State officials on Thursday announced the winners of $20.6 million in grants to develop high-speed internet across Minnesota, the latest infusion of money approved by lawmakers to fully connect the state.
Many celebrated the cash, which Steve Grove, commissioner of the Department of Employment and Economic Development, called a “vital” push to correct disparities in internet service that were highlighted during the pandemic.
Yet the grants also drew frustration from some broadband developers.
That’s because Gov. Tim Walz’s administration won’t award state money for projects where telecom companies won more than $408 million in federal grants to provide new internet service across swaths of northeast, central and southern Minnesota. The biggest federal grant winner was the controversial LTD Broadband, a company the governor’s own broadband task force is skeptical can meet its promises for a huge range of projects.
State officials say it could be a waste of taxpayer money to subsidize internet where another company plans to build infrastructure with other grant funding. And LTD Broadband maintains it can deliver a huge surge in broadband service in Minnesota. But some local developers say LTD’s failure, or even success, could delay broadband internet for areas they could quickly serve.
“Communities in Minnesota have worked diligently with providers to develop applications and had shovel-ready projects that could have been built as soon as this summer if they received a state grant,” Vince Robinson, chairman of the Minnesota Rural Broadband Coalition, said in a statement. “Now, communities that applied for state grants but were included in (federal) auction areas could have to wait up to six years before they receive service.”
A controversial provider
The Walz administration plans to award state grants for 39 projects, enough money to bring high-speed internet to 6,922 business, homes and other customers. Minnesota lawmakers have periodically approved money for the grant program, which is aimed at helping telecom companies build internet infrastructure in areas where terrain or lack of customers make service otherwise too expensive.
In 2019, the Legislature approved $40 million for DEED’s Border-to-Border Broadband Development grant, to be used in 2020 and 2021. Minnesota has poured $126.2 million into the grant program since it launched in 2014, and the state continues to inch toward its goals for universal high-speed internet.
The federal government has also spent a considerable amount of money advancing broadband development. In December, the Federal Communications Commission announced $9.2 billion in broadband grants nationwide, $408 million of which will be spent for projects in Minnesota.
The biggest recipient of those awards, through the Rural Development Opportunity Fund (RDOF), was LTD Broadband. The company, which had roughly 100 employees in December and is based in Nevada, won nearly $312 million from the feds to build internet infrastructure in rural pockets across huge parts of the state, from outside Moorhead to outside Mankato, Marshall, Duluth and east of Mille Lacs Lake.
LTD also won $1.32 billion nationally — the most of any company. The money was awarded based on a reverse auction system, in which companies bid on who could offer service to areas with the least money from the government for help building infrastructure.
The choice of LTD has been controversial. The company primarily offers fixed-wireless internet, where homes get service from a signal placed high on a structure, like a water tower or a silo. While fixed wireless internet can be built cheaper than fiber-optic cables, state officials and local broadband developers say it’s often slower and less reliable than the more expensive fiber.
Corey Hauer, CEO of LTD, said the company will be obligated to build fiber in the grant areas, something it has some, but not much, experience with. It also has to deliver blazing fast gigabit speeds. There are still few details about LTD’s plans, in part because of a “quiet period” for grant winners imposed by the FCC. Still, Hauer says LTD can meet the challenge and is poised to expand rapidly to complete its projects over the required six-year period. The company is completing a longer application process with the feds that will more closely scrutinize LTD’s ability to meet its goals.
The Minnesota task force report, however, says LTD Broadband “has limited experience delivering broadband with the technology needed to meet the service speeds demanded by the RDOF program,” and said there “is concern some providers” in the federal grant program “will not be able to secure the funds awarded to them in the initial grant allocation.”
A Jan. 19 letter to the FCC about the RDOF awards signed by dozens of members of Congress didn’t mention LTD Broadband — but it urged the FCC “to validate that each provider in fact has the technical financial, managerial, operational skills, capabilities, and resources to deliver the services that they have pledged for every American they plan to serve regardless of the technology they use.” It was signed by much of the Minnesota delegation: U.S. Sens. Amy Klobuchar and Tina Smith, who have acknowledged concerns with LTD Broadband, as well as GOP Reps. Pete Stauber, Michelle Fischbach and Jim Hagedorn.
