How much broadband does $100 million of federal funding buy in MN?

The Minneapolis Star Tribune reports…

Frontier Communications has received over $100 million in federal grants to improve rural broadband in Minnesota over the past four years, yet complaints about its internet service suffuse a state investigation of the company.

Minnesota regulators last year commissioned an inquiry into Frontier after fielding numerous complaints. In January, the Minnesota Department of Commerce issued a report concluding Frontier may have broken at least 35 state laws and failed its customers with shoddy service and inadequate network investment.

The report also questioned how Frontier used the federal grant money. Information submitted to the state by Frontier “has been too minimal” for utility regulators to certify that the grants from the Federal Communications Commission’s (FCC) Connect America Fund were used appropriately, the Commerce Department said.

“It is obvious to anyone who bothers to look that Frontier is a terrible investment for the federal government,” said Christopher Mitchell, community broadband director for the Minneapolis-based nonprofit Institute for Local Self-Reliance.

Frontier strongly disputes the entire Commerce Department report and expects this week to file a formal response with the Minnesota Public Utilities Commission (PUC). The company said in a statement that it is in compliance with all FCC requirements for the Connect America money.

Frontier is not alone is accepting money…

It is one of several large phone companies collecting hundreds of millions of dollars from the Connect America Fund, and it says it has filed all requisite FCC reports and met all its obligations.

Connect America is aimed at FCC-designated rural areas where broadband is deemed too costly for private investment without public subsidies. The program has been criticized for requirements on broadband speed that use outdated government standards.

In 2015 the fund awarded $9 billion over six years to several large U.S. wireline carriers. Money from the 2015 allotment, dubbed Phase 2, has been used extensively in Minnesota by both Frontier and Monroe, La.-based CenturyLink.

Companies participating in Phase 2 must provide download speeds of at least 10 megabits per second (Mbps) and upload speeds of 1 Mbps. That target was set when the FCC standard for download speeds was 4 Mbps. But by 2015, the FCC had redefined broadband as 25 Mbps for downloads and 3 Mbps for uploads.

Essentially, Connect America phase 2 projects were obsolete before they rolled out, Mitchell said. “It’s totally wasteful.”

Bill Coleman, owner of St. Paul-based Community Technology Advisors, said that 10 Mbps service is an improvement for some remote areas. Also, the lower — and therefore less costly — standard allowed the FCC to spread Connect America funding over a larger area, he noted.

“But whether it positions Minnesota or any state for rural economic vitality, I would say no,” said Coleman, who works with small communities on telecommunications issues.

How much federal funding has been spent?

Federal records show that Frontier has already been allotted $109.5 million for Minnesota through 2018. The company completed more Connect America projects by the end of 2017 than it was obligated to finish, records show, and Frontier said that was also true for 2018.

CenturyLink, Minnesota’s largest wireline provider with 430,000 customers, received Phase 2 Connect America funding of $505.7 million annually for six years. For Minnesota, CenturyLink gets $54 million each year. The company says it expects to have completed more than 60,000 Connect America-funded projects by the end of March.

CenturyLink and Frontier, not surprising given their size, have been targets of various grievances to the PUC.

The PUC logged 216 service complaints about CenturyLink from Jan. 1, 2017, through Feb. 28, 2018, said Dan Wolf, the PUC’s executive director, in an e-mail. During the same time, 63 were filed about Frontier.

Is the FCC minimal requirement enough?

Frontier and CenturyLink said they annually report the status of Connect America projects to the FCC. Both companies said that many locations under the program are eligible for download and upload speeds that are faster than 10/1 Mbps.

A report last summer from the Grand Rapids-based Blandin Foundation concluded that it is difficult to gauge the effects of Phase 2 Connect America investments in Minnesota. “The lack of transparency and accountability in [the program] has been challenging and frustrating,” the report said.

Connect America-funded networks don’t meet Minnesota’s own definition of broadband, which is the same as the FCC’s current characterization: 25 Mbps for downloads and 3 Mbps for uploads.

 

 

This entry was posted in FCC, Funding, MN, Policy, Vendors 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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