Last night I listened to the latest discussion at the House of the proposed $100 million fund for broadband development (HF 2615 – archive available online). I’ll paste my full notes below – but also offer my high level take:

1. The $100 million is now slated for grants (not loans) because they will be easier to manage and administer.
2. Policymakers have a lot of questions on speeds and the definition of served versus unserved. There’s a push towards using the federal definition of broadband to define unserved, which is what is happening in the Senate. The federal definition is 4 Mbps down and 1 Mbps up. I’m not sure why they are having the discussion and why they are looking at the federal definition when the state goal is 10-20 Mbps down and 5-10 Mbps up. Remembering the original Task Force that came up with the definitions – they decided to go with those speeds to offset the fact that they were also aiming for ubiquitous coverage. In other words, some folks in the original discussions (several years ago now) made speed concessions make then. Why are further concessions are being made now? If the purpose of the $100 million fund is to meet the state goals (10-20 Mbps down and 5-10 Mbps up) and become a broadband leader – targeting lower speeds doesn’t make sense.
3. Policymakers have questions on what the speeds mean. As each Task Force has discussed at some point – speeds defined by Mbps aren’t meaningful to many policymakers. They want to know what speeds are required to telemedicine or participate in remote learning. It might be helpful for the policymakers to make a list of things they want people to be able to do with the infrastructure (now and in the future) and reverse engineer the speeds required based on the list of tasks the policymakers find important.
4. Myself I find some of the criteria difficult to understand. They want to reach as many people are possible to get the best ROI. They want to reach the unserved. Unfortunately the unserved are unserved because the ROI is limited. There seems to be no weighting of criteria – but it was noted several times that the details were still in the works. I suspect that somehow the Office of Broadband Development (OBD) will find a way to address these factors that seem almost contradictory.

Broadband Bill Notes from the meeting

Rep Simonson

Good jobs bill – especially for rural Minnesota. Hope it’s not a political issue. We have good bipartisan support. Pulled together a stakeholder meeting. Designed to facilitate public-private partnerships. We want to help OBD leverage private funding. We want to move Minnesota forward in terms of being a broadband leader. We’re currently 23. We recommend $100 million – as recommended from Task Force. It’s a grant program. We just removed the loan aspect to make it easier and more efficient.

What’s eligible?

• Requires a 1 to 1 match
• Funding acquisition of middle and last mile infrastructure
• Scalable up to 100 Mbps – we want to build for future
• Business and partnerships, governments, coops, tribes, nonprofits are open to apply
• Application is straightforward
• Will only fund half of a project

Commission shall give priority to

• Areas currently unserved – as defined by OBD
• Projects offer new or upgraded infrastructure to key institutions (schools, libraries, government buildings, health care)
• Projects that facilitate telehealth
• Serve economically distressed areas
• Offer training to help build broadband adoption
• Offer marketing to build adoption
• Serve the most households and leverage greatest funds

The plan is to maximize ROI.

Testifiers

Margaret Anderson Kelliher – The Task Force recommends $100 million for broadband development. We are focusing on 10 Mbps downstream and 5 Mbps upstream.

What we know about the demand:

• The 1 to 1 match
• There are no tails – it can be a one-off investment
• How do we know the needs? The feds just announced a rural expansion program and MN communities were asked to submit letters of intent – in MN requests have totaled $300 million
• A MN who is connected in able to increased income $3000 annually

Steve Nasby Windom City Admin  – We have fiber in Windom and it has served us well. We have good businesses in the area. Our infrastructure has helped to retain and draw businesses to the area.

Dan Dorman, Greater MN Partnership – the broadband fund is our top economic development priority. We know you’ll hear about incumbents and served vs unserved areas. But our focus is border to border broadband. The Metro area is served; rural areas aren’t. Blandin commissioned a report to look at LqP County – there was a 10 to 1 ROI for broadband. We asked SNG to look at the impact of having 95 percent of MN access broadband at speeds of 25 Mbps down and 10 up. They saw annual increase in GDP of $1 billion, annual increase in household income of $440 million and sustain 15,000 jobs. Some rural areas are well served and it makes a difference to local business.

