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New Report Details Local Government Efforts to Improve Minnesota Connectivity

In our latest report, All Hands On Deck: Minnesota Local Government Models for Expanding Fiber Internet Access, we analyze how local governments in 12 Minnesota communities are expanding 21st century Internet access to their citizens.

In 2010, the Minnesota legislature set a goal for 2015 - universal access to high speed broadband throughout the state. Even though we have the technology to make that vision a reality, large swaths of the state will not meet that goal. Nevertheless, local folks who have chosen to take control of their connectivity are finding a way to exceed expectations, surpassing the choices in many metropolitan regions.

Some of the communities we cover include:

  • Windom, which is one of the most advanced networks in the state, built their own network after their telephone company refused to invest in their community.
  • Dakota County showed how a coordinated excavation policy can reduce by more than 90 percent the cost of installing fiber.
  • Lac qui Parle County partnered with a telephone cooperative to bring high speed broadband to its most sparsely population communities.

We delved into networks in Anoka, Carver, Cook, Lake, and Scott Counties. The report also shares developments in the municipalities of Chaska, Buffalo, and Monticello. We tell the story of RS Fiber, located in Sibley and part of Renville County. These communities provide examples of municipal networks, a variety of public private partnerships, and "dig once" policies.

This week in Minnesota, the governor’s office began accepting applications for the state’s new $20 million initiative Border-to-Border program. We hope this new report will serve as a resource for potential applicants and other community leaders across the U.S. interested in taking charge of their broadband destinies.

Read and download the full report [PDF].

Catching Up with the RS Fiber Coop in Minnesota - Community Broadband Bits Podcast #99

In the nearly two years since we launched this podcast with an interview from Minnesota's rural Sibley County, the project has evolved significantly but the need for better Internet access remains a constant.

Today, we interview Coop Vice-Chair Cindy Gerholz and Winthrop Town Manager Mark Erickson to get an update on the fiber-to-the-farm project. The Renville-Sibley Fiber project has transitioned from a municipal project to a cooperative. Local towns and a sizeable majority of townships will together issue an economic development bond to provide seed capital to the coop.

We discuss the project, financing arrangements, and the need to make sure that no one is left behind. Stay up to date with the project on their website and Facebook.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 20 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Thanks to Valley Lodge for the music, licensed using Creative Commons. The song is "Sweet Elizabeth."

Multiple Minnesota Projects Submit "Expressions of Interest" to FCC

We reported in February that the FCC sought "expressions of interest" from entities that want a share of Connect America funds. The agency sought feedback on the need and desire for projects across the country from entities that have not traditionally received universal service funds. The FCC received over 1,000 expressions of interest.

Minnesota leads the U.S. in proposed projects. According to a recent MPR News Ground Level article, 62 expressions of interests come from Minnesota. Projects vary in size; some focus on a small number of homes while others plan to bring services to many people.

All of the proposed projects address gaps in rural broadband service. MPR noted that several of the expressions of interest describe community experience with CenturyLink, Frontier, and Mediacom. The RS Fiber cooperative wrote:

“The communities have approached all three providers [CenturyLink, Windstream, and MediaCom] and asked them to work with the communities to build the fiber network. They all refused. Then the communities offered to put up the money to construct the network and the providers could operate and eventually own the network. None of them were interested.”

The MPR article reports the FCC will likely offer approximately $86 million to the three incumbents to bring broadband to unserved and underserved areas. If they refuse, a long line of interested parties are waiting.

Minnesota's desire for broadband caught the attention of state lawmakers. A bill to earmark funds for rural broadband was introduced earlier this session and has received bipartisan support. From the MPR article:

Even if the Minnesota projects go nowhere with the FCC, they already may have had an impact here in the state.

For the first time, lawmakers here are considering whether to spend money on broadband infrastructure, and the idea has backing from Gov. Mark Dayton. But “there was concern from the governor and others there might not be enough interest,” said Christopher Mitchell, analyst with the Institute for Local Self-Reliance. “This answers that.”

Minnesota Local Governments Advance Super Fast Internet Networks

Publication Date: 
March 19, 2014
Author(s): 
Christopher Mitchell
Author(s): 
Lisa Gonzalez

Local governments in Minnesota have been at the forefront of expanding fast, affordable, and reliable Internet access - often in some of the most challenging areas of the state. ILSR has just released a policy brief to explore some of these approaches: Minnesota Local Governments Advance Super Fast Internet Networks.

The full report is available here.

The brief examines five communities that have taken different approaches to expanding access, from working with a trusted local partner to creating a new cooperative to building community-wide FTTH networks.

