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.

To be fair the limit seems pretty generous – 300 gigabytes for basic Internet plans.According to the Minneapolis Star Tribune, only 1 percent of U.S. Internet users use that much data in a month.  (Although I could see a family of 5 going through that quickly enough – especially if viewing HD video.) And the charge is not exorbitant $10 for every 50 gigabytes over that limit. And this does replace a lower cap (250 gigabytes/month) that led to customers getting cut off rather than charged. But it’s the precedent that seems to be the issue here – especially since the Xfinity video service does not count against that monthly limit.

As is often the case the most interesting part of the story is the comments section. Some folks are happy that the “basement nerds” will pay their share. Some worry that this is a slippery slope and that soon customers will be charged for every download. Some feel that this is a reaction to folks getting video from places other than traditional TV/cable. And some just want to talk about the favorite or most hated politicians/businesses/neighbors.

Last year, the FCC published a report that shows most broadband Internet providers aren’t providing the speeds and quality customers are paying for. The information is highly technical, and fairly overwhelming for the average consumer.

High Speed Experts has taken this information and displayed it in an easy-to-digest infographic format so that your readers can clearly see what their provider offers and whether or not they’re getting the best value.

Now it doesn’t take much sleuthing to see that they favor Verizon FIOS and they sport a Verizon FIOS ad on their homepage – but I still think that graphic is worth sharing – partially because it echoes conversations I’ve heard at the Minnesota Broadband Task Force meetings in the small group discussions on digital inclusion. The truth is many, if not most, residential users are unaware of their broadband options, they’re unaware of what’s the best fit for them and they don’t know if they’d got the best deal around or are being robbed.

I know that the National Broadband Plan was working on “transparency in the retail broadband market” and I know progress has been made with maps and speed tests. In fact with the handy National Broadband Plan Action Agenda, I can see that the tasks related to consumer benefits are 80 percent done. Maybe what they need to reach the 100 mark is some slick packaging!

Their next Governance Group meeting is scheduled for June 21. The plan is to invite last mile providers to make presentations on their services. If you know of any last mile providers who might be interested, please have them contact David Minke.

The meeting will start at 9:00 AM in Room 705 at the Anoka County Government Center. Please pass the word along to all those who may be interested in learning more about last mile connectivity including council/board members, EDA members, economic developers, cable commissions, etc.

KOOTASCA Community Action and Rainy River Community College have been spearheading the effort in International Falls – and they have worked with a local provider to bundle the new computer with 10 months of Midcontinent broadband Internet service to low-income families. Here’s a quick take on how it’s working in the community…

KOOTASCA is distributing 30 refurbished computers and 10 months of Midcontinent broadband Internet service to low-income families. The organization is encouraging any other members in the community who need computers to apply for a low-cost or free refurbished computer, which KOOTASCA may be able to obtain from “PCs for People.” KOOTASCA two weeks ago became an affiliate of PCs for People, a St. Paul-based non-profit organization that distributes refurbished computers for $30 to $50.

At the college, 10 new laptops were distributed to qualified students. Hardy is still taking applications for the 15 free Internet accounts from low-income students. Midcontinent is providing the Internet to the college and KOOTASCA at a discounted rate.

And a quick note on the impact…

“It’s making a difference in International Falls,” said Hardy, who is also the college’s director of the TRIO Student Support Services, which serves non-traditional and under represented students. “I really see it.”

An interesting side note – and a detail that folks in metro areas might not consider. The deal has been working really well when the new computer owners live in broadband range – but there is a clear cutoff for folks in International Falls that is now separating the tech haves and have-nots…

One challenge that was found during the program is that broadband access ends around County Road 332, the truck route, according to Amy Mortenson, KOOTASCA support specialist.

“That’s a barrier for people who live past the truck route — people in Littlefork, Loman, Northome and Birchdale,” she said. “So they wouldn’t be able to participate in the broadband Internet part of it, but we’re hoping to get them computers at least to break down the barrier that way.”

So I went to my panel of experts – Facebook. Although in this case, Facebook did lead me to current and past broadband provider IT directors (and friends of mine). I sent the link and simply asked – what do you think, especially for rural areas? I want to be clear in saying that these guys haven’t used the service and are only commenting on the service described in the article.

The greatest concerns were latency and data caps. A couple pointed out that this is clearly better than dialup – and perhaps better than other existing options but that latency and data caps would be major issues. One who had used satellite in the past said that once another option was made available he opted out of a 3 year contact for the new service and saved enough in overage charges in 7 month to make up for the early cancellation costs.

Nextera Communications, a provider of wireless voice and data, will expand its wireless services to the Duluth area. Nextera has the largest fixed wireless business network in Minnesota, with more than 60 towers throughout the Twin Cities.

Because Nextera’s fixed wireless networks use towers rather than underground cables, there is no risk of outages due to fiber cuts, and installation is fast and unobtrusive.

