Analysis shows that broadband access gap in Minnesota shrinking; More households have access at State and FCC Speed Goal Tiers

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St Paul, MN – New research unveiled today by Connect Minnesota shows that the broadband availability gap in Minnesota is shrinking, with 85.09% of Minnesota residents now having access to broadband speeds of 6 Mbps download/1.5 Mbps upload, compared to 81.20% last October. In addition, 59.92% of Minnesota households can access broadband at speeds of at least 10 Mbps download/6 Mbps upload – the minimum speed threshold for Minnesota’s goal of ubiquitous broadband availability – a nearly 3% increase from October 2011.

“It is encouraging to see that the efforts of providers and all state stakeholders to increase broadband access are showing clear results,” said Connect Minnesota Program Manager Bill Hoffman. “These efforts, however, must continue in order to bring the empowering technology of broadband to the roughly 2 percent of Minnesota residents who remain unserved. And while the majority of the state can access basic broadband speeds, our 2011 survey results show 28% of the population still does not use broadband at home.”

Nonprofit Connect Minnesota has been working since 2009 to ensure that Minnesota residents have access to the economic, educational, and quality of life benefits derived from increased broadband access, adoption, and use. Part of that work includes mapping Minnesota’s broadband availability and providing analysis to the Broadband Taskforce, broadband providers, policymakers, and community planners.

Among the findings of the new broadband availability research are:

• 85.09% of Minnesota households can access broadband at advertised speeds of 6 Mbps download/1.5 Mbps upload, meaning that 311,000 households are in areas that may be eligible for Universal Service Fund broadband deployment subsidies.
• 59.92% of Minnesota households can access broadband at speeds of at least 10 Mbps download/6 Mbps upload – the minimum speed threshold for Minnesota’s goal of ubiquitous broadband availability*.
• 94.83% of rural households in Minnesota have access to broadband.
• 67.66% of Minnesota households have access to broadband speeds of at least 100 Mbps download/1.5 Mbps upload. In October 2011 only 45.30% of households in Minnesota had access to these broadband speeds.
• Broadband at the basic 768 Kbps/200 Kbps tier is available to 97.77% of Minnesota households, up from 97.08% last October.
• 88.1% ofMinnesota households have the ability to choose broadband service from two or more non-mobile broadband providers

Note: The data in this report are subject to data validation.

*Minnesota Statute 237.012 indicates upload goal of 5 Mbps. Data collection only conforms with speed tiers as represented in the SBI NOFA where 6 Mbps is the most comparable upload speed tier. This means that across the state, approximately 837,000 households are not connected to services that meet the state’s target.

Last month, Connect Minnesota released an innovative new broadband mapping tool called My ConnectView offering unmatched views of Minnesota’s technology landscape. Residents and businesses are encouraged to use the interactive map to find area providers and help validate the data.

Connect Minnesota’s research was conducted as part of the State Broadband Initiative (SBI) grant program, funded by the National Telecommunications and Information Administration (NTIA). The data were gathered in accordance with the requirements of the Notice of Funds Availability (NOFA) and subsequent clarifications set forth by NTIA. The process begins by contacting all known providers in the state and providing information about the broadband mapping project. Information on broadband service areas is collected from each willing provider through voluntary participation. A nondisclosure agreement (NDA) is offered to all providers prior to the submission of data; the data protected through the NDA is limited to highly sensitive network infrastructure information, including middle-mile locations. Connected Nation strives to maintain a flexible mapping process in order to be able to collect data from providers in a variety of formats based on providers’ technical capabilities and resources.

June 20th, from 1:00 – 4:30
University of Minnesota, Science Teaching & Student Services (STSS) Building
Room 412
Register now!

This event will look at re-engineering the classroom to harness the power of digital technologies. How can we customize learning to meet the needs of each student? Technology tools, teaching innovation, and new ways of organizing learning may provide the answer. Join us to hear from national experts on technology-enhanced customized learning.

