Update on Resilient Region’s MN Broadband Grant Project

The Wadena Pioneer Journal reports the status of the MN Broadband Grant project happening in the Resilient Region (aka Region Five)…

A multi-year, multi-million dollar project aimed at bringing high-speed internet access to all residents in Region 5 continues this year with broadband expansion and exploration into the rural areas of Todd and Wadena counties.

According to the North Central Economic Development Authority, the project is a cooperative effort involving regional telecommunications companies Consolidated Telephone Company (CTC) and West Central Telephone Association (WCTA), with assistance from the Region Five Development Commission (R5DC) and National Joint Powers Alliance (NJPA).

Cheryal Lee Hills, Executive Director for R5DC states, “Since 2015, NJPA has made a combined total of $400,000 worth of investments to CTC, WCTA and others in the region for feasibility and engineering research. This generous investment helped us provide the data needed to secure and leverage $9.8 million through the Department of Employment and Economic Development (DEED) Office of Broadband and CTC/WCTA match infusion.”

WCTA’s project build-out areas for 2017-18 include approximately 200 residents and 68 miles of fiber in the rural Wadena County area, and approximately 145 residents and 63 miles of fiber in the northern Todd County area. Through funding, grant money, and company match 852 rural Region 5 residents have gained access to broadband. CTC and WCTA plan to work with R5DC to secure additional funding for future expansion into rural Todd County.

Celebrating a Border to Border grant in Lanesboro (Fillmore County)

The Bluff County Newspaper reports on Lanesboro’s MN broadband grant project…

This event celebrated work that has already begun to tunnel cable to 431 households, 42 businesses and one community institution in rural Lanesboro as part of the Minnesota State Border-to-Border Broadband Development Grant through DEED.

DEED awarded AcenTek, a Houston-based communications company, $1,777,936 to assist with the installation which Moser estimated to cost approximately $4.7 million. Additionally, Fillmore County’s broadband development fund contributed a $75,000 loan toward the work to make it possible for home business owners, telecommuters and students to complete their work without having to worry about how fast their internet service uploads or downloads.

Moser remarked that AcenTek is investing roughly $3 million to upgrade rural internet service to fiber-optic cable. He outlined that preparations began once the grant was awarded to AcenTek in January and that the company attempted to do most of its work while keeping Lanesboro’s tourist season in mind, meaning that late September is a prime starting point.

You can also read about it in the Fillmore County Journal.

Problems facing MN Broadband Grantees: What we can Learn from Kandiyohi County

Kandiyohi County was a recipient of a Minnesota Border to Border broadband grant. The County was working with CTC (Consolidated Telephone Company) to serve around 1700 homes in an area north of Willmar, in the Lake Florida-Norway Lake region. They were awarded $4.92 million.

The County was going to match the grant with tax abatement bonds. Proceeds from the bonds ($5 million) would be loaned to CTC for the project. The debt would be paid from tax abatement revenues and property taxes which will be reduced or cancelled by the loan payments from CTC.  The loan would be paid back fully by CTC with no impact to the tax base in Kandiyohi County.  The project started with a series of open house meetings in the communities in the proposed service areas. The goal was to get people to sign up for service and pay $25 down payment to show their commitment to taking services.

Getting residents to sign up in advance was key to CTC moving forward.  This become key because the financials substantially changed from the time of the grant application submission to the project buildout timeline.  Interest rate increases drove up the cost of debt CTC would be incurring substantially.  Despite encouragement from several sources – including Representative Baker – they did not get as many signed up as CTC needed to move forward.

 

So what happened?

Connie Schmoll at the Kandiyohi County & City of Willmar Economic Development Commission was able to help me with some details.

One issue – CTC was looking for 50 percent of the residents to sign up and pay a deposit to move forward. What happened? More than 50% of the people in the project area signed up and more than 44% had sent in the $25 deposit at the time that CTC pulled the project.

While I’ve heard providers say they have seen a 50 percent take rate and higher, it’s a high amount to require before service is even available. But it’s high because the base number of possible customers is low. The costs of serving rural areas is higher because of the population density, distance, terrain. And the ROI is lower because you just don’t have the potential volume as is available in other (more densely populated) areas. Yellow Medicine County running into the same issue.

How can we fix it?

