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Minnesota lawmakers agree to spend $70 million on improving broadband access across the state

The funding would be the largest infusion of money into the program since it began. And it’s possible lawmakers could spend even more. 

Gov. Tim Walz
Graeme Jennings/Pool via REUTERS
In January, Gov. Tim Walz proposed spending $50 million on the program, saying the state budget could be tight amid an pandemic-induced economic slump.
Minnesota lawmakers this year have said the COVID-19 pandemic highlighted the need for universal access to quality internet as many residents worked or attended school from home.

In response to the lack of adequate broadband in parts of the state, especially rural areas, legislators agreed to spend $70 million on a state grant program that aims to build high-speed internet infrastructure across Minnesota.

The windfall, likely paid for by the stimulus plan approved by Congress and signed by President Joe Biden earlier this year, isn’t enough to completely close internet disparities that have long plagued Minnesota, and the state may still miss goals for broadband speed and distribution set for 2022. But if legislators approve the cash in a special session later this month, it would be the largest infusion of money into the program since it began in 2014.

“This is a definite step up for the program,” said Angie Dickison, executive director of the state’s Office of Broadband Development, which administers grants with the money.

Lawmakers find common ground on broadband

Since 2014, the state has spent more than $126 million on its Border-to-Border grant program, which helps subsidize construction of broadband in areas where geography or lack of density make it too expensive for telecom companies to build on their own.

Angie Dickison
Angie Dickison
Minnesota set a goal for universal access to service with download speeds of 25 megabits per second (Mbps) and upload speeds of 3 Mbps by 2022, and has another goal for access to 100/20 Mbps by 2026. For reference, the streaming service Hulu recommends download speeds of 3 Mbps for streaming archived video, 8 Mbps for live streams and 16 Mbps for 4k content.

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Dickison said state data from the end of 2020 showed 92 percent of households had access to internet service meeting the 2022 speed goals. A state task force in December of 2020 recommended the Legislature spend $120 million over the next two-year budget cycle to actually hit its target.

In January, Gov. Tim Walz proposed spending $50 million on the program, saying the state budget could be tight amid an pandemic-induced economic slump. But an expected decline in tax collections never materialized, and Minnesota’s budget was aided by $2.8 billion in direct cash from the federal American Rescue Plan stimulus package, and more dedicated to specific policy areas, opening the door for more state spending.

Walz and lawmakers struck a partial budget deal in mid-May that outlined how large the total budget would be, but left many specific details on state spending and policy left to be negotiated by the Republican-led Senate and DFL-majority House.

Senate Majority Leader Paul Gazelka
MinnPost photo by Peter Callaghan
Senate Majority Leader Paul Gazelka
But legislative leaders did agree on $70 million for broadband. Senate Majority Leader Paul Gazelka, R-East Gull Lake, told MinnPost on Thursday the money would come out of a $179 million ARP fund dedicated specifically by the feds for capital infrastructure projects

Gazelka said they landed on $70 million over the two-year budget because that’s how much lawmakers felt the program could handle, but he didn’t close the door on eventually spending more than $70 million by the time a final budget is passed. “It could be more than that, but that was the minimum that we would do there,” he said.

House Speaker Melissa Hortman, DFL-Brooklyn Park, said Friday that legislators are still waiting for more guidance on the $179, and that it’s possible it must all be spent on broadband over several years. “There’s a big question about whether that money can be spent on actually anything else,” Hortman said. “So it might all end up being spent on broadband but we don’t know.”

Funding is welcome, though concerns remain

Dickison said she thinks the state would be able to spend $120 million on broadband projects in the next two years, not just the $70 million, but nevertheless she and others praised the infusion of money. “I think we could get that money out the door but I don’t want to be disrespectful of the number folks arrived upon,” Dickison said. “I am thrilled at the number they came up with, and excited to get this program launched.”

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In a statement, Nathan Zacharias, lobbyist for the Minnesota Rural Broadband Coalition, said the organization is “very happy to see legislative leaders and Governor Walz commit to $70 million for the Border-to-Border Grant Program,” Zacharias said. “This would be the single largest investment in state history and will bring service to thousands of Minnesotans that don’t have access.” 

The $70 million would be enough to serve roughly 25,000 locations, such as households and businesses, Dickison said, though it may not be enough to get Minnesota across the finish line on its 2022 speed goals, she said.

Many in the broadband industry are already looking ahead to the 2026 speed goal of 100/20 Mbps. That’s in part because some view the 2022 goals of 25/3 Mbps speeds as too slow, and already somewhat outdated. A 2020 report from the broadband task force says 3 Mbps upload service is “inadequate to support remote business and education needs and can no longer be considered high-speed broadband.”

“The 2022 goal I don’t even pay attention to,” said Bill Coleman, a Minnesota broadband development consultant who runs the company Community Technology Advisors.

Sen. Amy Klobuchar
Sarah Silbiger/Pool via REUTERS
Sen. Amy Klobuchar
The $70 million also isn’t the only federal cash coming in for broadband. Some local governments are planning to use their share of the ARP to build internet infrastructure, and U.S. Sen. Amy Klobuchar last week told the Forum News Service that Democrats and Republicans are close to a deal that would spend somewhere around $65 billion on broadband across the country.

If the state’s $70 million does come from the federal government, Coleman noted it will come with strings attached compared to the state grant program. Projects are generally expected to deliver service at blazing fast 100/100 Mbps speeds, for instance, though there are exceptions.

Dickison said Minnesota’s program only requires broadband developers to build projects that can scale up to 100/100 Mbps in the future. Still, she said that shouldn’t be too difficult a shift in a program that has already been exploring whether to set a new goal for speeds faster than 100/20 Mbps anyway.

Coleman also said it may be harder for developers to build out projects because of a massive federal broadband grant program. In 2020, the Federal Communications Commission awarded more than $408 million for broadband development in Minnesota as part of a larger $9.2 billion effort to spread internet infrastructure across the country.

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While that money — distributed through the Rural Development Opportunity Fund (RDOF) — covers a wide area of the state, some parts of Minnesota that fall under the RDOF grant program will be geographically scattered, and service won’t be required to be built for several years.

Local developers who missed out on federal funding can’t use state or federal money to cover the same ground, even though they contend they could build broadband faster. Meanwhile, contiguous areas where it could be relatively easy for local developers to build will be broken up into chunks by the federal program.

Steve Giorgi, executive director of the Range Association of Municipalities and Schools and a member of the state broadband task force, said at a meeting of the group last week that lawmakers should consider changes to the program based on the concerns. “I think you’re going to end up with these tiny tiny parcels with remote areas that aren’t in the census blocks of RDOF and are going to be real challenges for providers to even access because there’s going to be a lack of continuity from one service area to another,” Giorgi said.

Dickison noted the state doesn’t want to spend taxpayer money twice to reach unserved areas and predicted they would still get enough applications to use up the $70 million.  “I’m not anticipating issues with that,” she said.

State government reporter Peter Callaghan contributed to this report.