Featuring

• Jennie Magiera, a 4th-5th grade math teacher in the Chicago Public Schools. Jennie began implementing a 1:1 iPad technology grant. She was also named a Golden Apple Teacher of Distinction in 2008, Apple Distinguished Educator and this January she was named the Chicago Public School’s Tech Innovator of the Year.
• Dominick D’Angelo, Principal of I.S. 228 in New York, has a strong focus on mathematics and technology. In 2010 the school began the School of One program for mathematics. The School of One seeks to customize learning to each child and is housed in its own dedicated section of the school, where instruction takes place in large, interconnected classrooms.

Don’t wait until the event to get the conversation going.  Join the virtual Education Innovation Gathering on InCommons to discuss and share information on the topic, access relevant videos, documents, links to related organizations and resources. Create a profile or log in through Facebook.

What I didn’t realize was that Lisa, while now working at Involta, used to work at APEX, a Duluth-based organization that was instrumental in attracting Involta to the area. So I got to hear about attracting high tech businesses to Minnesota from both sides – something I thought might interest readers.

In terms of an update, Involta is looking at opening their second location in Duluth in September. They are on the look for more places as they grow and as they strive to create a robust and redundant network.

In terms of why Duluth? Duluth was very thoughtful in their approach. APEX did a market survey and realized there was pent up demand. They had a natural advantage over warmer climates. They had the workforce and a public and private sectors that were willing to work together. That culture was key to getting on track and attracting likely candidates. As Lisa said – they had clients, community and climate – a perfect recipe for data center success.

“We’ve diversified our commerce using sites like eBay and Etsy,” says arts advocate Lynn Kasma, a recent MIRC participant from New York Mills, Minn.

In Akeley, Minn., 79 percent of local businesses have taken advantage of the program; in Sebeka, Minn., 57 percent. More than 1,500 individuals have participated in the grant-supported workshops, benefiting the vitality of rural Minnesota.

As MPR reports…

Bemidji-based Paul Bunyan Communications, which provides service to some 28,000 phone customers, is slowing down an aggressive expansion of fiber optic cable because the Federal Communications Commission is shifting how it allocates money in what is known as the Universal Service Fund.

The company could receive from $3 million to $5 million less from that fund each year as more money flows instead to such large carriers as AT&T and Verizon, a company spokesman said.

I’ve heard the same sentiment from other folks, such as at the CLE Day on Broadband last week. The Local Exchange Carriers (LECs) feel as if they are paying into a system from which they can’t make a withdrawal. At that meeting Joseph Cavender from the FCC explained that the recent changes are the first of several phases, indicating that the next round of changes may help LECs. I think that feels like cold comfort right now – first because it doesn’t help today. Second, because that just leads to more uncertainty and it’s difficult to build (or sustain) a business plan or make investments based on uncertainty – as seems to be the case with Paul Bunyan.

It’s hard on the companies; it’s hard on the communities as well. A recent report from the University of Minnesota Extension (Economic Contribution of Telecommunications Companies Serving Greater Minnesota) indicates that the total economic contribution of the telecommunications industry serving Greater Minnesota in 2011 was an estimated $1.3 billion. So anything that hampers growth will hamper the economic impact. Also with the negative impact and uncertainty communities are not getting broadband.

David W. Collins, Executive Director of Hubbard County Regional Economic Development Commission has sent a email to several folks outlining the potential problems with these changes on his community and asking policymakers and community leaders to consider the impact…

We need your help!

The Hubbard County Regional Economic Development Commission (HCREDC) for several years has been trying to bring high speed broadband services to ALL of our rural areas. Approximately 4,000 homes and businesses within the Park Rapids (MN) phone exchange currently are not served, and have to rely on satellite or dial up service. These options are unacceptable. Bringing state of the art, underground fiber optic cable to these areas is vital to our future economic growth for numerous reasons, a few of which are:

1) the ability for consultants and others to operate / manage their business from home;
2) students / parents / teachers / schools being able to communicate and student being able to complete assignments (they are currently at a disadvantage compared to other students);
3) resorts being able to take reservations and market themselves, plus the ability of guests to communicate while visiting;
4) people want to live in this area, but are choosing to purchase real estate only where broadband is available;
5) medical care / monitoring plus emergencies;
6) the list goes on and on.

