Broadband is a problem that can be solved with money. But it can be solved quicker and more economically if we are good stewards with that money. Minnesota has been lauded for the Border to Border grant program that has invested more than $126 million in state grant funds awarded to 179 projects, deploying service to more than 57,000 homes and businesses. (Quick math makes that $2,225 state investment per location.) Minnesota communities and providers have applauded the program. So I was surprised when the MN Cable Association introduced the Line Extension Program as a new way to spend money that would otherwise go into that successful program.
I’ve written about the basics of the Line Extension Program and Easements and I even had some immediate questions but now I’ve had time to research and have heard the topic discussed at the Task Force meeting and a Senate Committee meeting; I have some more thoughts.
A quick recap: the proposal is a portal where households can repot lack of broadband, the Office of Broadband Development would make sure those addresses qualified (were unserved) and then every six months open a reserve auction where providers could bid to extend service to those homes. The money for the program would come from the Border to Border grant money.
Last Fall, Pew published an article on how states can use line extension programs to expand broadband. They outlined how the bill is working in some states and how it was proposed in others. There were some notable difference in the MN version:
- MN is looking at a maximum of $25,000 per line extension. California has a $9300 maximum; Vermont has $3,000 and Indiana has a $25,000 maximum and includes a maximum of $4800 per passing (home). The Minnesota budget is not in the same ballpark at all.
- MN does not differentiate between wireline and wireless solutions. California and Vermont do and budget for wireless service is $500(CA) and $300(VT) – considerably less than for a wireline solution.
- The Minnesota bill does not define served and unserved or specify a required upgrade speeds. I assume they would use the Border to Border definitions but it would be helpful to have that here. Indiana uses 25 Mbps down and 3 up as their served/unserved definition. And they use “actual” speeds, which opens the door to discussions with provider about quality or service rather than assume that either provider or consumer is correct.
The Line Extension Program provides a mechanism that allows the consumer to initiate the process. That is an improvement when the only other programs available place the providers in the driver’s seat. Minnesota is unique in that the homeowner has had a voice through community participation in the Border to Border grants. What’s difficult here is that the Line Extension Program will give a lot of voice to single homeowners while potentially drowning out the voice of the community.
I’ve been to meetings where a community is deciding whether to invest in their portion (match) of a Border to Border grant. Sunrise Township voted to work with CentryLink on a grant application. Homeowners approved bonding that would cost them (each) roughly $100 a year to invest in fiber to the home. There was federal funding (CenturyLink used their CAF money), a State grant and local funding used in the program. That’s the power of community agreement and aggregating need.
In that project, Sunrise/CenturyLink received a $1,074,852 Border to Border grant to serve 584 unserved households, 10 unserved businesses, and 2 community anchor institutions. Now if those 584 homes (I’ll ignore the other entities) were to use the Line Extension Program to get funded and they were funded to the maximum, the cost to the State would be $14,600,000. If they only received half of the line extension limit it would still be more than $7 million.
We have 240,000 households that need service in Minnesota. So while it’s unlikely that a whole community would choose to go for Line Extension, it is conceivable that 584 people around the state would apply and qualify for funding. It’s also conceivable that another community would apply for a Border to Border grant similar to the Sunrise project. For Minnesota tax payers, the Border to Border grants are a more cost-effective was to serve 584 households. And going back to past investment, we’re averaging $2,225 State funds per household – that’s a far cry from the proposed $25,000.