In the meantime, local providers say they would be sure bets to get fiber-optic internet into areas where it’s needed, and faster.
Barbara Droher Kline, a broadband consultant working with Le Sueur County, said the county had applications rejected by the state for two broadband projects for roughly 500 homes in areas that could potentially be served by LTD. Both are next to parts of the county where the county and other partners built fiber infrastructure with $547,000 from the federal stimulus CARES Act.
Droher Kline said about two-thirds of eligible areas in Le Sueur County are now covered by LTD’s winning bids, which means they may get broadband, but it also may take years. She suggested the state ask the feds to withdraw RDOF funding in areas where the state program can build infrastructure quickly. “It would have been a drop in the bucket (for LTD) and we’d have fiber in the ground this spring,” Droher Kline said.
Submitting new applications outside the LTD zone quickly after the federal awards wasn’t feasible, Droher Kline said, and there are few areas left in the county they could try to build. Angie Dickison, executive director of DEED’s broadband office, said 10 projects were denied grants because they overlapped with RDOF coverage areas. Two applicants also withdrew their projects. DEED got 64 applications for this current round of grants.
Robinson, chairman of the rural broadband coalition, said they were “incredibly pleased to see further investment in rural Minnesota to expand broadband.”
“However, we asked the Office of Broadband Development to award grants regardless of if the projects included RDOF auction areas,” Robinson said. The coalition includes telecom companies, county officials, advocacy groups and businesses like Mayo Clinic.
State hopes to avoid ‘duplicative’ grants
Grove, the DEED commissioner, said Thursday that after the federal RDOF awards were announced, the state said applicants for state grants could change their proposals to be outside of the federal coverage areas. Ultimately, “we did want to make sure that none of the taxpayer dollars that we put into our program are going to be duplicative,” Grove said.
He also said the state didn’t want to wait to see if any federal grants didn’t get approved by the FCC because the state hopes to move on a faster timeline.
Hauer told MinnPost Thursday that governments have tried to prevent “overbuild” of broadband infrastructure in the past, an issue Congress has investigated. And he said internet developers all had the opportunity to bid on RDOF grants. “If there are subsidies to be made, they should be made for areas that don’t have an opportunity to get broadband,” Hauer said.
Since 2014, the agency says its grant program will have served more than 56,800 homes and businesses with the projects once this round is complete.
Several telecom companies who won state grants applauded the program at the press conference Thursday, saying it would still help build out critical infrastructure in rural areas. BEVCOMM, which is based in Blue Earth County, won two grants in southern Minnesota for roughly $1.4 million. Both projects will be for gigabit-speed fiber, which far exceeds the state’s speed goals and will cost about $3.5 million in total.
Bill Eckles, the CEO of BEVCOMM, said the company canvasses potential customers in areas they hope to serve with grant money to learn more about why they need broadband. “The letters we get — it’s just astounding the need out there,” he said.
So Trump once again screwed over the people who voted for him. Shocker.
Thank you for covering this issue so critical to our community.
Trump rigged the rural market to financially benefit his cronies who will profit by providing communities with inferior services. How many of the rural people who voted for him in 2016 and 2020 are even aware of this? Eventually, this provider will fall flat on his face and possibly even be liable for fines and a criminal investigation, but having a contract which provides most of the money, what is the state to do? Just another case of Minnesota trying to work around Trump’s corrupt decisions. For once, I would love the author to get beyond identifying a pretty obvious problem to suggest solutions or identified other rural states that have done better.
Another completely useless waste of tax dollars. Within the next year or so, much faster than you can deploy fiber, StarLink will be providing broadband service in virtually all rural areas in the country. Why are we throwing government money at a problem that private industry is rapidly solving on its own?
