House Agriculture Subcommittee on Broadband July 11 in DC

The House Agriculture Committee is having a Subcommittee hearing this Thursday, July 11th on rural broadband: “Building Opportunity in Rural America through Affordable, Reliable and High-Speed Broadband.” Looks like the meeting starts at 9am (MN time) and there’s a link for the livestream

Thursday, July 11, 2019 – 10:00AM

1300 Longworth House Office Building

Washington, D.C.

Commodity Exchanges, Energy, and Credit Subcommittee Hearing

RE: “Building Opportunity in Rural America through Affordable, Reliable and High-Speed Broadband”

The story of Minnesota’s state broadband funds past, present and future from Matt Schmit

Recently, the Daily Yonder posted an article by (former Senator) Matt Schmit on Minnesota’s Border to Border Broadband grants, specifically the history of the legislation (which he authored) that made it happen in 2014…

The first bill, which created the grant fund, focused on improving service in unserved areas while not ignoring the underserved; achieving technology neutrality while requiring scalability of all state-funded deployments to 100 Mbps /100 Mbps speeds; and encouraging meaningful partnerships among various entities, such as local communities, tribal governments, incumbent and competitive providers, and rural cooperatives.

He mentions the obstacles…

At each turn, we overcame these obstacles, but not without consequence. Concerns over statewide prevailing wage mandates on public funding in rural markets led to a bipartisan exemption in state law, a tweak to the program that has worked well and enhanced program purchasing power. A desire to improve service in underserved areas inspired a small carve-out for targeted investment but to date has produced scant proposals. An infusion of new federal CAF dollars and an interest, however idealistic, in coordinating scarce public resources and leveraging federal funding to maximum benefit led to a challenge process that has failed to push incumbent CAF recipients to provide more competitive service.

And remembers a plan that didn’t work…

As beneficial as Minnesota’s Border to Border program has been, I remain convinced that my other bill was the better bill – and far more likely to inspire greater impact. The bill’s overarching goal was to facilitate local and regional cross-sector collaboration and partnership by introducing new public financing tools to the rural broadband conversation. After all, if lack of private investment capital for scarcely populated service territories remains the fundamental challenge underlying broadband service gaps, this bill sought to address the problem head on.

Intended to provide new tools for local and regional solutions, the legislation clarified and enhanced local bonding authority, enabled creation of regional broadband districts to strengthen cooperatives and public-private partnerships with new taxing authority, and provided a critical source of non-state match funding for state grant program applicants.

Dramatically mischaracterized by one industry lobbyist as the “most radical legislation ever introduced in Minnesota,” the bill never even received a hearing.

And makes some recommendations going forward…

At the same time, the broadband grant program would benefit from a few upgrades. First, multiyear base funding, preferably through a dedicated source that limits its exposure to general fund competition, would provide more stability to the program. Second, a reconsidered incumbent challenge process would help achieve the intended purpose of pushing CAF recipients to invest in better technology and offer faster speeds. Third, new tools and clear authority for local and regional entities to raise non-state funds to match a state grant or forego state funding altogether would improve rural broadband providers’ access to capital.

21 percent of MN can access fiber through a Cooperative

The Institute for Local Self Reliance has updated their 2017 report on how Cooperatives Fiberize Rural America, because…

In the 18 months from when we originally released our report on rural cooperatives, we have seen a tremendous increase in attention on cooperatives as a key approach for dramatically improving rural Internet access. Many cooperatives have become more aggressive in building next-generation networks for their member-owners and their neighbors. This updated report reflects the latest data we could gather on this essential movement.

Here are some of the high level highlights:

    • More than 140 co-ops across the country now offer residential gigabit Internet access to their members, reaching more than 300 communities.
    • Co-ops connect 70.8 percent of North Dakota and 47.7 percent of South Dakota landmass to fiber, and residents enjoy some of the fastest Internet access speeds in the nation.
    • Georgia and Mississippi have overturned state laws banning co-ops from offering Internet access, and other states, including Colorado, Maryland, North Carolina, and Texas, have implemented legislation that will further ease the way.

