Consider this your daily affirmation of Minnesota’s excellence: We have the best funding structure for connecting our rural areas to high quality broadband internet access. You can thank the Minnesota’s Border-to-Border Broadband Development Grant Program housed within the Department of Employment and Economic Development for this. The overarching goal of this program is to extend high quality and affordable internet access to all Minnesotans, especially those in unserved or underserved areas. Despite the myriad partisan battles between 2014 and now, the Minnesota Legislature has allocated $90.5 million to the program, providing a booster shot to the economy of Greater Minnesota.
Internet access is not the most provocative topic to write or think about. Neither is electricity! However, like the electrification of America during FDR’s New Deal, internet access provides the glue for all communities to operate in the 21st-century economy. This access is necessary for tasks such as students completing their homework assignments, jobs requiring applicants to submit a digital version of their materials, and farmers updating their crop yields digitally. While nearly every state across America has rural areas, few have systematically stood up to solve this complex societal issue the way Minnesota has.
Minnesota’s unique preference for local providers
Federally and across a number of states, these types of funding mechanisms tend to pour millions into the coffers of the largest internet providers in the nation, such as Comcast, Charter, and AT&T. Not true in Minnesota. The Border-to-Border program funds entities such as city and county governments, cooperative-owned entities, and small-scale providers. Each of these entities is required to provide matching funds alongside the grant, ensuring a broader commitment to the policy. These locally owned and operated internet providers are more responsive to demands on the local level and will implement their projects in the way that their communities prefer. There are also numerous studies underscoring the benefits of independent businesses versus large chains. Keeping internet providers local can double or triple the dollars invested by the state.
Recommendation No. 1: Removing industry influence
One of the only downsides to the current composition of the grant program is the amount of influence the largest players in Minnesota’s telecommunications market have over key components of the policy. This is most evident in what is called the “challenge process” of the grant program. This process allows incumbent providers, most often the largest Internet Service Providers, to claim that they were going to build out service and prevent their competition from building in a territory that is nominally in their jurisdiction. Oftentimes, the service the build-out is inadequate or on an extremely long timetable. A simple fix could be to change the challenge process in a way that requires the provider to actually build out in the territory it is requesting in a certain amount of time. By requiring this build-out, both advocates and the industry would achieve what they wanted — more access across Greater Minnesota and a large monopoly service territory, respectively.
Another key to removing industry influence is to shift a greater amount of the money to underserved areas of Greater Minnesota. Incumbent providers would be subject to more competition, leading to better outcomes for those in Greater Minnesota. The cities dotted across these areas (such as Alexandria, Bemidji, or Grand Marais) would not suffer from the “donut hole” effect where their unserved outlying areas are connected but they do not qualify for further funding. These proposals will, no doubt, be difficult to implement given the intense lobbying presence at the state Capitol.
Recommendation No. 2: Funding
In case you missed it, and golly I don’t know how you could have, Minnesota’s House of Representatives changed hands and the DFL made a clean sweep of the state’s constitutional officers. That’s a lot of folks who need education around the benefits of robust broadband policy in Greater Minnesota.
This recommendation revolves around the funding stream and security for it long-term. A more consistent funding stream that is not subject to every shift of the political winds is crucial for improving the efficacy of the program. A few options could help secure funding for this program.
Minnesota could use the revenue generated by the internet sales tax ruling in the Supreme Court case Wayfair, Inc. vs, South Dakota (2018). Another option could be delivering a one-time infusion of cash from the budget surplus to connect nearly everyone across Greater Minnesota. What is most feasible, however, would be to request a substantial sum and authorize the funding for the program across a number of years. A five- or six-year window of funding at, for example, $50 million annually would enable Internet Service Providers to plan for grant applications years in advance. This more dedicated funding stream would also contribute to better outcomes for underserved areas that do not currently have adequate internet service.
The Minnesota Legislature and governor’s office are in a unique position to influence outcomes for those in Greater Minnesota for multiple generations; they must take advantage of it.
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