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.

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.

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.”