Lac qui Parle County has worked with Farmers Mutual Telephone cooperative to bring fiber networks to those who had been stuck on dial-up. Finding itself in a similar situation with no reliable partner, Sibley County is creating a new coop to work with.

Scott County built a fiber ring to connect community anchor institutsion to dramatically expand access to high capacity networks and lower telecommunications budgets. That network has helped to lure several major employers to the area by leasing fiber to them.

Windom and Monticello have built FTTH networks in extremely challenging conditions. Though Windom is far smaller than most have believed is feasible to build such a network, it has thrived and is now connecting many of the small towns surrounding it. It was essential in retaining jobs in the community that would have been lost without it and has attracted new jobs to the region. Monticello is a younger network and has remarkably benefited the community even as it has struggled financially due to dirty tricks from the telephone and cable companies.

The policy brief makes some policy recommendations while focusing on some local solutions to difficult problems in ensuring all Minnesotans have fast, affordable, and reliable Internet access.

To Improve Minnesota Broadband, Look to Lessons of Electrification

Steve Downer is the Associate Executive Director of the Minnesota Municipal Utilities Association, MMUA, and he previously served on the Blandin Foundation Strategy Board. He offered these thoughts on page 4 of the "The Resource" [pdf] from January 2013 and has allowed us to reprint them below.

According to online reports, House Commerce Chairman Joe Atkins has listed his top 10 issues for his Committee in 2013. Included on the list, at No. 4, is Telecommunications and Broadband Law Update. As municipal involvement has been a hot-button topic over the years, this should be of interest to municipal utilities.

The idea of re-writing state telecom law was a priority of the Ventura administration but, even with agreement among various parties that state law was antiquated the discussion never gained much steam, largely because the telecom companies decided the law was just fine after all. Efforts have been made over the years to remove or reduce the super-majority referendum requirement to build a municipal telephone exchange, but have withered in the face of vociferous opposition.

On the other hand, efforts to further restrict municipal provision of broadband service, a concern in recent legislative sessions, have also languished. So, what does Chairman Atkins have in mind?

Perhaps local interests, working through organizations like MMUA, could suggest the state needs to be more open to partnerships and local government projects, if it is ever to reach its broadband goals.

Cities have proven fully capable of providing a full range of telecommunications services over the years. Counties are providing cutting-edge communications services. The Southwest Minnesota Broadband Services project (a consortium of eight cities) shows how ordinary people, working through their local governments, can work together to provide high-quality voice, video and data service at reasonable prices.

Renville Sibley Fiber Project

After much work, a similar project in Renville and Sibley counties has recently been stymied due to concerns over the ability of city-county partnerships to issue bonds. The project itself has been enthusiastically supported by rural and city interests and was well on its way to construction before last-minute legal concerns were voiced.

This is just the type of project the state should be fostering.

Yet, instead of recommendations to clearly allow this type of partnership in state law, it appears there may be efforts to stack the deck against local interests heading into the session.

The Minnesota Governor’s Task Force on Broadband, for example, recently released its Annual Report and Broadband Plan, including recommendations for the 2013 legislative session. The Report, while the result of much good work, bears the traditional hallmarks of large group writing efforts, and tilts toward the input of private interests that comprised the bulk of the members.

The report notes the obvious, saying, the private sector will play the leading role in expanding broadband access (it might as well have said ‘the sky is blue’).

Two sentences later, the report promotes “public-private broadband projects” but makes no specific mention of how to foster such projects.The recommendations that are made generally provide “incentives” (read tax breaks or subsidies) to private companies and doesn’t even mention local government, which has played a leading role in broadband provision in certain locales.

A number of recommendations are made, but a clear and consistent road map is lacking.

Some recommendations prove the point that governmental ‘pork’ is money that is going to somebody else. Current perks have apparently not been enough to ‘incent’ private providers to extend highspeed service in many areas. Yet, in some of these areas locals are more than willing to invest their own money to provide the service if they could just get the lawyers out of the way.

Minnesota Seal

On the other hand, calls for new positions in state government, to untangle the web of available programs, only seem to prove the point that if bureaucracy grows large enough, you will need more of it to make its purposes clear.

Then there is this recommendation, rich in irony: “to coordinate highway construction and broadband deployment projects,” and have the state install conduit that would presumably contain privately owned fiber optic cable.

Does anybody remember Connecting Minnesota? This was a late-90s proposal for MnDOT, in cooperation with a private partner, to lay 2,000 miles of fiber optic cable in interstate highway right-of-ways. Legal battles, largely with US West (now CenturyLink) led to the demise of this public-private initiative.

