Thanks to MTA (MN Telecom Alliance) for letting me repost their story. I was on a data center tour earlier this week (at Involta in Duluth) and tax came up there too. Specifically the cost that the data centers need to pass onto their customers – which is a barrier to getting customers who are looking at locations and comparing different states. Apparently cost of power and tax are two of the big tickets items that businesses investigate.

It’s difficult to strike a balance that encourages businesses to support public sector and allow for growth…

Recently the MTA Active Members were surveyed on capital investments made in 2010, 2011, and 2012. A little more than half of the MTA membership responded to the survey. The purpose of the survey was to determine what (if any) impact the FCC’s Transformation Order is having on investments made in Minnesota. These dollars represent investments made in telecommunications. The results of the survey are as follows:

2010 $ 212,933,930

2011 $ 231,278,426

2012 $ 164,818,462

This shows an increase of 8.6% in capital expenditures between 2010 and 2011 (before the Order) and a decrease of 28.7% between 2011 and 2012 (after the Order). In other words: $18.3 million more dollars were spent in 2011 over 2010 and $66.5 million less was spent in 2012 versus 2011. That is a shift of $84.8 million dollars. It should be noted that CenturyLink did not participate in this survey, so none of the Twin Cities metro area or large serving areas are included in this survey. All of this investment (or non-investment) was for rural Minnesota customers.

“Clearly, the FCC’s Transformation Order has had a negative impact on companies deploying Broadband,” commented MTA President/CEO Brent Christensen. Christensen added, “At the end of the day, the FCC has created uncertainty in rural areas and consumers are being affected. This should be a huge lesson for Minnesota lawmakers. They cannot have it both ways. They cannot set state goals for ubiquitous broadband, or border-to-border broadband as the Governor put it, AND take away the tools that let us get our jobs done, like the sales tax on telecom equipment. It will be interesting to see next year’s numbers after the repeal of the sales tax exemption on COE has taken hold. That decrease in investment can only get bigger.”

On a related – but separate note, several big broadband providers (Comcast, Time Warner Cable and CenturyLink) made the Progressive Policy Institute’s (PPI) list of top nonfinancial company “investment heroes for 2013, which ranks companies from the Forbes 150 by capital expenditures on additional plant, property, and equipment over the past fiscal year.