During a stop in Minnesota last month, U.S. Secretary of Commerce Gina Raimondo made a promise: The $652 million earmarked for Minnesota to help build infrastructure for rural high-speed internet would be enough to finally cover every part of the state.
“This is enough money to finish the job,” Raimondo told reporters, gathered at the Association of Minnesota Counties’ office near the Capitol in St. Paul.
Is that true? It depends, it turns out, on how you define a finished job.
When calculating who has access to proper broadband, the federal government counts much slower internet speeds compared to Minnesota’s definition. As a result, the cash may be enough to hit federal goals for universal broadband, but not state ones.
That is one of a few details that have become more clear since the White House announced how much each state would get for broadband as part of the $1.2 trillion infrastructure bill passed by Congress in 2021.
Here are three things to know about what is, by any measure, a huge influx of cash meant to help telecom companies and other broadband developers build fiber-optic cable and other infrastructure across Minnesota.
1) The money probably won’t arrive for years
Congress approved the $42.5 billion broadband funding package two years ago. But state officials say it could take another two years before Minnesota can spend its share.
Why the big delay? Where there’s a lot of money, there’s a lot of logistics.
First, there was mapping to determine how much every state would get based on the need for broadband services. Now, each state must write a plan for how to use their allotment of cash and have it approved by the federal government.
“It is safe to assume federal dollars won’t actually be in the ground until 2025,” Bree Maki, director of Minnesota’s Office of Broadband Development, told MinnPost, describing it as a conservative estimate.
That means the cash will probably come too late to significantly help meet a goal in Minnesota law for universal access to broadband with download speeds of at least 100 Megabits per second and upload speeds of at least 20 Megabits per second by 2026. That law has guided state funding decisions and priorities since it was passed in 2016.
That doesn’t mean broadband officials are ungrateful for the federal infrastructure money. It’s a huge sum that dwarfs prior state and federal spending on internet infrastructure. However, it just won’t arrive quick enough for Minnesota’s goal, meaning some will have to wait for what the state deems to be adequate service.
Once the money arrives, it will likely need to be spent over “numerous years,” Maki said.
2) It’s (still) not enough to fully hit state goals for speed
Even if the federal money were to arrive faster, it still wouldn’t be enough cash to fully hit the state’s broadband goals, because the state has higher standards for speed than the federal government.
The federal government believes the $652 million is enough to cover the whole state because of their definition of an area that is “unserved” by broadband. The feds count any location with access to internet that can potentially reach speeds of 25/3 Mbps as “served.” Maki said that includes “fixes wireless” technology — internet distributed through a device placed on a high location like a water tower — that state officials view as less reliable than fiber-optic cable. Maki said the federal definition leads to a count of 134,850 unserved businesses and households.
By contrast, in Minnesota, the state’s broadband task force estimated in October there were 291,000 unserved locations because they’re operating on a much higher speed standard of 100/20 Mbps. “There’s a gap there,” Maki said.
Since the Office of Broadband Development will be responsible for both doling out federal money and carrying out state goals, the different speed standards could lead to some complications.
New grants using federal money from the infrastructure bill will have to meet Minnesota’s higher speed standards, Maki said. However, Minnesota can’t use that money on “served” areas. So there will be parts of the state that Minnesota believes has substandard service but may not be able to upgrade, at least with this pot of money from the feds.
That means the broadband office will have to use state money or other federal broadband programs to backfill those areas in the aim of meeting higher speed goals, though likely not in time to meet the 2026 state goal.
One estimate by the state broadband task force expected about $426 million in new state or federal money — on top of the $652 million from the infrastructure bill — needed to hit the 2026 goal, though the price tag could be larger if developers need bigger subsidies to reach the hardest-to-serve areas. Since the Minnesota Legislature approved $100 million for broadband subsidies earlier this year, the leftover sum necessary is roughly $326 million.
3) Officials are keen to prevent another LTD debacle
The last time Minnesota was in line for such a large influx in cash for broadband infrastructure, it turned into a bona fide debacle.
The company LTD Broadband was awarded $311 million in Minnesota by a program run through the Federal Communications Commission. But the relatively small company had little experience in the fiber-optic cable required by the Rural Digital Opportunity Fund. LTD faced a litany of questions from competitors and broadband advocates about its ability to actually meet its promises and build infrastructure.
Eventually, LTD came under state investigation and then had its awards revoked by the FCC, almost two years after winning them. The company CEO always maintained LTD could do the work. But either way, Minnesota was left in the lurch.
What will prevent a repeat of this episode?
For one, the grants will run through Minnesota’s broadband office rather than the FCC, lending a local eye that has already approved hundreds of millions in grants in the state. “That history helps to know who should be getting the money and who shouldn’t,” U.S. Sen. Amy Klobuchar said during a recent news conference with reporters. Klobuchar sponsored a bill for tougher vetting at the FCC last year.
The FCC also awarded money to LTD Broadband based on a “reverse auction” system that rewarded companies that pledged to build infrastructure in unserved areas with the least amount of government money.
While that system is meant to result in a competitive bidding process that stretches taxpayer dollars, it has also drawn criticism from some that argue it rewards companies that can’t actually build at the low price point they promised. The money wasn’t lost to the federal government in this case, but the debacle delayed broadband infrastructure in parts of Minnesota by years.
Minnesota has its own criteria for awarding grants and does not plan for now to use a reverse auction except for one small potential exception, Maki said.
Klobuchar told reporters there are “clawback” safeguards in the law meant to ensure the return of money if developers don’t build infrastructure within four years. “I was obsessed with this because of stories like that,” Klobuchar said of LTD Broadband.