A perfect example of public-private partnerships exists in the electric utility industry. Despite animosities, largely in the formative years, municipal, investorowned and cooperative utilities jointly invest in capital-intensive projects on a regular basis.

Utilities do this because they recognize the level of capital needed to improve service to their customers, and realize an effective way to raise the needed capital is to partner with others willing to invest, regardless of philosophical differences.

Enacting guidelines to allow similar investment in our broadband infrastructure would similarly benefit citizens of Minnesota.

We are encouraged by Rep. Atkins’s inclusion of telecommunications on his 2013 session “To Do” list and encourage him to recognize the important and effective role municipals can play to help the state reach its 2015 broadband goals.

Rural Reality: Waiting One Month for Basic Telephone Service in New House

Yesterday, we released our first podcast - a short discussion with Linda Kramer of the Sibley-Renville Fiber project in rural Minnesota.

When I happened across their Facebook page this morning, I found this perfect example of why the project is necessary (and they gave us permission to reprint it):

One of my friends moved from Fairfax to Gibbon two weeks ago. Her existing provider won't hook up service to her new home until June 29. This means nearly four weeks without basic telephone service for her family (and no phone at all while her husband has his work cell phone with him during business hours).

Once she gets the service hooked up, she needs to address a billing problem, as the amount she's being billed by this company is not the same as what she was promised when she signed the contract.

Excellent local customer service is one of the things many people are looking forward to with RS Fiber. Is this important to you?

Most of us in urban areas really hate our cable providers because of the poor service they provide. But at least they are relatively timely in the terrible service they offer -- unlike in rural areas where telco technicians may be responsible for covering many hundreds of square miles.

Hesitant though I am to promote anything Facebook-related, the people in Sibley have done a tremendous job of using Facebook to organize people and share stories about why their community-owned network is so important. If you are trying to organize a community for better broadband, take some notes.

First Community Broadband Bits Podcast - Sibley County Fiber to the Farm

In our excitement to produce this podcast, we forgot to credit Fit and the Conniptions for the intro/outro music. Much thanks for releasing their music under a creative commons license that allows us to use it for this purpose. If you like their sound, buy an album!

We have decided to start a podcast- a recurring audio program that you can listen to on your smartphone, iPod, computer, this web page, etc. We are calling it Community Broadband Bits and our plan is to offer short (10-15 minute) interviews with people doing interesting things to encourage community broadband networks.

As this is our first attempt at such a show, we hope you will send feedback and suggestions. Eventually, we will get on a schedule, likely releasing every other week for the first few months.

To subscribe with iTunes, click here.

If you simply want the audio feed for the show, it is http://feeds.feedburner.com/BroadbandBits

For our first show, we interviewed Linda Kramer with the Marketing Committee of the Sibley-Renville Fiber Project in rural Minnesota's Sibley County. In this ten minute interview, we discuss the need and demand for broadband in rural areas, as well as how the marketing committee has educated residents and demonstrated support for a County-owned fiber network.

In Minnesota, Rural Fiber to the Farm Project Expands

A rural Fiber-to-the-Farm project that started in Sibley County has added three new towns to its potential territory due to the extremely high interest in fast, affordable, and reliable connections to the Internet. The current providers aren't getting the job done and few expect that to change given the cost of improving services.

An article last year reported on present difficulties for many in Sibley:

Soeffker, who farms with her husband in rural Sibley County, said the dish receiver they must use works fine in good weather but balks during heavy rain and snowstorms.

Meantime, her husband struggles with a lagging Internet speed of .6 megabits a second that falls short of meeting his business needs when he’s selling commodities.

The committee organizing the network set a goal for demonstrating the interest of something like 50% of the population in the target area. There has been some confusion as to exactly how many they should have before committing to the project but with just two mass mailings, they have received nearly 3,000 positive responses (of the over 8000 households that could be served). This is a very strong response.

To keep the public informed, they have had numerous public meetings in each of the communities that will be involved. To be as open as possible, they would often have three meetings in a town per day -- a morning, afternoon, and evening meeting to accomodate everyone's schedule. As this project moves forward, no one can claim the group has been anything but open with the plan.

On January 19, they had a major meeting with over 100 people attending, including many elected officials from the towns. For over two and a half hours, they had five presentations and numerous questions. MPR's Jennifer Vogel was there and wrote about the project shortly afterward.

Participating communities--which include Renville County, Sibley County, Fairfax, Gibbon, Winthrop, Gaylord, Arlington, New Auburn, Green Isle, Buffalo Lake, Steward, Brownton and Lafayette--have been asked to decide by early March whether to continue with the project and release additional funds for marketing and administration.

