Pipestone County Broadband Feasibility Study: building broadband will require grants

With funding from the Blandin Foundation, Pipestone County worked with Finley Engineering and CCG Consulting on a study that would look at if and how the county might take on bringing better broadband to all corners of the county.

Here’s the executive summary of the Pipestone County Broadband Feasibility Study – check out the full study for greater details and next steps…

Finley Engineering and CCG Consulting submit this report of our findings and recommendations for the feasibility of finding a broadband solution for those parts of the county without broadband today. The county is typical of many rural counties where a substantial part of the county has or will soon have good broadband, including fiber, while other parts of the county have little or no broadband. The county is a textbook example of broadband haves and have-nots—with those without broadband living close to others that have it. This disparity will eventually harm those portions of the county without broadband and you can expect those areas to suffer lower housing prices and become places where families and business don’t want to be located.

Our study area looked at the feasibility of bringing broadband to the parts of the county that are not expected to have fiber construction over the next few years. We looked at three different business plan scenarios for getting broadband to everyone: 1) building fiber everywhere, 2) a hybrid plan that has a mix of fiber and fixed-wireless broadband and that covers the whole study area, and 3) a plan that just brings wireless broadband to the rural areas. Finley Engineering developed estimates of the cost of deploying each network option and CCG used these costs in the financial business plans to see if there is an economically viable model for providing broadband in the rural areas.

For each scenario we looked at a number of different options. For example, we looked at the difference of funding the project with municipal bonds or with commercial loans. We looked at different levels of customer penetration, including calculating the breakeven scenario, which determined the number of customers needed for the business to always be able to cover costs and remain cash positive. We also looked at the impact of the most import variables in the forecasts including customer pricing, interest rates on debt, and having the projects partially funded by grants.

Our analysis shows that it is not feasible to build broadband in the study area without some support from grants. That is not a surprising finding since the cost of building broadband to rural areas is high. This is particularly pronounced in Pipestone County since the areas we studied are entirely rural and don’t include small towns that might reduce the cost of building broadband. The analysis also shows that it will require more than the 50% grant offered currently by DEED if somebody wants to build fiber to the rural areas. We’ve seen this same result in other rural counties since the cost of building fiber to farms is so high.

It looks more feasible to provide wireless broadband to the study area. We know that is not the result the county was hoping for, but the Finley analysis provides for a fiber-fed wireless network that can provide speeds of at least 25 Mbps download to rural homes in the county. That would solve the immediate crisis for homes with no broadband. However, once built, the county will have to continue to push in the future to eventually get the network converted over to fiber.

The county has already taken the first steps of presenting these study results to potential service providers. Hopefully one or more of them will be able to seek grant funding from Minnesota DEED in the upcoming grant cycle this fall. But if that doesn’t happen then there are steps the county can take to be prepared to support a grant filing for next year.

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