First, in 2020, the Federal Communications Commission announced more than $408 million in broadband subsidies for Minnesota through a program known as the Rural Digital Opportunity Fund, or RDOF.
Some developers have started building infrastructure with that cash. But three quarters of the money was earmarked for a relatively small and inexperienced company, LTD Broadband, that many in the industry don’t believe can deliver on the work it promised and has yet to get final federal approval.
Then, in 2021, Congress approved the $1.9 trillion American Rescue Plan, which included at least $179 million for Minnesota in a “capital projects” fund that can be used for things like paying to subsidize broadband infrastructure, but also buying equipment like laptops or improving certain community buildings.
Last summer, Minnesota lawmakers agreed to use $70 million of that $179 million ARP fund — leaving about $110 million left over — on the Border to Border grant program helping broadband developers. But the federal government is still reviewing a state application for the money, so no grants were distributed last year. There’s a possibility Minnesota could miss this year’s construction season, too, if the feds move too slowly. …
Lastly, in December, Congress approved a $1.2 trillion infrastructure bill that includes at least $100 million for high-speed internet construction in Minnesota. That infrastructure money is in limbo too, for now, as the federal government works on how to distribute it.
How much would it cost to get broadband to everyone…
Despite all that potential money, Minnesota lawmakers and state officials want even more spending on broadband. Angie Dickison, who manages the state grant program as executive director of DEED’s Office of Broadband Development, told legislators during a late March hearing at the state Capitol that she would conservatively estimate the cost of meeting the state’s 2026 goal for adequate broadband at $1.3 billion, and most of that would need to come from the state, especially if not all of the RDOF money is used.
What are legislators budgeting…
The Republican-led Senate GOP has proposed authorizing the remaining $110 million from the ARP’s “capital projects” fund to subsidize construction of high-speed internet infrastructure. House Democrats initially wanted $100 million from the state’s general fund to spend on broadband, arguing that relying on state money instead of federal cash is more flexible and would lead to fewer delays and regulatory hurdles.
That DFL plan, however, has been reduced significantly, touching off fierce intra-party debate. This week, Democrats slashed the proposal from $100 million to $25 million at the direction of House Speaker Melissa Hortman, DFL-Brooklyn Park.
In an interview, Hortman said the reduction was in part because that $25 million from the state general fund is what she believes the market can actually use on top of the $580 million from the feds. She said local and national providers in the telecommunications industry are set to receive an unprecedented amount of federal money and told her they are backed up. “There’s just been so much allocated that the blocker right now is not actually the funding, it’s the staff to lay the cable that’s already been authorized and funded,” Hortman said.
Hortman didn’t rule out a different House committee focused on bonding and capital construction projects using some cash on broadband grants, or tapping into the remaining $110 million from the ARP for more border-to-border grant spending. Though no concrete plan for that has been announced.
Grove said the Walz administration wants to dedicate some of that ARP money to construction of internet infrastructure. But he said they want to use some of it for other allowed projects focused on what the Treasury Department calls “digital connectivity,” such as buying devices and equipment like laptops to facilitate internet access or “multi-purpose community facility projects,” such as upgrading libraries or community health centers.
State Sen. Torrey Westrom
Senate Republicans would use the full $110 million on broadband infrastructure. Sen. Torrey Westrom, an Elbow Lake Republican who chairs the Senate’s Agriculture and Rural Development Finance and Policy Committee, said using only federal money allows them to pump lots of cash into broadband while still delivering large tax cuts proposed by the GOP — even if industry groups say state money would be put to use much faster. The federal money can also be spent over a few years, offering flexibility, Westrom said.
“A once in a generation opportunity, let’s take advantage of it for rural broadband,” Westrom said. “And give the taxpayers their money back to boot. How much better of a baked pie can you get?”
And Westrom said Minnesota should focus ARP money on the people who have no access to quality broadband instead of paying for equipment or community centers. “It’s analogous to buying people cars for roads they don’t even have to drive on,” Westrom said. “Right now we’ve got a lot of citizens left behind.”
If the Legislature doesn’t come to an agreement on how to use the remaining $110 million from the ARP, it will be up to Walz to decide how to spend it.