This speaks to the need to reevaluate the required grant match; currently there is a 50 percent required match. I’ve heard from several providers in rural areas (who offer FTTH!) that areas that still need service will require more grant dollars and lower match requirements to make the project financials work. With a lower match, CTC may have been able to move ahead with a lower advance subscription rate. (As would Yellow Medicine and other potential projects.)

Another issue – In July, TDS announced plans to expand broadband to parts of Kandiyohi. They announced they would be using A-CAM funding (federal funding for Rate of Return broadband providers) to expand to 2,200 homes to bring speeds ranging from 25/3 (25 Mbps down and 3 Mbps up) down to 4/1. Those speeds do not compare to fiber BUT word of improvement did impact a resident’s decision about whether to switch providers to sign up for service.

How can we fix it?

This speaks to an issue with the grant challenge process. Applicants for the MN grants are required to give notice to incumbent and nearby providers. Knowing a potential competitor’s plan in advance gives the incumbent a strategic advantage. So even if an incumbent doesn’t challenge a proposal they are still on notice regarding competitors’ or would-be competitors’ plans and are able to take the opportunity to offer some improvements. In Kandiyohi County the new service offerings the incumbent rolled out at the same time CTC was recruiting new customers did not match the symmetrical fiber network CTC planned to build; TDS’s upgrade was minimal but may have been enough to dissuade some residents to sign up. That leaves the residents who do want or need speeds that meet state goal (100/20 by 2026) out of luck.

How can we fix it?

An ongoing source of funding or at least multiple years of funding would make it easier for communities and other potential applicants to prepare applications. I have heard that from a few folks in the field. They have been working on feasibility studies with an end goal of submitting a proposal but as a deadline draws nearer they must decide whether to apply before they may be entirely ready or miss the deadline and risk an opportunity that may not return. I suspect that leads to more applications of lower quality, which in turns creates more work for the Office of Broadband Development.

So what do we do with this learning a week after the deadline for the 2017 applications?

We take the lessons to the 2018 legislative session. We talk to the powers that be. Minnesota is onto a really good thing here. Ohio and Virginia are looking at modeling our grant program. The Office of MN Broadband is receiving awards. Providers (such as CTC and others) are working hard to make the numbers work. Communities (such as Kandiyohi and others) are on the ground doing public education and encouraging action and adoption. We are leaders – and that means we learn from our own lessons to stay ahead of the pack.

How much is a public infrastructure project? Putting $22 million for fiber in Yellow Medicine County in perspective

Government Technology reports on the prospective cost of better broadband in Yellow Medicine County (MN)…

A newly completed study looking at bringing broadband service to rural areas of the county calculates that it will cost $20 million to $22 million to lay the fiber optic network needed.

It’s a matter of the county’s geography and dispersed population, according to Doug Dawson, president of CCG Consulting, and Chris Konechne, project engineer with Finley Engineering. They presented the study to the County Board of Commissioners on Tuesday in Granite Falls.

Their study found that the county would need to lay fiber optic cable along 955 miles of roadway to serve 1,862 homes and businesses in the rural areas that are currently not served by broadband.

They also look at a lower cost option…

The study provided another option for the county. The consultants said the county could consider a combined wireless and fiber-optic “hybrid” system for a $5 million investment. A 52-mile network of fiber-optic cable could connect towers and reach the rural areas with a wireless system delivering 25 megabytes of service per customer, the minimum speed for broadband. Dawson described it as a less costly, first step toward eventually developing a more comprehensive broadband network.

But recognize the limitations…

And, he noted at the onset of his presentation, that while a 25-megabyte capacity would meet today’s needs, it will certainly become outdated. Since 1980, internet speed has doubled every year, he said.

I’ve said many times, there is room for fiber and wireless. Wireless is a great interim solution for rural areas and even after fiber is deployed, customers will want the mobility of wireless. You can access the feasibility study on the County web site. And I recently reported on discussions in Yellow Medicine and noticed that Farmers Mutual Telephone submitted an application to the Office of Broadband Development – so it looks as if things are moving forward.

But for some reason these numbers jumped out at me. It’s hard to put my arms around $22 million. So I wanted to do a little comparison and found some pricing (albeit from 2015) on cost of maintaining roads. The Pioneer Press reported…

How much does it cost to fix a road?

