Mille Lacs County feasibility study: textbook case of haves and have-nots

I want to thank Mille Lacs County for sharing their feasibility study (by CCG Consulting and Dain International financially supported by Blandin Foundation) . It is 144 pages of detail! But I think it’s very well done. I wanted to share the executive summary because – while as the summary says, each community is different and each solution is different – I think we can learn a lot about the different moving pieces involved with expanding broadband in ANY county by digging into the specifics of one county. It talks about the impact of the terrain, the incumbents, the needs and enthusiasm of the resident and the CAF 2 funding – which again as the report points out is a game changer!

If your community is thinking about broadband – the Mille Lacs feasibility study might help you figure out some really good questions to ask. If you’re a policymaker, the study just might help you better understand the practicalities of the technology – and especially with the CAF 2 funding the potential unintended consequences of policy and funding decisions.

Probably what is most important to understand about the county is how poor the broadband is in the rural areas. The alternatives in those areas are poor or non-existent. And when there are alternatives, like using satellite data or cell phone data, the broadband is expensive and has very small stingy monthly data caps. Since over half of the residents in the county live in these poor broadband areas this is a major problem for the county and one that is going to put you at an economic disadvantage to your neighboring counties as they find broadband solutions. The county is a textbook example of broadband haves and have-nots. You either live in the cities or near the lake and have broadband or else you don’t.

But we found that it would be a financial challenge to build fiber everywhere. It’s not impossible, but there are several factors that make a business plan a challenge here. First is the geography. The river in the middle of the County means that a network has to be built on both the east and west side of the County, which costs more than what we would have expected in looking at the square miles of the County.

Second, we found that the people in most of the cities today have broadband with which they are probably happy. Certainly some of them would love to be on a fiber network, but the question is: can you count on enough of them to make the business plan work? The financial analysis shows that you’d need at least a 46% penetration rate in the cities just to make the business plan reach breakeven, and you’d want to do better than that. If you want to consider fiber everywhere you’d have to conduct a thorough canvass to make sure that enough customers would support fiber.

Third. There was a change in the rural broadband picture since the time that we started the study. These areas today have basically no broadband, or else broadband that is expensive and that suffers from low monthly data caps. These areas are ripe for a broadband solution. But in late August, as we were wrapping up this report, both Frontier and CenturyLink accepted federal money from the FCC’s Connect America Fund to improve the DSL for the rural parts of the county to 10 Mbps download and 1 Mbps upload. Even by today’s standards that is not great broadband and it is going to be obsolete almost before it is built. But it might be just good enough so that some rural households might not elect to change to a new network. You need a 62% penetration in the rural areas to justify fiber and that seems like a high hurdle considering these DSL upgrades.

Finally, some parts of the county either already have fiber or will soon get it. Milaca has already been overbuilt with fiber from Milaca Local Link, and the Benton Cooperative Telephone Company is planning to overbuild Bock and the surrounding area with fiber in a few years. If you take Milaca out of the business plan the needed breakeven penetration rate for fiber for everywhere else gets even higher.

In light of the challenges to build fiber in the rural areas we suggest a solution to build a carrier-class point-to-multipoint wireless network just for the rural areas. The biggest issue with doing a point-tomultipoint wireless network is the heavy tree cover and foliage in the county. But there are ways to work around that. We’ve recommended using a new spectrum that the FCC is just about to release in the 3.65 MHz range that carries through trees a little better than the other spectrum available today. Plus we’ve assumed that you would build tall towers and also use telescoping poles at each customer house to enable a direct sight to a tower. This network will deliver speeds up to 30 Mbps download to customers. There is an even better spectrum on the horizon called white space spectrum that the FCC is expected to release that could offer speeds of almost 50 Mbps.
Further, the wireless business plan can spin off significant profits over the years and it looks to us that if it’s operated well you could eventually use the profits from the wireless business to then build fiber in the rural parts of the county. It might take 15–20 years to get fiber everywhere, but it’s a financially and technically viable plan. Customers could get real broadband today with the goal of eventually upgrading to fiber.

We’ve recommended that the best business structure for the new business is a cooperative. This form of business has advantages over the alternatives. Probably the biggest advantage is that, since a cooperative is owned by the customers of the business, it can maintain the focus needed to eventually get fiber. Any alternative business structure that is for-profit would expect to pay profits to the owners and operators of the business, and as such would probably never have enough cash to replace wireless with fiber.

We’ve made numerous other specific recommendations that are also important, but the above are the primary take-aways from this study. We have provided a very specific list of next steps that ought to be taken if you want to go from this feasibility study and work towards a solution.

This entry was posted in Building Broadband Tools, MN, Research by Ann Treacy. Bookmark the permalink.

About Ann Treacy

I have a Master’s Degree in Library and Information Science. I have been interested or involved in providing access to information through the Internet since 1994, when I worked for Minnesota’s first Internet service provider. I am pleased to be a part of the Blandin on Broadband Team. I also work with MN Coalition on Government Information, Minnesota Rural Partners, and the American Society for Information Science and Technology.

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