No ISP should have a monopoly on any area. I’m sure StarLink will be fine, but there’s no way satellite Internet is going to be anywhere near as reliable or as fast as fiber, which is already superior to standard broadband.
I live in St Paul, and for all practical purposes, I am in a monopoly or as a minimum duopoly situation, with Comcast and CenturyLink as my only options. Both have significant caps on data transfers. Why should the government throw money at rural users to give them more options than those of us in the metro area have?
Have you looked at StarLink? They are already providing service that far exceeds what you can get from DSL service in most of the state, with the goal of providing 1GB service in the near future.
Fibre isn’t the answer to everything. You can have Fibre outages too, if someone with a backhoe isn’t careful.
So when Elon decides to turn off the signal because someone calls him a name on the internet, what do propose as a solution? Since his satellites have taken up the area of sky necessary for such service, and any additional clutter would lead to major negative externalities, how do you propose meaningful competition can be provided to discourage Starlink from immediately raising prices astronomically on its captive market, seeing as how the “market” is supposed to be used solve every problem in your view?
Also, as I sit here in St. Paul, I send this message through an ISP that isn’t Comcast or Centurylink, at a speed better than all but their most expensive offerings. I think you misunderstand the term duopoly.
We blame Trump for a program that was started under the Obama administration? Sounds like a turf war between the FCC and the State, who obviously have not been working together. If it is so easy and cost effective for the state and local companies to run fiber to these rural areas, why haven’t they yet? A Wireless solution is absolutely more cost effective than running fiber everywhere. Just like electricity, you will not get competing services in a rural area.
1. Because the federal grants were doled out to unqualified cronies by the TRUMP administration.
2. It’s NOT easy or cost effective to run fiber lines to every area of the state, hence why it requires government intervention, lest the rural areas be left at a competitive disadvantage.
3. Wireless is not, and will not be in the near future competitive speed wise with hard line fiber in the areas in question. “Good enough” might be ok in a residential setting, but when it comes to commercial applications slower speeds and frequent disruptions will lead to business losses, and severely limit the types of businesses willing to locate in rural area, limiting rural residents prospects for success. Shall we tell them that Republicans are to blame for that?
4. Please list for me all the communities with competing electrical services. It’s like you had a glimmer of a thought regarding natural monopoly, and then just picked the absolute worst example available as not only is there no difference between rural and urban electrical service (competition-wise), but rural electrification is the A+ number one poster child for government intervention being used to supply a service the private sector is unwilling to address.
Trump is to blame because the contracts were awarded to a company that cant deliver. Again, this is what happens when you elect a president who has absolutely no clue how to run a successful business.
First: I am far from being a Trump fan. And as president, he ultimately was responsible for actions of federal administrative agencies during his term in office. But no modern day president has a “hands on” involvement with thousands of the actions and decisions made by the massive federal bureaucracy.
Federal bureaucrats make dozens of “bad calls” in every administration. Just go back to Department of Energy grants during the Obama administration – millions granted five “renewable energy” companies that went bankrupt (the most famous: Solyndra). Just one area of the bureaucracy in a limited period.
Political opponents tried to make hay of that. But I doubt Obama made those decisions personally any more than Trump did in this case.
The federal government is largely an inefficient, overgrown mess. Failed and questionable decisions are common. They won’t end with Trump… or Biden or ….
Trump fan or not, belief that the government is incapable of success is a core Trumpist belief. THIS issue is not a result of “inefficient bureaucracy”, it’s the result of malfeasance by poorly assigned political appointees for the purpose of rewarding political support.
Walker, thanks for the good reporting on this… Do you know if there’s been any consideration given to a version of satellite broadband, from Starlink? I’m a beta user of their new system, and get 50-100 Mbps (both up & down) from this service. Doesn’t require any land-based infrastructure, other than some 120V power. Their system of 1000’s of satellites isn’t fully built out yet, but does work well, already, in northern latitudes like MN; could be a great fit for rural / out-state Minnesota.
— Jim Korslund