And  a look at what’s happening in Minnesota.

They mention a few Minnesota coops and the impact of Minnesota state grants…

In addition to federal funding sources, co-ops
are often eligible for state and local grants. The
Minnesota Border-to-Border Broadband Grant
Program has awarded funds to several
cooperatives, and multiple states looked to it as
a model for their own grant programs. Local 22
government funding for connectivity is rarer, but
in Minnesota, numerous counties have
provided loans and grants to electric and
telephone cooperatives for broadband projects,
often to supplement federal or state funding.23
For example, Cook County, Minnesota, offered
Arrowhead Electric Cooperative a $4 million
grant after the co-op was awarded $16 million
in stimulus funding.

San Francisco Mayor says whoa to FCC proposal to allow landlords to limit broadband competition

The San Francisco Chronicle reports…

San Francisco Mayor London Breed has spoken out against the Federal Communications Commission’s attempt to overrule a provision of a city ordinance.

In a letter sent on Tuesday to House Speaker Nancy Pelosi, D-San Francisco, Breed wrote that the FCC’s proposal to preempt part of a city law that prevents landlords of multi-unit buildings from blocking tenants from accessing the internet service provider of their choice would hurt residents by reducing competition for communications services.

The provision of the ordinance, known as Article 52, says property owners can’t deny internet service providers access to existing wiring within multi-unit residential and commercial buildings. It was the first such rule in the nation when the Board of Supervisors unanimously passed it in 2016, according to then-supervisor Mark Farrell.

I mostly write about rural broadband – so why the notice of an urban post dealing with multi-unit homes? Because rural areas can feel the same pinch when policy impedes competition. It looks a little different – but the result is the same: lack of choice.

We’ve seen that with CAF II funding where incumbent providers had access to federal money to upgrade to a minimum of 10 Mbps down and 1 up. Once the incumbent accepts that money, they have dibs. (To use a playground term.) Another provider will have a hard time getting federal funding to move into that area – even if they promise better connectivity.

And the even more difficult part of it is that the CAF II is that it isn’t a clear win for the incumbents. The funding isn’t enough to offset the real cost, nor enough to spur a real focus on unserved areas when there are areas with a better return on investment. But there are providers, often cooperatives, whose business model do allow for broadband upgrades that do meet customer need and sufficient ROI. (Last fall, tax changes were suggested that would have made it even more difficult for cooperative to offer broadband.)

The policy impact on rural communities may be familiar to more readers but again the result is the same. One choice! And with one choice, you run the risk of service, speed and prices that suit the provider. In rural areas, it’s federal funding or tax changes. In urban areas, it’s giving that power to one landlord – who may be compensated for making a broadband choice for the building.

There is one proposed budget amendment that may get in the way of the FCC plan…

The FCC proposal has hit at least one bump: The House of Representatives last week approved a budget amendment introduced by Rep. Katie Porter, D-Irvine, that would prevent the FCC from finalizing a draft rule that would overturn a provision of San Francisco’s local ordinance. The amendment was passed as part of a group, but it could still fail in the Senate.

“The communications industry is in dire need of more competition,” Porter said in a statement. “San Francisco’s Article 52 has been incredibly effective in promoting broadband competition — giving residents the benefit of competition and choice in the market, increasing their service quality while decreasing their monthly bills.”

Michigan’s broadband grants look similar to the Minnesota model

You know we’re onto something when other states start programs that look like ours. According to the Michigan website

Recognizing the impact access to high-speed internet has on educational and economic opportunities, Governor Gretchen Whitmer announced the opening of applications for the Connecting Michigan Communities (CMIC) grant program to increase broadband in underserved areas of Michigan. While much of Michigan has access to high-speed broadband internet service, there are still many rural areas lacking this vital connectivity.

“Access to high-speed internet is a must to compete in today’s society,” said Whitmer. “Connecting all Michigan communities with broadband service is about leveling the playing field for every child and small business in the state. Everyone should be able to fully explore their passions and talents, no matter where they live, and not be held back by a lack of infrastructure.”