After communicating with several industry providers in our area, the HCREDC partnered with Paul Bunyan Communications (cooperative, based in Bemidji) and supported efforts to obtain a Rural Utility Service loan (RUS loan) thru the United States Department of Agriculture (USDA). This effort was successful and Paul Bunyan Communications was awarded a $17 million loan in September 2011 to build out fiber to each home in the Park Rapids area. It was expected that work would begin immediately with fiber going into the ground beginning Spring of 2012, with project completion estimated to be early 2014.

HOWEVER, in late October and again in November, the Federal Communications Commission issued an order to “reform” universal service fund (USF) and intercarrier access compensation. This “reform” would cost local telecoms millions of dollars annually in lost revenue. It would dramatically change the business model for these telecoms from a system that has worked and been in place for years. The “reform” would significantly reduce their annual revenues and in almost all cases eliminate their ability to invest in rural broadband / phone infrastructure. It is my understanding that one of our local area telecoms stands to lose over $3 million annually due to this “reform”, which would be implemented over the next 9 years. This “reform” will make it extremely difficult for these businesses to repay existing loans, let alone invest in further developing a broadband infrastructure in rural areas.

This is not just a Hubbard County problem. It is not just a Minnesota problem. It is a problem for rural areas nationwide!! This “reform” will negatively impact the development of rural broadband infrastructure nationwide. Imagine if rural areas did not have land phone lines or electricity? We are basically talking about the same issue for our times! And this is much more important than keeping rural post offices open!!!

But back to Hubbard County. The build out of fiber in our area has been for the most part “put on hold” because of the “reform” and its impact locally. Tough for Paul Bunyan Communication (or anyone else in our area) to build out a $17 million broadband infrastructure when the revenue model is being so drastically changed.

So, we are asking that:

1) our congressional delegation (Senator Klobuchar, Senator Franken, Congressman Colin Peterson & Congressman Chip Cravaack) make this issue a top priority; [See note from Klobuchar/Franken]
2) we need our congressional delegation work to have the FCC order nullified or reversed or amended in a way that our project could proceed;
3) and we may need our congressional delegation to extend the deadline for using the $17 million dollar RUS loan authorization. Time is ticking away on us as this issue is being “discussed” in Washington. The “reform” issue needs to be resolved, but when that happens we still need to be able to access the $17 million RUS loan;
4) the Association of Minnesota Counties to actively become involved in this issue. Perhaps by asking each county to pass a resolution of support, and by actively engaging their Minnesota and Washington lobbyists and political action network;
5) Bill Richards, Richards Policy Group, representing Governor Dayton & Minnesota, become actively involved in resolving this issue;
6) Impact 20 / 20 (Northwest Minnesota Foundation) to become involved and mobilize their network;
7) Blandin Foundation Broadband Initiative become involved and mobilize their network;
8) Governor Dayton and his staff to make this a priority and communicate the same to the Richards Policy Group and entire MN Congressional delegation;
9) that the Rural Broadband Alliance (based in Washington, D. C.) continue to work with us towards a satisfactory solution.

Apparently challenges to the “reform” have been, or will shortly be, filed in the 10th Circuit Courts (Denver). However, this route to remedy the situation could take years at best. Congressional action is needed and needed now. The intent of the USDA’s RUS program is solid, the FCC needs to keep its USF and inter-carrier access fees in line with and supportive of that intent.

I offer the content of his email almost in its entirety as a roadmap for anyone who has similar concerns.

As part of a larger, ongoing research project, this paper discusses the digital presence of rural businesses in 23 communities. We define digital presence as any locally controlled webpages, social media, or GooglePlace pages devoted to an entity, i.e., a private business, nonprofit, or government office, within a community. Overall, the digital presence of 85 townships and cities were assessed.

