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To close rural broadband gap, Minnesota communities consider public option

As infrastructure expands, some municipalities are getting into the broadband game.
REUTERS/File/Gary Cameron
FCC chairman Tom Wheeler said he would use his agency’s regulatory power to fight state laws that ban municipal broadband networks.
FiberNet Monticello
After a 2009 price war with private Internet providers, Monticello’s municipal network has had difficulty paying back bondholders.
Connect Minnesota
In its 2013 report, Connect Minnesota mapped
broadband access across the state. Areas in
pink have access to high-speed broadband
while areas in yellow and blue have slower
access speeds, according to the group.
Click the map to view a larger version.

Comments (3)

  1. Submitted by Bill Coleman on 05/02/2014 - 04:54 pm.

    Waiting for yes…

    Any discussion of broadband quickly gets murky due to complicated technology choices and business model considerations. This article touches on both. It also lumps middle mile networks like Scott County’s with last mile networks that would be funded with prospective state and local dollars. Middle mile connects towns together; last mile networks reach end-users.

    As to last mile considerations, this article states that 99% of Minnesotans have access to broadband speeds of at least 10 Mbps. This number, based on data provided by telecommunications providers, includes mobile cellular wireless services. Maintaining a voice call in many parts of rural Minnesota outside of highway corridors can be a challenge, much less maintaining a 10 Mbps data connection. If you see any television ads, you certainly know that a family of four can get 10 GB of data for “only” $160 per month. The bad news is that the average family of four uses about 50 GB of data on a wired connection. The reality is that only about 30% of rural Minnesotans can connect via wired networks without data caps at the state goal.

    Our schools and governments have large requirements for networks. In places like Scott County and other places that have developed their own networks, this data flows at Gigabit rates of speed. Those places relying on a strictly private sector solution are restricted to a comparative trickle of bandwidth. Payback on relatively large capital investments is relatively short, especially when considering that fiber is a long-term asset with growing usage to accommodate.

    For the last mile, it is clear that ownership matters. The communities that have the best service over advanced networks are locally owned. Minnesota is blessed with a number of rural telephone cooperatives that were formed when private companies ignored rural communities 100 years ago. These lucky communities continue to benefit with access through 100% member-owned fiber optic networks connecting homes, farms, small businesses, schools and health care facilities that make metro communities jealous. Municipal networks provide the equivalent level of service over similar fiber networks.

    In 2010, the state’s first broadband task force recommended, and our elected officials set in statute, a goal of 10 – 20 Mbps broadband availability everywhere in Minnesota. Mr. Christensen representing the MTA and representatives of Qwest and Comcast are signatories to that goal.

    Since that time, county and community citizen task forces across the state have organized in pursuit of that goal. The first step taken by each and every task force has been a call to their incumbent telephone companies with requests for service improvements, petitions of anxious customers, offers to joint venture and finance, and commitment to implement community-led efforts to drum up market demand for prospective broadband network improvements. Any response from incumbent providers has been limited.

    Worse yet have been where providers made investments to wrap up only the most profitable customers, thereby limiting the attractiveness of the market for other providers or a public sector response. The exceptions to this picture are the multiple cooperatives and a limited few private companies that have approached communities with good faith efforts to expand their service areas. The final straw is when providers offer to consider a partnership, then dawdle along, playing out the energy of the community initiative.

    The Monticello example is illustrative. That community, with its strong manufacturing base needing broadband services, begged its incumbent providers for improvements and price competitive services with no response. It was only after the City committed to building its own network that the incumbents improved their networks and dropped their prices. Other communities served by these same providers wish that those firms would invest in their communities as they have in Monticello.

    I have seen this same type of competitive response in places where some of the rural telephone cooperatives have built into incumbent providers’ territories, improving their networks only where there is now competition. It seems that there is never enough market for one provider, but always enough for two.

    It is not like these companies object to government involvement. They – from small to big, co-op to publicly traded company – benefit from a set of government programs to extend and maintain telecommunications services in rural areas that were established in the New Deal and continue today. Today, telecommunications services mean broadband and modern broadband means speeds well in excess of 10 – 20 Mbps. A growing number of communities can offer businesses and residents 1,000 Mbps, or gigabit, connections at prices not much more Twin Cities residents pay, or even less than some rural residents pay for their relatively paltry service.

    Community broadband advocates have been waiting for the Minnesota Telecom Alliance and other industry groups to offer a plan to reach the state goal to which they committed in 2010. That goal says “by 2015” which is now just months away. They have had a set of willing partners all of this time in communities, counties, school districts, chambers of commerce, health care providers and others. Instead, all they say is no. This article confirms that the answer is still no today.

  2. Submitted by Dave Eischens on 05/02/2014 - 07:51 pm.

    poster child, yeah right

    Well stated Bill, good article Devin.

    It seems to me that Monticello can be a “poster child” for financial concerns only if we don’t consider the previously inferior service to addresses which were not “low hanging fruit”. This is standard practice even in near-cities located right on the I-35 corridors to Duluth. Big providers apparently have no investment in any community beyond the balance sheets.

    Consider too the predatory pricing implemented by Charter and TDS once the city moved to accommodate its under-served businesses. If companies are large enough to dump their product at or below cost in one community (since as virtual monopolies they charge too much in other communities), they can eliminate the community-owned competition. I’m guessing the monopoly communities would be a bit jealous of prices in Monticello if they were aware of them.

    Anyone wanna bet what prices will be like if Monticello FiberNet goes away?

  3. Submitted by Michael Wellcome on 05/06/2014 - 04:06 pm.

    Getting to yes …..

    Good article Bill (how have you been?) ….

    There is little doubt Monticello residents and businesses would be in worse shape today had the city not created FiberNet. It was a Catch-22 — build it to maintain a competitive advantage or do nothing and let the telecom companies provide marginal service while businesses died. The city was in a no win situation.

    The broadband gap is becoming ever so critical as telecommunications services converge. More and more content providers are using the Internet to distribute their product as opposed to distributing via resellers (cable companies, DISH, DIRECTV, to name a few). To the content providers, direct distribution makes sense because it bypasses the “middle man”. If one doesn’t believe they need high speed, try streaming your favorite network shows on DSL.

    The question is how much, if any, political clout and willpower do communities have over providers? It appears a partnership similar to Scott Country would be one answer since both public and private entities would have skin in the game. But this solution only works when you have two (or more) willing partners.

    Could one solution be to use the stated goals as leverage when negotiating telecommunications franchise fees?

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