The Department of Technology, Management, and Budget (DTMB) is now accepting applications for the CMIC grant program. It is offering $20 million in grants to internet service providers that are willing to expand access in unserved parts of the state.

Broadband conversation: FCC Commissioner Jessica Rosenworcel speaks with Senator Tina Smith

It’s a quick and easy inspirational listen or read. Listening to how Senator Smith got into politics is inspiring to anyone; listening to how she appreciates the needs for better broadband maps – that’s likely to be more inspiring to a more select group.

Here’s the description from the FCC site…

Minnesota Senator Tina Smith is a community organizer, entrepreneur, and a policymaker. In this episode of Broadband Conversations, listeners will hear her describe her path to the US Senate, which started as a community volunteer when she knocked on doors with her two children and a stroller in tow. She went on to serving in local government, including a stint as Lieutenant Governor of Minnesota, before her current role on Capitol Hill. As a US Senator, she’s used her platform to fight for universal, affordable broadband coverage. As Senator Smith says in the episode, we should not take internet access for granted. She points out that when hundreds of thousands of Minnesotans do not have online access to jobs, education, and economic growth, families and communities are left behind.

DEED Commissioner Grove plans to put MN on the tech map

 

MinnPost reports

When Steve Grove was appointed commissioner of the state’s Department of Employment and Economic Development (DEED) in January, one of his first priorities was to grow the state’s technology sector to compete with cities like Seattle, Boston and Austin.

 

That agenda is now taking shape with help from the Legislature. In the two-year budget approved in May, lawmakers passed a slate of proposals made by Grove and Gov. Tim Walz to foster startup businesses and build tech companies.

The Legislature re-instituted an “angel” tax credit for people who invest in startups and created “Launch Minnesota,” an initiative focused on nurturing the tech scene with grants, mentorship and collaboration with private businesses. The Legislature also agreed to spend $40 million on a grant program that helps build infrastructure for rural high-speed internet.

DEED did not get everything Grove had wanted, including more spending for broadband internet grants. But Grove, a former executive at Google, said the state is taking critical steps to support a sector that can help create jobs, attract young workers in a tight labor market and put Minnesota on the economy’s cutting edge.

They also report on where Minnesota currently stands in terms of the tech/entrepreneur map…

As a tech region, the Twin Cities is unexceptional. In a 2018 report on tech hubs by commercial real estate firm Cushman & Wakefield, Minneapolis/St. Paul ranked in the second tier of its top 25 cities and regions in the United States and Canada. The Twin Cities were below 10 other places, including Silicon Valley, San Diego, Raleigh/Durham, Seattle and Boston.

The report found the Twin Cities had the 15th highest share of tech employment and its growth in that sector was below average between 2010 and 2017. The Twin Cities also ranked low in venture capital spending, which is used to seed startups.

The report even found Minneapolis/St. Paul had $40 million less venture capital spending in late 2017 and early 2018 than it did in 2011, in a section comparing post-recession funding to current seed money. Chicago had $645 million less venture capital spending than in 2011, but every other tech hub cited by Cushman & Wakefield saw increases.

In 2018, PitchBook reported Minnesota as having the 15th most venture capital spending in the U.S., ahead of some states with similar populations like South Carolina and Wisconsin, but below others like Colorado, Maryland and Utah. “The lack of capital is a disadvantage,” Grove said. “It’s growing, but it’s not where you’d like to see it.”

In the Cushman & Wakefield report, the Twin Cities also had one of the smallest millennial populations by percentage among tech hubs. Many see a large millennial workforce as critical to a tech economy, especially as the country deals with workforce shortages.

The report did cite low rent and property values in Minnesota as positives — at least compared to other tech areas, which have seen extreme surges. And Grove said Minnesota’s tech scene has a lot going for it, including a host of big companies to learn from, startups with a high “survivability” rate and strong “civic pride” in the tech sector.