Here are the results:

Across the 23 communities, an average of 42.6 percent of businesses had a website. On average, 9.9 percent of businesses in each community used social media. More businesses showed activity on their GooglePlace pages. No major difference was found between the control and intervention communities for website and social media use.

The research seemed to pinpoint a few reasons that communities seemed to have more businesses online that their cohort communities

• MIRC communities saw slightly higher use of GooglePlace pages. UMN MIRC business training sessions focus on GooglePlace.
• Businesses in growing communities have a higher proportion of websites, are more likely to use social media for business, and have a higher proportion of GooglePlaces with owner verification and content.

The report adds that since the study was inclusive, not random, in nature that it doesn’t necessarily reflect all of rural Minnesota – but it does include 23% of rural businesses. So I suspect the rest of the state would follow suit. Check out the actual report if you want to see the list of specific communities and how they fared.

One fun follow up – the researchers used business listing from InfoUSA (a tried a true market research tool) to get lists of businesses. While the raw data from the report if not available to the general public, they have shared it with the individual communities so that efforts can be made to approach businesses to encourage them to learn more about effectively using the Internet to market themselves. As Hans wrote to me, “the important thing is that this is information that can help communities make “informed, intentional, positive choices about their future.”

The City of Monticello has put bondholders on notice that the municipal broadband network once hailed as a national model is unable to meet its financial obligations with revenue generated from FiberNet Monticello customers. Instead, city leaders now will discuss how to restructure payment of $26 million in revenue bonds to save the faltering broadband network.

A financial report prepared for the Monticello City Council meeting on May 14th acknowledges that FiberNet “continues to operate at a loss. For the quarter, FiberNet lost around $100,000, not including its 2012 debt payments.”

A blunt letter sent to Wells Fargo Bank in March indicates the City does not have an obligation to continue making up the losses incurred by FiberNet.

I contacted Jeff O’Neill, the city administrator at Monticello for his take on an update. He touches upon some of the issues we’ve heard in the past: the budget has taken a hit starting with obstacles caused by the lawsuit brought against the project at the onset of the initiative. Also they have seen some fierce competition from other providers. But I think it’s interesting to take a look how a community network can and should measure success. Obviously finances is part of the equation – but providing the community with the infrastructure it needs to succeed is another part.

Here’s what Jeff had to say…

When evaluated as a whole, FNM has been wonderful for the community.  As requested by its citizens, FNM has delivered.   The system is performing well with FNM staff and HBC getting great reviews from customers.  The community is benefitting from telecommunication service at a level and cost that is the envy of the nation.  With telecommunication costs  dropping 35-60% since the inception of FNM, the savings to the community are enormous.  This savings and improved performance is certainly a huge plus for the local economy and supports the goal of  job creation.

When measured from a purely profit and loss basis,  original business plan has been impacted significantly by the one year delay created by the TDS lawsuit along with a variety of impacts resulting from the great recession.   Also, the presence of an army of Charter door to door salespeople selling 30 meg internet, all video channels and four movie channels for $59.90 has blunted the growth of FNM subscription rates.    Please note however that FNM subscription rates are actually quite good (Appros 39% of Single/two family) and we have a strong and steady base of customers that continue as FNM customers due to fair prices and great service. These customers have turned away Charter salespeople on multiple occasions.   Some have mentioned that they will not take the Charter deal as doing so would be self-defeating and like cheating against themselves and their neighbors who voted for building the system.

Over one quarter of businesses in the community are using services (120+) and the number continues to grow.  Overall, business and residential citizens in the community are saving millions due to the reasonable prices by FiberNet combined with the drastically low prices by Charter.   The original David and Goliath story ended with the sling of a single rock… this modern day version is ongoing… Monticello is fighting the good fight and doing what it can to enhance financial viability through cost cutting and development of new revenue sources.  We are confident that these business development efforts will ultimately off-set the economic damage resulting from the lawsuit and unbelievable competitive pricing.

 

Winona has a unique problem that the $100,000 local grant is also addressing: the city needs to attract more workers to fill the jobs it has. Grant money is being used to create free wireless portals around the city that are comparable to similar offerings in urban centers.