Nextera’s wireless broadband WiMax service will combine fixed wireless with IP-based voice technology and offer options from 1.5 to 6 Mega bits of bandwidth with voice prioritization, while point-to-point solutions will offer speeds of up to 1 Gigabyte to Duluth-area businesses.

Nextera is a Brainerd/Baxter-based telecommunications company with offices in Duluth, Minnetonka and St. Cloud, providing customized, secure telecommunications services and local customer service to small and mid-sized businesses throughout Minnesota.

I suspect the folks north of Duluth would like to see the expansion expand even more.

Larson and Wetzel [Kevin T. Larson, CEO/general manager, and Mike Wetzel, Consolidated Board director] urged their congressional delegates to help them continue to provide the services their community needs at an affordable rate by removing regulatory uncertainty and urging the Federal Communications Commission (FCC) to reconsider the deep cuts and other extreme modifications it is proposing to impose on the Universal Service Fund (USF). Larson and Wetzel said cuts to this important fund could put existing investment in rural broadband at risk and discourage future investment in new broadband-capable networks by small companies, leading to increased rates for telephone, broadband and other services.

Here are a couple of the sessions that I thought would be interesting to folks outside the industry as well as those in telecommunications:

• Beyond the Demarc: The Revenue Opportunity Inside the Digital Home
• Revenue Generating Opportunities for the Digital Marketplace
• Putting a Wall Around the Cloud? Security in the Cloud
• The Cloud Has a Silver Lining: Becoming the Service Provider of the Future
• Central Office Strategies for Speeding FTTH Service Turn-up Requirements
• What Impact Will Over-the-Top Video Have On My Bottom Line?
• The Evolution of Mobile Technologies 2G to 4G LTE
• IPTV for People Who Aren’t Engineers
• Managing Customer Service Via Apps

Cloud, video and apps seem to be some strong themes, which would indicate to me that they will be broadband drivers in the future. Sadly I was unable to attend the session on customer service apps, which sounded really good.

I was able to attend the session on public-private partnerships: Making Public/Private Partnerships Work for You – and Your Revenue Stream with John Schultz, U-reka Broadband Ventures. I thought that would interest a wide swath of readers and I was able to capture it on video. John talked about his experience working to develop partnerships with local communities.

I was also able to talk to some of the MTA members – specifically about telework. I’m very excited to talk more about that – but will make that a new post, hopefully for Monday.

The article highlights the trials and tribulations with some of the ARRA funded broadband projects…

Eighteen local construction projects won federal grants and loans as part of the Recovery Act of 2009 totaling almost $229 million. They come in all shapes and sizes. Some will be owned by the public, while others will be built and run by small phone companies and electric coops. And they are at various stages of completion. The federal government’s Recovery.gov website lists 14 as less than 50 percent completed, two as more than 50 percent completed and two as not yet started.

Many have proceeded without hitches. But others have faced obstacles like difficulty obtaining building materials, opposition from incumbent providers, cost overruns, frustratingly slow bureaucracies and trouble clearing environmental hurdles.

What’s funny is that the discussion in the article reflects fuzzily one of the sticking points in broadband adoption. It’s happening, but is it fast enough? We’re just talking about deployment here, not speeds. Ironically, another recent article in MPR raised the speed issue asking if wireless in rural areas was an improvement to existing broadband options in rural areas or rather a stop-gap measure that might delay a larger solution. I might ask a similar question here – are we seeing improvements or are we seeing federal funding getting in the way of other investments? I think we’re seeing improvement – at least in the 16 (out of 18) projects that have been started.

It’s true that some projects have run into hiccups – for the reasons listed by reporter Jennifer Vogel. (For a more comprehensive list of what’s happening with projects, you can check out the Minnesota Broadband Task Force Report (Dec 2011); it includes a table that details progress of ll of the projects that received ARRA funding.) Some projects are actually ahead of schedule. (According to the Task Force report, the Southwest Minnesota Broadband Services is ahead of schedule.)

I might not look at whether the glass is half full or half empty with these federally funded projects – but I might celebrate the fact that the glass is filling! Lac qui Parle County (one community listed as waiting for fiber) may be stalled, but they are moving forward – as are most of the other projects mentioned. Federal funding (and I think results of federally funded mapping) has spurred other communities, such as Kanabec, Redwood Falls and Sibley Counties to take a more serious look (and/or strides) towards broadband deployment. The stimulus funding has stimulated broadband projects and an interest in more!

Finally I have to sing the praises of Blandin Foundation-led Minnesota Intelligent Rural Communities (MIRC) project. Yesterday at the Task Force meeting we got to hear about the federally funded project and its impact on one community – Benton County. Here are a handful of their measures of success;

• More than $20,000 in-kind match
• More than 200 businesses assisted
• More than 500 residents assisted

Benton County is just one of 11 participating MIRC communities – and some MIRC activities reach beyond the select demonstration communities. The project is making a difference in the quality of life in the area; it’s also boosting a demand for greater broadband, which will help support deployment efforts, which as the MPR article points out – can be a bumpy ride – but I’d emphasize that it’s a bumpy ride forward.