Anywhere from $167,000 to $3.7 million or more per lane-mile.

That’s to fix – not build. So the cost to build fiber 955 miles is $20-22 million. The cost to fix a road is $166 million to $3.5 billion.

And an interesting fact for the rural-urban eyes out there, here’s some info on building roads…

f the road’s substructure is in good condition, then rough pavement can be fixed by just applying a new surface. A typical asphalt resurface costs about $167,000 per lane-mile — meaning double that for a two-lane road and more if the road is wider. Concrete is sturdier but more expensive: a new concrete surface costs about $488,000 per lane-mile, according to MnDOT.

If a road deteriorates to the point where its substructure also needs replacement, fixing it becomes a lot more expensive. A full reconstruction costs about $1 million per lane-mile for a rural road, and $2.2 million per lane-mile in a town.

Because of the denser population in the Twin Cities, metro-area projects can be significantly more expensive — up to 70 percent more. That means more than $3.7 million for a lane-mile — or $7.5 million per mile for a two-lane city street.

I’m not saying $22 million isn’t a lot of money. I guess I’m just saying it depends what you do with it.

NU-Telecom launches Hanska broadband project

According to The New Ulm Journal

NU-Telecom recently celebrated the launch of one of its 2017 broadband development projects, made possible by a grant awarded by The Minnesota State Department of Employment and Economic Development (DEED). NU-Telecom received three of the 42 grants announced by Lt. Governor Tina Smith earlier this year.

NU-Telecom received $200,397, roughly 45 percent of the $445,326 project, to build fiber connections to 46 homes and businesses in the rural area of Hanska, an area previously designated as unserved and an underserved area. NU-Telecom received two additional grants in the rural areas of Bellechester and Mazeppa, MN. President and CEO Bill Otis stressed the significance of reliable broadband in rural communities.

It’s great news for Brown County!

 

MN broadband grant requests $50.3 million – more than twice available funds

Monday was the deadline for the Minnesota Border to Border grant applications. The Office of Broadband Development reports that they received 70 applications, totaling $50.3 million in requests and representing $112 million in total project costs. During the 2017 session, the legislature included $20 million in funds for the Border-to-Border Broadband grant program.

You can get a full list of applicants online (I’ll paste that info below too). The next step is to see if there are any challenges to the applications. Here’s more info on that from the OBD…

An entity wishing to challenge an application must do so by 4:00 p.m. on Monday, October 16, 2017. Challenges will only be considered from providers that submitted updated broadband mapping data to Connected Nation in the spring 2017 data collection period. Challenges must be submitted in writing to the Office of Broadband Development, Minnesota Department of Employment and Economic Development, 1st National Bank Building, 332 Minnesota Street, Suite E200, St. Paul, MN 55101-1351. A separate challenge must be submitted for each project being challenged.

So who is asking for funds?

  • AcenTek (2 applications)
  • Albany Mutual Telephone Company (2 applications)
  • Advantenon (6)
  • Arvig (1)
  • Benton Cooperative Telephone Company (1)
  • BEVCOMM (6)
  • Carlton County (1)
  • CenturyLink (3)
  • Farmers Mutual Telephone Company (2)
  • Fond du Lac Band of Lake Superior Chippewa (3)
  • Garden Valley Telephone Company (1)
  • Gardonville Cooperative Telephone Association (2)
  • Halstad Telephone Company (1)
  • Hanson Communications (1)
  • Jaguar (1)
  • KMTelecom (1)
  • Mediacom (4)
  • Midco (3)
  • Midstate/TDS (3)
  • Minnesota Valley Telephone Company (1)
  • NU-Telecom (5)
  • Otter Tail Telcom (1)
  • Palmer Wireless (5)
  • Paul Bunyan Communications (1)
  • Runestone Telecom Association (1)
  • SCI (4)
  • Sjoberg’s Cable (1)
  • West Central Telephone Association (2)
  • Wikstrom Telephone Company (1)
  • Windomnet (1)
  • Winthrop Telephone Company (1)
  • Woodstock Telephone Company (3)

At what speeds:

  • 1 Gbps/1Gbps – 37 applications
  • 1Gbps/500Mbps – 4
  • 1 Gbps/100Mbps – 3
  • 1Gbps/50Mbps – 4
  • 1Gbps/20Mbps – 1
  • 940Mbps/20Mbps – 3
  • 250Mbps/20Mbps – 4
  • 100Mbps/100Mbps – 8
  • 100Mbps/20Mbps – 1
  • 25Mbps/3Mbps – 4

 

Which counties are looking for funds?
(This does not indicate that the whole county is applying, usually just a portion)

Counties:

  1. Aitkin County
  2. Benton County
  3. Brown County
  4. Carlton County
  5. Chippewa County
  6. Chisago County
  7. Cottonwood County
  8. Dodge County
  9. Douglas County
  10. Faribault County
  11. Fillmore County
  12. Freeborn County
  13. Goodhue County
  14. Grant County
  15. Hennepin County
  16. Houston County
  17. Hubbard County
  18. Itasca County
  19. Kandiyohi County
  20. Kittson County
  21. Lac qui Parle County
  22. Lake of the Woods County
  23. Lincoln County
  24. Lyon County
  25. Marshall County
  26. Martin County
  27. Mahnomen County
  28. McLeod County
  29. Meeker County
  30. Mille Lacs County
  31. Morrison County
  32. Otter Tail County
  33. Pennington County
  34. Pine County
  35. Pipestone County
  36. Polk County
  37. Pope County
  38. Ramsey County
  39. Redwood County
  40. Rice County
  41. Roseau County
  42. St Louis County
  43. Scott County
  44. Sherburne County
  45. Sibley County
  46. Stearns County
  47. Stevens County
  48. Todd County
  49. Wadena County
  50. Wilkin County
  51. Wright County
  52. Yellow Medicine County

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Broadband Update in Yellow Medicine Broadband: partner, plan, local investment

The Yellow Medicine County Board met to discuss their broadband plan – investment, grant applications and partners in a plan to being providing fiber service to the county. Sounds like they have a willing partner and community investment. They are hoping for a Minnesota broadband grant – and I’d say that’s the linchpin here in the project. They are asking good questions. The Independent reported on the meeting.

Scope of work…

Two methods were being looked at, Konechne said. First, to build fiber into the entire area or building a hybrid model with fiber to towns and branch off of that.

In the rural area, YMC is looking at a potential of 1,862 customers.

“That includes a large pile of homes and a handful of businesses without internet service,” Dawson said. He and Konechne went into the details of the 52-mile width of land to cover, he called it the backbone. It adds up to about 955 miles of rods, weaving down township roads because there seems to be a household down each one, he said.

The investment…

They are looking at delivering the service on poles, like telephone wires.

The next steps for the county to consider were half done, the consultants said, because the first step was to find a partner for the project. Which, depending on getting a grant, the board had made that agreement at the last meeting.

The YMC Board approved a $4 million broadband agreement with Farmers Mutual Telephone Cooperative (FMTC) in August pending the cooperative receiving a grant to cover half of the costs for the project.

The details…

The grant would only cover about 49 percent of the project FMTC had asked the county to loan it the other 51 percent if the grant came through. The county could bond the funds at a minimum of $4 million with the repayments coming from FMTC.

Isaackson then brought up a coverage glitch. The project is to service the central and northeast portion of the county, not the southeast where he lives.

“How are we covered?” he asked.

Heglund said that the county was looking at Arvig to cover that area since it is already in parts of the southeast end of the county.

“They have five to 10 years to complete the project,” she said.

Some specifics…

“Fiber to towers will enhance MVTV service,” Antony said.

“The 52-mile backbone does hit a lot of their spots,” Konechne said. A successful combination is high elevation (towers) and solid backbone (fiber).

The second step is to find the other half of the financing for the unserved area. Another partner to help with that would be ideal.

Repaying a loan was weighing on Greg Isaackson’s mind. Isaackson, from Cottonwood, is the treasurer for MVTV. He wanted to know what happens if the annual payment on the bonded amount doesn’t get paid.

“The fiber is collateral,” Heglund said. “We’d have to find another partner.”

She went on to explain that there would be precautions up front. The county has to get at least a 63 percent take rate (subscribers). Farmers Mutual Cooperative would have to show it financials, that it can make these payments, before the deal went through.