With two universities, a technical college, and a history of entrepreneurial efforts, this scenic river town is long on innovation. The number of global companies that trace their roots to the city of 27,000 is notable by any standard, with many still headquartered there today. Global giants like Fastenal, Hal Leonard, Peerless Chain, Watkins, RTP and others.

Higher education, health care, arts and culture have risen to meet the needs of Winona‘s innovative business community, and now widely available broadband technology adds a crucial piece of the progressive puzzle. With slow population growth, the city needs more workers so local companies can continue to flourish.

Technology, business, and medical jobs are available, in a place modern job-seekers might not think to look. A place that’s historic, contemporary, innovative, culture-rich, and a welcome alternative to the big-city grind. And now, well connected to the rest of the world.

Notes: for more on modern-day Winona, go to www.cityofwinona-mn.com. Grant money was also used in Winona to provide computer training to 60 Hmong refugees, and home computers to 40 Hmong refugee families, in partnership with PCs for People.

Here’s a quick look at their trip from the Bemidji Pioneer…

To help with this problem, the United Way of Bemidji Area partnered with PCs for People, a nonprofit organization that collects and refurbishes used computers for seniors and low income individuals. …

PCs for People computer technicians Scott Lumbar and Christian Rugel have been working on the computers since Wednesday night and are scheduled to work until their deadline, preparing the 88 computers. Hill’s Plumbing and Heating donated the work space for the two to work.

Rugel said that each computer is a unique project, which causes some computers to take longer than others….

The computers will be done by Saturday, when people who have qualified to receive a computer will come in, receive brief instructions on the computer and be on their way.

This week, the St Cloud Times paints a different picture of Internet in the schools. The Internet/broadband now permeates every aspect of education – from teaching to education administration. Now it’s the classroom, school and student without access that have become the exception – and not in such an exceptional way…

Broadband is being used in Minnesota schools for student testing, reports to the state, portals for parents to track their child’s work, and for students to take online classes, according to a December report from the Governor’s Task Force on Broadband. Professional development for teachers is another area where broadband access can reduce costs.

“I think people don’t always realize … how essential Internet access is to the business of doing education. It’s no longer nice to have,” said Mary Mehsikomer, technology integration development and outreach facilitator for TIES, which is an education technology collaborative.

“It’s just as important as having electricity and water. It’s really become a core component of the whole business of delivering instruction and also managing school districts.”

The good news is that as the article points out – most schools and the majority of students have access. The bad news is that they often don’t have sufficient access. There are programs that are out there supporting connectivity, especially for schools. The FCC’s E-Rate program subsidies offset about $20 million to $25 million in Minnesota every year, about half of what it costs schools. On a more local level, Foley Schools recently received funding (via Blandin Foundation’s MIRC program) to install more wireless units in the school for school and community use.

And the Internet isn’t just for K12…

“Internet access has gotten so vitally important for college students,” said Vi Bergquist, chief information officer of St. Cloud Technical and Community College. “It’s almost a must.”

“Some people wouldn’t be able to get an education if we didn’t offer online classes,” she said.

At the college, registration is done only online and some classes are offered online, she said.

The college accommodates students who don’t have access at home with open computer labs, which is good but I think insufficient for many students. The article mentions a college student who was trying to take an online class using only her mobile phone. (That’s some dedication to the effort!)

So while progress is being made on the school front, progress is still lagging for home access in some areas and with some demographics…

“Some (parents) don’t realize what the kids can’t do,” he [Marc Johnson, director of ECMECC] added. “They don’t know they have access that just isn’t robust enough.”

As a community we should be asking what our kids can’t do due to limited technology – and is the cost of that lost opportunity greater than the cost of providing ubiquitous opportunity. (Both in terms of broadband connections and computers – as a parent of three students I can attest that the cost of the equipment can easily trump cost of connectivity.) There are lower-cost options available from Comcast and CenturyLink ($9.95/month and reduced rate computers for qualifying families) but that only helps in Comcast/CenturyLink coverage areas.