Throughout the COVID-19 pandemic, children in parts of Minnesota without high-speed internet have struggled to log on to remote classes, while businesses and employees who lack broadband have strained to connect to customers and co-workers.
As Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, told Minnesota lawmakers last week: “We knew (broadband) was important before the pandemic hit, but boy we sure know how important it is now.”
“That helps telemedicine, that helps learning, that helps job creation,” Kashkari said.
Thirteen years after Minnesota first established a broadband task force to study how to bring the internet to everyone within its borders, COVID-19 has not only highlighted how critical broadband is for rural communities throughout Minnesota, it’s also reinforced how difficult and expensive reaching that goal has become.
The Legislature has spent more than $126 million since 2014 on a grant program to address the state’s internet disparities, but the issue has once again become a top issue for many at the Minnesota Capitol. Several plans now being considered would help telecom companies build internet infrastructure across the state, including one with a price tag of $120 million over the next two years. At the same time, Gov. Tim Walz has proposed a separate $50 million measure, while federal programs have also promised huge injections of cash for rural broadband.
But even as those proposals are debated, the state task force on broadband is considering whether the bar for true connectivity should be set higher than it is under Minnesota’s current grant program.
Minnesota makes progress, but need for speed ramps up
When Minnesota first created a broadband grant program in 2014, the state had a goal for universal access to service with download speeds of 25 megabits per second (Mbps) and upload speeds of 3 Mbps. For reference, Netflix says a user should have download speeds of 3 Mbps to stream in standard definition, 5 Mbps for high-definition and 25 Mbps for “ultra HD quality.”
In February of 2015, about 86 percent of the state and 68 percent of rural areas had met that goal. Minnesota has inched forward since, with the aim of having statewide 25/3 Mbps access by 2022. To do so, it’s offered grants for telecom companies to subsidize networks in areas where a lack of customers or difficult terrain would otherwise make such projects too expensive. Local governments have often pitched in their own money, too. Now, 92.47 percent of Minnesota has access to internet with 25/3 Mbps speeds, including 83.1 percent of rural areas.
In 2016, the state hiked its speed goal, saying it wanted universal access to the internet with speeds of 100/20 Mbps by 2026. A recent report from the broadband task force, whose members are appointed by the governor, says 87.75 percent of the state now has that option, including 72.53 percent of rural areas.
Since 2014, the state has plunged $126.2 million into the broadband program, helping build enough internet infrastructure to serve more than 56,800 homes, businesses and other customers. That number includes the latest round of funding announced in late January: $20.6 million for 39 projects.
“The state continues to make progress,” said Angie Dickison, executive director of the state’s Office of Broadband Development, which is separate from the Governor’s Task Force on Broadband.
The grant program is at something of a crossroads, however. Dickison said the parts of the state still left unserved are typically the most difficult or costly to reach. One project the state recently funded promised to reach an area with a little more than one customer per square mile. “The low-hanging fruit has been picked,” Dickison said.
The latest data shows that 100/20 Mbps coverage improved at a far slower rate between 2019 and 2020 than in years prior, and less of the state had 25/3 coverage in October 2020 (92.47 percent) than in April 2019 (92.7 percent). Dickison said the issue was a mapping mistake by providers rather than an actual decrease in service on the ground, but the episode illustrates how gains have become slower and more difficult.
As the state focuses on its 100/20-speed goal for 2026, most projects funded now meet those faster criteria and all are required to be built so that they can be easily upgraded to provide even greater speeds.
In fact, the broadband task force said in its 2020 report that Minnesota’s speed goals should be reevaluated again, particularly in light of the pandemic. People who work or attend school from home are doing more than using the internet for basic functions like sending emails without huge attachments, reading social media or streaming video.
Specifically, the report says Minnesota should emphasize increasing upload speeds for activities like video calls, and notes 3 Mbps upload service “inadequate to support remote business and education needs and can no longer be considered high-speed broadband.”
While projects now must be built to allow them to be upgraded to 100/100 Mbps, the task force report says there is no current mechanism or funding to ensure that the infrastructure is actually changed to meet those speeds. In other words, even if the state meets its 2022 goal — or even its 2026 mark — experts say more will need to be done.
The state isn’t alone in providing financial help to build internet infrastructure in rural areas, however. Under former President Donald Trump, the FCC approved billions for broadband development, including, recently, $408 million for Minnesota for projects over the next six years. The cash was part of a $9.2 billion round of nationwide grants. Nearly all projects completed across the country will provide internet with 100/20 Mbps speeds and about 85 percent of locations will get gigabit speeds. Much of that is going to be used by one relatively small company, LTD Broadband, that has little experience in providing fiber-optic cable it has promised to build.
