history of competitive bidding in the US is part of our history of political corruption. Competitive bidding has often been circumvented by “competitive” bidders who are really fronting for someone else.
The real story here I think is about the “Rural Opportunities Digital Growth Fund.” What is that? From a cursory google search I learned that this fund was created by the FCC from “fees” collected by interstate telecommunications carriers. Maybe this is authorized by law but it’s one of those myriad “fees” that shows up on telephone bills. It’s really a tax but not one specifically authorized by Congress as far as I can tell.
I have no problem collecting taxes or fees for making telecommunications services “universally available” even if they’re described as “broadband” or “internet”. If I understand correctly, many people in rural Minnesota and rural Wisconsin cannot obtain affordable access to the internet. This fund makes broadband possible for rural areas that amazingly in 2020 still do not have it. I heard recently about high school kids in Prescott, Wisconsin who had to park in their school’s parking lot with lap tops to do their homework and attend classes because they couldn’t get or afford any closer access to the internet. That’s not acceptable. Apparently, the school and the community have no resources or clues about how to get it.
What I’d like to know is: why isn’t this grant money made available to local governments, school districts or cooperatives to develop community based broadband networks? Let the local communities build and own, if not operate, these networks. Do we need another generation of monopoly middlepersons providing our necessities and running our governments and our lives?
“What I’d like to know is: why isn’t this grant money made available to local governments, school districts or cooperatives to develop community based broadband networks?”
Minnesota law has ridiculous restrictions in place on a local government that would operate an internet network. The city council would have to make a finding that the proposed service would not compete with an existing service or that private services are not providing service and won’t provide service in the foreseeable future. City ownership also has to be approved by 65% of the voters at a referendum.
Before you ask, Minneapolis’s city wi-fi is provided by a private company that contracts with the city to make the service available.
Minneapolis’s charter must have saved it from that law. But I wonder who got that law passed? I think I know the answer but it’s clearly an obstacle for municipalities in “rural Minnesota” to get the broadband people have been clamoring for for some time now.
Nevertheless, the law wouldn’t seem to apply to the parts of rural Minnesota outside of incorporated cities in townships or unincorporated areas. And it doesn’t apply to cooperatives. I notice that two of the bidders receiving grants are rural electric cooperatives which are member owned I believe.
The law applies to municipal ownership of any telecommunications provider. It’s been around for a long time, it seems. Co-ops are allowed to provide service. From what I hear, rural co-operative internet is some of the best in the state.
Minneapolis contracts with USI Wireless to provide internet service. The company is not owned by the city.
The most relevant fact of the specs for letting out contracts is “low costs.” The issue for rural communities is reliable service – which is not free. I checked the company out at the BBB site. Very few comments, with an indication it is not a BBB bureau company. Here is what was there.
https://www.bbb.org/us/nv/las-vegas/profile/internet-providers/ltd-broadband-1086-90024720/complaints
This is a service company. That its executive doesn’t live in the same state suggests loose supervision – that the town is Las Vegas is also concerning.
As a researcher, it is pretty obvious that the best people able to offer an opinion about capabilities is current customers. I am guessing that there may have been no requirement by bidders to demonstrate high level of current customer satisfaction.
As this sounds like a new market with higher technical requirements, it seems like there should have been more questions asked, but as the reviewers work for a businessman who has left thousands of dissatisfied customers, it may not surprising.
Government, trying to pick private companies for public funds, has not worked. Look at Solyndra, that was a beauty. Neither party is qualified to understand any business enough to make decisions…. They are politicians for goodness sake, they know nothing about business.
That isn’t true at all – governments contracts with private businesses all the time. Its just that in the history of this country we have never had a president who understands as little about business as Trump.
Look at HUD, that has been a public/private parring that is a disaster. Please show me a tax payer funded project being parred with a private company that has come in under budget and on time.
Are you offering suggestions, or just complaints?
Should it be left entirely to private business? Yes, that would work about as well as screen doors on a submarine. If providing affordable high-speed internet in rural areas were profitable, it would be happening already.
