Yesterday the Task Force met. There was some talk about how to revive the Broadband Development Fund – especially from the Senate site. (Big suggestion – contact your legislators if you want to see action.) They also heard about the FCC and the history of support for infrastructure from providers. My notes include some video, which really is intended only for the audio. Such as the video update below from the Office of Broadband Development…

10:00-10:10         Welcome/Introductions/Approve Minutes from February 19, 2014 Meeting

10:10-10:20         Update on Office of Broadband Development—Danna Mackenzie (see video above)

The bill is in conference committee. Two things we’re looking at:

• The Development fund
• Maintain data and mapping

There is no language around broadband in the Senate at all. It came into the conference via House – so the House version will be the starting place ($25 million) but the Senate can comment – as can the Governor.

MAK – The issue isn’t the policy so much as the budget. The issue is budget – so increase for OBD operating funds is unlikely. Also no expansion of operating funds for the OBD.

Danna – talking to FirstNet folks. No conclusions yet. Continue to work with Connect MN. Thinking about ways that we can continue track and map data even after federal funding runs out. Will be meeting with cohorts in other states and federal contacts soon. We are looking at redesigning federal programs to fit better the state goals. Talking with folks about adoption – but we’re also waiting to see what happens with legislation.

Done outreach. Communities have asked about ARMER. Visited with Fergus Falls to talk about telework. Spoke to lots of groups.

10:20-10:30         Legislative Update—Kim Babine, DEED

10:30-11:30         Comments by Legislators

• Invited: Sen. Matt Schmit, Rep. Sheldon Johnson, Rep. Erik Simonson, Rep. Ron Kresha

Senator Schmit –

Working on the border to border development fund. We’re looking at $100 million. The House is looking at $25 million. We need a solution that works for providers and community. It would be nice to have a toolkit to help communities and providers work together – it might be nice to get that from the Office of Broadband Development.

Speed goals are important but applications are a better measure. Are people able to do what they want to do? It’s important to this of the end users.

Representative Kresha –

There’s a lot of misinformation. We need to be able to find out what broadband is available. When the internet was going to schools – there was a big now what question. We need to work on awareness and adoption. A lot of that can help with the telecoms. In Todd County, how can we build a market for CenturyLink. This is a tool that can help build businesses – such as mobile business.

Mobile businesses need ubiquitous coverage. The need to get calls and sales even when they aren’t in their offices.

The infrastructure is coming – but we need people to use is. Kids are having a great time online. We need to know what people are doing online. I’m not sure how to do this but we need to do it.

If we can build awareness – if we could partner with providers to help people understand what they can get from the providers would be helpful.

Two years ago Todd County didn’t want broadband – until they realized that meant no Skype, no remote education. Once they made the connection between applications, they got it.

MAK – both of you talk about work outside the Capital. Update on what’s happening:

The bill is in conference committee. The house has $25 million in their budget; the Senate doesn’t have money in the budget.

What can we do to move the bill along?

Schmit – education is key. Encourage you to contact your own legislator. We need to leverage state funds to encourage federal funds. We need to talk about it. We need to use the resources we have in the markets – that’s the provider!

There’s a broader discussion about positioning Minnesota to be more competitive – so that’s data centers, consumer protection, cyber security. The Task Force is a great sounding board.

There’s expertise in the Senate – but generally a misunderstanding in the Senate on the importance of broadband.

MAK: We have a letter out there for folks to send. It went out right before the legislative break.

Kresha – Whatever’s going to happen, it going to happen? If we could reach out to our business community and have them talk throughout the state. So that people can identify with success in the state.

Rep Johnson –

Telecom exemption passed. Took effect April 1, 2014. Mapping – we got it into the bill. We have a budget surplus 1.23 billion in Feb forecast. We’re trying to find the best way to spend that. It’s in conference committee. There’s $450,000 for Connect MN – along with the $25 million. The mapping money comes out of general fund; it’s one-time funding.