Previously, the project included 7 potential towns. But some nearby towns in Nicollet County have expressed interest in joining and their density would make the project more viable. Most in Sibley have been dedicated to serving every household - town and farm alike. While the principle of equity is noble, it ultimately makes the project harder to finance due to the higher fixed costs required to serve the least dense areas. Bringing in a few more towns benefits everyone.

Unfortunately, the people around the those towns are frustrated that they are not slated for connections in the current plan -- see some of the discussions on their vibrant facebook page. They will have to draw the line somewhere but will undoubtedly be interested in expanding the network once they have built out in initial territory.

Minnesota law has a barrier to municipal networks and as a matter of law, it is not clear that it applies to a county-owned project. Under law, if a municipality wishes to own or operate a telephone exchance, it must have a successful 65% referendum -- an incredibly high bar given the imbalance of spending power in such contests. Incumbent providers can spend a lot to oppose a referendum whereas local governments cannot take a position and grassroots groups are limited in their financial resources.

Renville Sibley Fiber Network

However, as this network plans to neither own nor operate a telephone exchange, it should not have to pass a referendum. It seems as though the project is leaning toward a partnership with Hiawatha Broadband Communications, a well liked private firm from southeastern Minnesota. HBC already operates the muni-owned Monticello FTTH network.

While no financial plans are yet finalized, the most likely option appears to be non-recourse revenue bonds for nearly $70 million. These are bonds that are issued to private investors and will be repaid with revenues from the subscribers. If the network were to fail to produce enough revenue to make the debt payments, the towns and county would have the option of making up the difference from tax revenues but would be under no obligation to do so.

From Jennifer Vogel:

There would be some public obligation to the project, in the form of what McGinley called a "debt service reserve fund." In order to make the project appealing to investors, he said, the participating communities would be required to establish and replenish if necessary a $4.5 million rainy day fund that would cover any shortfalls. They also would have to cover the contributions of any communities that ducked out of the project down the road or couldn't pay into the fund.

If one town, Winthrop for example, decided not to ante up for the debt service reserve fund, other communities could cover the difference. As the network generates net income (perhaps 5-6 years down the road), the money comes back proportionally to those towns that created the reserve fund.

It bears noting that these people are not asking for any handouts. Whereas Frontier and other providers in the towns are incredibly unlikely to expand their networks absent taxpayer subsidies, the Sibley County Fiber Project will be locally self-reliant.

Redwood County, Minnesota, Latest to Study FTTH

Minnesota, land of 10,000 lakes, may soon also be the land of Countywide rural FTTH. Yet another County is doing a feasibility study to figure out how it can bring fast, affordable, and reliable broadband access to all of its citizens.

Redwood County’s Economic Development Authority (EDA) opted to move forward with a broadband feasibility study that would determine just what the county would need to do in order to get fiber to every premises.

The study, which is being conducted by the Blandin Foundation through what is known as the Robust Broad-band Networks Feasibility Grant Program.

The grant, which includes up to $40,000 for the county as it addresses the needs of every community and farm site from one end of the county to the other, requires matching funds, which are available through the county EDA.

Redwood County

Redwood County is in an interesting area, just north of the Windom area muni FTTH networks and west of the proposed project in Sibley and Renville counties. This study comes not long after Todd County started a feasibility study as well (the the latest on that). And though we haven't discussed it much on MuniNetworks.org, Lac qui Parle County to the northwest is working with a rural telephone cooperative to bring FTTH to many in their border as well.

And then beyond them, we have Cook County going FTTH with their electric coop and Lake County going its own way, both with the assistance of the broadband stimulus awards.

Minnesota could very well become the state with the most impressive rural connections. Unfortunately, thus far we have seen no assistance from the state in this matter, but perhaps the Dayton Administration will chart a new course. He has decided to appoint a new Governor's Task Force on Broadband as well as a Broadband Development Office within the Department of Commerce. Those interested can learn more from Blandin on Broadband.

Blandin on Broadband also has more information about Redwood Falls.

WindomNet Saves Jobs, Provides Stellar Customer Service

Minnesota Public Radio, as part of its Ground Level Broadband Coverage has profiled WindomNet with a piece called "Who should build the next generation of high-speed networks?"

Dan Olsen, who runs the municipal broadband service in Windom, was just about to leave work for the night when he got a call. The muckety-mucks at Fortune Transportation, a trucking company on the outskirts of town, were considering shuttering their office and leaving the area.