Should it be government run? That would not be the worst idea in the world, and before you have apoplexy about Bolshevism, I would encourage you to look at the example of Chattanooga. That city has had municipal internet for the past ten years and now provides some of the highest speed connections in the country. The city-provided connection is more than just a nice amenity. It has played a big role in the economic development of the city.
Do tell us then Joe, how you’d propose getting high speed internet to rural MN? Without the gub’mint “picking winners” (in this case picking what most likely will be a loser), there would be no company willing to invest the capital necessary to capture what is by definition a limited and ever decreasing market. Is your solution to simply tell those rural folks, tough luck, go join the “citiots”?
Wow. You’re still bringing up Solyndra? Especially after four years of the grifting by the Goniff-in-Chief and his family?
Let’s hear what you think about Quemoy and Matsu next.
Isn’t LEO providers like Starlink really the future for rural high speed internet. For the cost of this project they could provide the up front costs for the stations for every residence currently without access to high speed internet.
The beta tests are showing 104Mbps service for $99 a months.
Running fiber optic cables to every person in rural Minnesota seems nearly impossible. God forbid your cable get cut or the lines go down.
The high speed cable/fiber optic solution for rural USA is analogous to the distribution of electricity problem this country (and other parts of the world) faced in the 1920’s and 1930’s. The privately owned electric utilities refused to extend electric lines to rural areas for just the reason you say. Then the US government under the New Deal stepped in with the TVA and the Rural Electrification Administration. Cooperatives (like the Paul Bunyan Electric Coop. which received one of the grants mentioned in the article) were formed by farmers and the wires were strung in these areas. It took 20+ years to electrify the whole USA, an achievement that might be compared to getting a man on the moon. But the USA got the job done.
A few years ago, I was involved in a project to encourage the development of cooperatives in other areas. I learned that in the 1960’s and 1970’s, the REA, as a department of the government owned something like 70% of the transmission lines (in terms of mileage) in the USA. The government also subsidized the building of central coal generating plants to supplement the power, which often came from the “white coal” of hyrdoelectric power. The TVA’s “yardstick” rates were credited with bringing down rates in the “private sector” of the electric industry through competition.
Of course, the conservatives then, as now, complained endlessly about “socialism” in the government “interfering” with private enterprise, which was doing nothing because the whole idea sounded impossible. The people through their government can accomplish great things when the conservatives aren’t allowed to sabotage ideas because of groundless fears of “socialism.”
Why is no one commenting on the absurd costs of this. The Feds are paying over $3,000 for every new broadband user. That is absurd, when you consider that within the next year or so, virtually everyone will be able to get broadband internet from Starlink with an investment of $500 for a terminal. Why do we need to throw all this money at a problem that Elon Musk is already solving?
Because Starlink isn’t sustainable long term at those prices? There’s only so much sky? Giving one man monopoly power over information is a bad idea? Shall I go on?
How is giving Elon Musk monopoly power over internet in rural areas any different than giving a fiber optic provider the same monopoly power in the same area? Or how about Comcast having a virtual monopoly power in much of the Twin Cities?
Elon isn’t stupid. Once they get their constellation complete Starlink is going to be able to provide an unbelievable amount of bandwidth everywhere on the globe. It may not make sense in urban areas, but out in the country, this is going to be MUCH more cost effective than laying fiber to every home.
Not that this is super important but just a reminder that Satellite internet from Starlink will be like other satellite internet. It will likely have very reliable and fast downlinks, but it is one way only. The uploads are much slower. The satellites will have lots of power to push the signal but your home unit won’t have enough power to push a signal back to the satellite. This technology is better than earlier generation satellite internet which let you download from the ‘bird’ but you still had to have a traditional wired connection for the upload back to the net.
I used LTd Broadband for about5 years in rural Owatonna. It was radio based. Paid for one speed, usually got 50% or less. Complained and never resolved. About 18 months ago, I had an opportunity to switch and I did.
Knowing what I know about LTD, I find it unlikely they have the horsepower to pull this off.