We are hopeful that we might get even more money is committee. The Governor has publically supported the bill twice. I am optimistic that we can move something forward.

There was concern about shovel-ready projects but we’re confident that it’s there now.

There has been push back on Greater Minnesota Partnership. They haven’t worked well with their message in helping to bring all of the legislators around. They were making a big push at the Capital. They don’t appear to have the same broadband view as the Task Force. It might make sense to work more with them.

BJ: Two weeks ago in Austin – there was a lot of discussion of Gigabit networks. We’re not having that conversation in this state. What can we do to be ready for Gigabit networks.

 

11:30-12:10         Overview of Connect America Fund by Price Cap Carriers

Frontier: Scott Bohler, Manager, Government and External Affairs

We’re in 27 states, including Minnesota, much in rural areas.

There are 200,000 houses/businesses in our footprint. 70,000 broadband connections. We are really a broadband company.

• 95% of our customers have access to some sort of DSL.
• We offer a satellite product
• We offer Metro IP to most customers (up to a Gig)
  • We use a variety of technologies to get that speed

CAF 1 – to reach unserved people by census block

• We got $775 from CAF 1 out of $1500 required for each house reached (65 houses were served through this.)

CAF 2 – to reach underserved areas

• We got $550 from CAF 2 (1300 houses). Construction starts this summer

CAF projects range from $690-3000. It’s expensive. The take rate is not always desirable.

The costs keep going up to serve customers as the use grows.

If we were going to get all of our COs ready for broadband would be $5.7 million; $85 million to get 95% to 4/1 standard.

Question – we are looking at symmetrical. Most connections are not. Can that change with fiber?

Why don’t carriers provide symmetrical connectivity?

Most customers download a whole lot more than they upload.

It would be great to research normal applications. Except maybe for healthcare.

You have to be careful; it’s an artificial standard. Engineers design to the networks available. There are a multitude of applications available with limited use because the connections can’t support it. For example Netflix has done a good job of providing service based on the end user’s connection.

We have to be careful about knowing the facts – we don’t live in a magical world that can ignore the network.

In Lake County – did the community approach Frontier before they built their network?

I don’t think so. They plan to serve FTTP to everyone in Lake County (and part of St Louis County). In lake cabins and everywhere. Right now they seem to only serve areas in towns.

How can it be considered an overbuild if it’s FTTP?

We are already providing serve to those areas. We serve those areas; sometimes with 1.5 Mbps.

But that’s apple to oranges.

CenturyLink: Jeff Lanning, VP Federal Regulatory Affairs (by phone)

USF – some areas are hard to serve. This used to be served by carrier of last resort a utility/monopoly model. The high cost problem is served by everyone. IN 1996 we moved to a competitive model. It was a good thing but undermined the carrier of last resort. Recent changes have tried to address that. On price cap side (CenturyLInk, Frontier…) that was not a bad thing.

On rate of return side is was different. They were more OK with the changes.

Most people are OK with ideals of FCC, it’s the process. FCC has done the following:

1. Froze support mechanisms – CenturyLink lost $9 million in MN
2. Phase 1 – incremental support – got some people broadband, but not a long term solution; $400 million was taken – looking for areas with no competitors
3. Leaving money for other areas
4. The FCC is working on how the model works.
   1. What areas need to be served
   2. Who are the competition?
   3. What are the obligations?
5. Original idea was to get some broadband to the most people possible. They were going to fund a 4/1 network. But probably that would be faster to get to the 1 Mbps up.
6. Now the FCC is asking about 10 Mbps down obligation. Hopefully they recognize that there have to be tradeoffs.
7. In remote areas this faster network will report more money, fewer building obligations.
8. In MN the support is looking like $56 in support for specific census blocks in high cost areas with no competition.
9. States that had cities were poorly treated in the old model – the thought being the cities could subsidize.
10. Mapping is important
11. Concepts that are important
    1. Providers need to react – will they apply for funds
    2. If incumbents don’t’ apply they will broaden the opportunity
    3. The obligations and support must match up
    4. Other solutions need fiber – you need fiber within 5 miles
    5. Funding more than one network doesn’t make sense.