"They said, Dan, you need to get your butt out here now," Olsen recalls. "I got there and they said, 'You need to build fiber out here. What would it take for you to do it?'"

Fortune, which employs 47 people in the town of 4,600, two and a half hours southwest of the Twin Cities, relies on plenty of high-tech gadgetry. Broadband Internet access figures into how the company bids for jobs, communicates with road-bound truckers, controls the temperatures in its refrigerated trucks and remotely views its office in Roswell, New Mexico. Fortune even uses the Internet to monitor where and to what extent drivers fill their gas tanks in order to save money.

Yet, when it was time to upgrade company systems three years ago, Fortune's private provider couldn't offer sufficient speeds.

That's where Windomnet came in. Though Fortune was a mile outside the municipal provider's service area, "We jumped through the hoops and made it happen," recalls Olsen. "The council said, "Do it and we'll figure out how to pay for it.' We got a plow and a local crew. We had it built in 30 days."

I have thought about this story frequently when I hear claims that publicly owned networks are failures. For years, lobbyists for cable and phone companies have told everyone in the state what a failure WindomNet has been - they crow about debt service exceeding revenue while ignoring the fact that all networks -- public and private -- take many years of losses before they break even because nearly all the costs of the network are paid upfront.

Toward the end of the article (which should be read in its entirely rather than in the snippets I repost here), Dan puts the matter in context:

Dan Olsen retorts that Windomnet was never designed to make money; one of the benefits of a municipal system is that nobody takes profits out of it. He says the plan was to break even by year five, which arrived in 2010, and it looks like they'll come within $50,000 of doing so.

"We don't charge enough to make money," says Olsen, noting that Windomnet serves the vast majority of the town's 2,000 homes with internet, phone, cable or all three. They also provide free service to city buildings and the library. "The point is not to make money, but to break even," Olsen says. "The number one goal of the system is to provide broadband to the residents of Windom."

And the vast majority of residents take service from WindomNet. With a population of 4600, meaning probably 2000 households, the network has 1846 fiber drops that are active with at least one service. They have people working for companies in South Dakota but able to work from home regularly due to the Internet connection. Compare that to Sibley County, where Qwest has not even bothered to offer DSL in the county seat of Gaylord!

And the customer service comes highly recommended. Again, from the MPR article:

For his part, Dale Rothstein, who runs the IT systems at Fortune in Windom, says, "I get three calls per month from people trying to get me to convert. I say 'no.' Dan and Windomnet took care of us. I'm not going anywhere. It's a great relationship. When there is a problem, I call and it's taken care of. It's great to have a local company to deal with."

Major providers, like Frontier (famous for some of the worst DSL in the nation) pretend to be reasonable on the issue by claiming that publicly owned networks will make it harder to reach the highest cost households. This must be why Frontier is trying to derail the Sibley County project from building fiber-to-the-farm when Frontier can't even provide reliable slow DSL across all of its phone lines in the area. Not only does Frontier have no plan to connect these farmers, they have no reason to as such an investment would not generate sufficient return for them to be interested.

FiberNet Monticello

TDS has been the king of BS in this arena, putting out patently absurd press statements that reporters feel compelled to repeat no matter how implausible. Regarding Monticello, MN, which built a FTTH network compelling TDS to upgrade their poor DSL service (while also delaying the Monticello network with a year-long frivolous lawsuit that was eventually tossed out of court):

Fast forward to today, a city with two fiber networks. Andrew Petersen, director of external affairs for TDS, acknowledges "the importance of broadband to stimulate economic development in urban and rural communities" and says his company would have built a fiber network eventually, without prodding from the city. He believes the network may be somewhat ahead of its time, though.

Ha! Monticello begged TDS to invest in a modern network and TDS refused, saying that their DSL was perfectly suitable for what Monticello needed. They suddenly changed their mind when the City decided to build their own network to ensure not only faster, more reliable connections, but a LOCAL option.

Keep an eye on this MPR coverage of broadband - they have several of the few reporters in the state that have developed a good background in telecom and can get beyond the soundbites too common in broadband coverage. Well done.

This article led to a great response on Connected Planet Online by Joan Engebretson:

Take this quote from a Frontier executive cited in the MPR story. “Simply pouring money into projects that overbuild and compete with networks built by private investment discourages private investment and does not help reach those highest cost households,” the exec said. “Duplication of the network is no guarantee of success, and is often simply a waste of both public and private resources.”

This argument, of course, ignores the fact that if the new facilities truly were simply a “duplication” of what was already there, there would be no need for them and local municipalities would not be taking on the task of building the new higher-speed networks.

Exactly.