Brent Christensen MTA – supports the concept of the grant program. Served on the original Task Force. We knew we needed the support. TO be successful it must be for the unserved in the state. We don’t want duplication of services. Rural customers who live outside of towns need access and we need help getting it to them. This is an economic development issue. United Health has a lot of remote workers; they require teleworkers to have 5 Mbps down and 1 Mbps up.

Mike Martin MACTA – Our concern is that funds be focused on areas that do not meet federal definition of broadband (4Mbps down and 1 Mbps up). Without this guarantee, we fear there will be duplication in service. We think that means areas that don’t need funding might get it. We feel this is especially true in the first year of such a program.

Amendments:

We need to match language with federal definition of broadband (4Mbps down and 1 Mbps up) to define unserved. I recommend 2/3 of the money should go to areas with population density of 100 houses per square mile and 1/3 areas that are less populated.

Questions:

• There’s no language on merit of grants – so how do we discuss it? This is a work in process. The Commissioner needs to work on requirements and guidelines.
• Funds unspent at the end of the biennium– they will go back to general fund. Funds in the first fiscal year and roll into the second.
• Big discussion on how to define areas. Want to keep it open for local areas to work with providers in place – but don’t want to set up a situation ripe for gerrymandering.
• What’s the cost per hookup? I don’t know. The Task Force have looked at cost per hookup – average cost is $3000 within a mile of a town. In remote areas, cost can run from $7-12,000.
• Is there a factor that make a project most deserving? No, they all need to be considered equally.
• The Task Force talked about hookups for fiber – what about other options? The TF is agnostic. Some communities will want fiber – but to have better cell coverage you need a wired connection to the local tower. Wireless providers need backhaul.
• How much private investment is being deterred by the bill? I don’t think any. It’s designed to encourage investment.
• How often is provider data checked? Connect MN updates their maps monthly. We’ve seen changes of about 10 percent due in large part of ARRA funding.
• Does the update include satellite? It fulfills a small portion of the state; we have heard about new innovation but it’s not here yet. It’s not sufficient for business use.
• How long would it take to implement a number of these projects? 12 months or so
• If it takes 12 months to complete a project – how do we keep up with Moore’s Law? And how do smartphones fit in – most people use them? We would not take away from what currently exists. We want grants for installation of scalable infrastructure. That has a longer shelf life. Younger people and communities have color faster but the issue is data caps. Data caps make mobile a difficult first choice for broadband access. Mobile can bridge the gap but data caps are tough.
• What is the idea of unserved? Can this mean places with incredibly slow internet? Unserved is defined as a certain goal – so yes. But something like dialup isn’t going to get you a lot these days.
• There are some areas that have no access? Yes.
• Is it possible that people with slow Internet access will be served before people with no access? Unserved will be highest priority. The 4/1 definition is pretty slow.
• My concern is that we get everyone on – then ramp up. Can we get a more clear definition? The bill here does define served as 4/1. The Senate has defined unserved as 4/1, which is the federal definition.
• Is there a list of places that most need access? There are a number of groups and individuals who are interested. Some areas are served by local providers. Some are not.
• We could just sign on with the Senate definition. Or bring it as an amendment. (It is the Senate bill first engrossment.)
• When you were in Deer River, we saw some education tools (Ojibwe lessons online) will this 5/10 Mbps give us the capacity to do that? No it would not be enough to facilitate a school to school connection but a student could watch the lecture archive online.
• Is 5/10 good enough for telemedicne? The samples we’ve seen work for 1 to 1 connections. There may be some latency but it mostly works.

Bill held over for possible inclusion to omnibus bill. Not sure we can go to $100 million, but we’ll see what we can do.