MAK: Can CAF 2 funding be part of a match? Seems like yes.

CL guys – leveraging doesn’t fit into their equation. They are going to try to provide all of the funding that’s needed – on top of earned income. They may see matching funds as too much support. From a financing source it’s difficult – it’s like trying to

What budget do you have, what do you want, how can you maximize broadband? After that it really doesn’t matter what other money you have.

12:10-1:00           Lunch (on your own at The Centennial Grand Cafe)

1:00-1:50              Overview of FCC’s Rural Broadband Experiments Expressions of Interest

This is a piece of the CAF puzzle. We want to know how it impacts providers in MN. Looking at novel ideas to see how to best support rural broadband projects.

Marc Erickson

KBI – they do not want to support a community network. It is too much for the area. We did a feasibility study a few years ago and learned there was more interest that we originally thought.

$8-12 million to build out the region; the cities are served but the rural areas are not.

They are looking at a public private partnership. We have talked to everyone. We heard there was no business case to build out. But we’re not patient. So we submitted a proposal for an experiment. We submitted without a provider but just saying that we were ready. We said we’d look at a regional approach if that was more attractive.

We have had discussions with ILECs. We’ve run into problems with non-disclosures. We are struggling with funding someone who wants to come to the table

Dave Bickles

We are looking at areas near Redwood Falls. One project has 2 customers per mile (to serve 250 people, the total cost was $2 million; we would put in half); the other have 18 customers per mile (that would be 1800 people at a cost of about $7 million; again they’d pay half). One is a better fit for wireless than the other.

We are looking at investment and re-investment. We have plans for upgrades – but it would accelerate our timelines by 10-12 years. We have

It’s difficult to serve many of our areas. We have one spat with 32 homes; it would cost $163,000 to reach them and it’s a dead-end. We said we’d build if 26 of them would pay $1200 for the fiber drop. They said no. We were able to reach the hoe most interested in better speeds with wireless fiber.

MVTV

We are looking to serve Southwest (Rock, Pipestone, Murray, Lincoln. Lyon) Minnesota including 6,000 households of which 2200 are very hard to reach. This is an extension of current service but separate by buffalo ridge.

We are looking at LTE Advanced to serve them. That allows us to exceed the state broadband goals.

This would accelerate our timeline. To cover a third of that service base would take about three years.

General questions:

How many applications from Minnesota? 67 We proposed more than anyone else. Co-ops were fairly represented.

Are there requirements for adoption? Not at this point.

What about economic development?

In Fergus Falls we have worked extensively with telework in the past. We have a telework hotel, some folks work from home….

We have had MIRC and BBC events in the area; not through the providers but we have been building demand.

Advertising and missionary work is expensive. We have someone on staff who works on that too at MVTV.

What happens next?

It was supposed to be on FCC’s May agenda – but it isn’t. Hopefully it will be on the June agenda. They need to get comments before anything really happens. This is months out.

Adjourned

Subcommittees meet After to focus on top 3 issues for the subcommittee and group

Digital Literacy & Adoption

• Minnesota Partnership – customize content for schools.
• What role does the provider play? How do they sell their services in a way such as Fergus Falls?
  • MVTV has a brochure that includes features such as online schooling
  • Comcast has different things in different areas. They looked at working through schools but the schools weren’t interested (in advertising)
  • Tough to distinguish marketing from advocacy
  • You could put a mailer into folks receiving subsidized support
• What can we tell Legislature – we need to focus on resources that need to be allocated.
  • We need a mechanism for funds to exist.
• Infrastructure
• Advanced Networks and Adoption
• The next meeting is May 22 – the location has not yet been set.