Despite that influx of money — and some other federal cash under past stimulus packages approved by Congress — Dickison told a Senate committee last week the state program is still necessary. Federal programs look at census blocks to determine unserved areas, and if part of that census block gets access to 25/3 Mbps, they don’t issue grants in the entire block, she said. The state program has much more “granular” grants that can catch those missed areas, Dickison said.
There are 157,000 rural households currently unserved by what the state considers high-speed internet, and 256,000 customers without access to 100/20 Mbps service. The task force report says the 157,000 households are unlikely to get broadband with help from the grant program, though the FCC says its grants will build infrastructure to connect roughly 142,000 locations.
Plus, the state aims to serve parts of the state that are covered in theory by fixed-wireless internet — a service where people get broadband through a transmitter attached to a nearby high point like a grain silo — but where topography makes coverage poor. The Minnesota grant program typically funds wired services like fiber-optic cable, which state officials say brings higher speeds and more reliable connections, but has drawn critics who say fixed-wireless infrastructure is cheaper to develop and easier to build.
Lawmakers differ over how much to invest in broadband this year
For now, state officials and lawmakers are focused on Minnesota’s 2022 and 2026 internet coverage goals rather than looking at even faster speeds.
The governor’s task force recommended $120 million in funding for the broadband grant program over the next two years — as well as in each budget cycle thereafter — and that all future awards should be for projects that can deliver speeds of at least 100/20 Mbps.
Walz, however, proposed $50 million for the program next year and no money for the program in the 2023 fiscal year. The administration claims in budget documents the $50 million will be enough to meet the 25/3 Mbps goal by the end of 2022 and “pave the way” for the 2026 goal of 100/20 Mbps.
In a news conference in late January, Steve Grove, the DEED commissioner, said they didn’t propose $120 million “given the number of competing priorities” during the pandemic and a projection that, at least for now, there will be a $1.27 billion deficit in the next budget period despite an estimated $641 million surplus this cycle. Grove noted their plans could change if the next budget forecast in February shows a sunnier picture, which is expected after the $900 billion COVID relief package Congress approved in December.
The $50 million was a “robust starting place,” Grove said. “There’s a lot of energy around this issue. You know budgets are a starting place for the conversation but the governor is really committed to this.”
State Sen. Tom Bakk, an independent from Cook, and Rep. Rob Ecklund, a DFLer from International Falls, introduced a bill with GOP cosponsors to give the state grant program $120 million over the next two years. In an interview, Bakk said “that’s what the task force said we needed, so that’s what I put in.”
Still, he said that’s a “high water mark,” and said there are questions about how much federal money comes in to spur broadband development and whether there is enough construction capacity to use $120 million.
Generally, he said the state is in a tricky budget situation, but that one-time spending on things like broadband can be smart because the infrastructure doesn’t require ongoing costs once it’s built. Bakk said he supports using a state reserve account, known as the rainy day fund, to pay for broadband infrastructure. The fund should be tapped to “bail us out of this downturn,” Bakk said, and broadband can spur construction jobs and help economic development during a recession.
“Let me just say it this way: because we have a deficit in the budget, doesn’t mean we can’t do this,” said Bakk, who helped create the reserve fund when he served as Senate DFL majority leader.
Sen. Torrey Westrom, a Republican from Elbow Lake who chairs the Senate’s Agriculture and Rural Development Finance and Policy Committee, which has jurisdiction over broadband issues at the Legislature, said he planned to introduce his own bill that he expects to be similar to Bakk’s $120 million bill.
Westrom said the state should focus on unserved areas rather than looking too far ahead at new speed goals. “For the students of my districts that don’t have access to high-speed internet, 25/3 (Mbps) is magnificent for them,” Westrom said.
He also said the state should make sure there is construction capacity, because if you try and pump too much money into the program with too few developers, the state might drive up the price and lose value.
Westrom says he prefers consistent money doled out over two years so internet providers and contractors have a steadier environment than the “peaks and valleys” created by Walz’s one-time $50 million proposal. And he said he wanted to explore whether the state could pay for a larger share of projects in areas that are difficult and more costly to serve.
“My guess would be you’re probably looking at somewhere between $50 and $100 million in the final proposal,” Westrom said. “$120 (million) would be very nice. We’re going to at least start there or higher.”
Westrom said rural broadband is a big priority of Senate Republicans and he’s “very bullish” on securing money for it: “There’s a need for speed.”