Beneath the fairly accurate headline in the Duluth News Tribune, DFL, GOP agree on goals for rural Minnesota, but not the means, Forum Communications political reporter Don Davis reports one contrast that caught our eye:
Democratic Gov. Mark Dayton and House Democrats want the state to pay $100 million to expand broadband; House Republicans passed $10 million last year, which Kresha said attracted $86 million of federal funds. [emphasis added]
Kresha's attempt to position the $10 million in state broadband funding for rural Minnesota as a magnet for the "Connect America Fund" grants to Minnesota made us pause. (It's the accuracy of Kresha's statement, not Davis's reporting, that's at issue here).
UPDATE January 20, 2016: The Minnesota House Republicans are questioning the wording in the news report and promise to send an audio recording of Kresha's response. We'll post the audio and a transcript when we get it. End update.
UPDATE #2 January 20, 2016:
The audio file will open in another window:
Starting at the 11 second link:
Reporter: Broadband?Kresha: Yes. So we have historic levels of that coming through. We have $86 million in federal funds, $10 million that we put in state and we're seeing unprecedented levels of broadband expansion and we just have to keep going forward.
Reporter: Any more in this session?
Kresha: Oh, I think they'll be talks about that. We're looking at telecom reform, as well as subsidizing to the hardest to reach area and getting the unserved, so we'll see that definitely moving forward. We know that's important and I'm glad the Democrats are talking about it and I'm hoping they're going to join us.
That exchange does uncouple the federal and state funding, but a different issue emerges: Kresha implies that the federal funding is somehow a Republican program that the DFLers are just now joining "us" on. As the post below illustrates, the $86 million in no way depends on Republican control of the Minnesota House of Representatives.
Indeed, press releases and legislative updates reveal that the Republican message has been to couple the state and federal money to show that the House Republicans favor big dollars for rural broadband, with combined dollar amounts matching those that the Coalition of Greater Minnesota Cities and the Governor are suggesting in state funds alone.
Take the Legislative Update (November 6, 2015) from Representative Jeff Backer, R-Browns Valley:
On Thursday, October 29th, Sen. Westrom and I hosted a panel of industry experts with years of experience in telecommunications and broadband policy to highlight investments from Minnesota's Border to Border Broadband Expansion Program and federal Connect America Fund (CAF) grants. These programs are making an historic $96 million investment in expanding access to quality broadband service in rural areas—including portions of Grant, Traverse, Stevens and Wilkin counties.
Fortunately, this is just the beginning of expanded access. The CAF broadband grants will bring $86 million per year to our state for five years. Paired with state funding, the investment in rural broadband access could easily exceed $100 million per year for half a decade.
Note that that parsing suggests that the Republicans will not measurably increase state funding, but rather consider the CAF dollars to be sufficient.
The Republican Caucus also advances its framing of the unified $100 million is terms of replication of interests. The West Central Tribune reports in Dayton wants $100M for rural Minn. broadband:
While there is broad support for getting high-speed Internet to unserved and underserved corners of the state, making that a reality is more complicated.
Debates about state-mandated connection speeds, concerns about overlap with the federal government and private competition, questions about technology preferences and the amount the state should spend, and requests to reform regulations and wage requirements make the desire to build complex. . . .
A federal program has recently made about $500 million worth of funding available to Minnesota providers through a program called Connect American Fund.
Last month, House Speaker Kurt Daudt, R-Crown, said he was concerned that a robust state program would duplicate those federal efforts. Others have also raised that issue. . . .
State officials say the federal program and state program have key distinctions.
“There is no circumstance where we are duplicating or supplanting the federal dollars,” Smith, the lieutenant governor, said.
The federal program provides grants only to specific service zones, and leaves others out. Further, it requires providers meet different, slower, speed goals than the state program would, state officials said.
House GOP communications staffers Andrew Wagner kindly sent us this email as well with a clarifying update by Don Davis.
Don Davis updated his story, and sent around updated version to papers that picked it up online.
http://capitolchat.areavoices.
com/ Democratic Gov. Mark Dayton and House Democrats want the state to pay $100 million to expand broadband; House Republicans passed $10 million last year, which Kresha said added to a separate allocation of $86 million of federal funds.
That greatly clarifies the situation, and we thank both Don Davis and Wagner for going to the effort to clarify.
We're inclined to believe that more is more, and $100 million is less than $200 million. To spend less, the GOP caucus has to make it appear that the state and federal money is interchangeable. The dollars are not. [end update]
While the clarification above was helpful, we're keeping the rest of the post up to demonstrate the separation of the funding sources and to deter future misunderstandings.
Did that $10 million in state funding really draw federal money to the state?
We're still waiting for a call back from the broadband office at the Blandin Foundation (which is a font of accurate information about rural broadband, as well as private grants for it), but our preliminary research suggests that there's no causal link between the pot o' state money leveraging the federal funds in our general direction or acting as a matching fund.
The Federal Connect America Fund
In May 2014, Minnesota Public Radio's Dave Peters reported in Minnesotans raise their hands for FCC broadband money:
Small phone companies, electrical utilities, townships, cities and newly formed cooperatives have flooded the Federal Communications Commission with ready-made project ideas that would get fast broadband service where it’s never been.
At the same time, three big national companies that provide phone and Internet service to much of rural Minnesota are going to make decisions in the coming months that could determine for years what the rural broadband landscape will look like. . . .
Here’s what’s going on:
The FCC has a big pot of money known as the Connect America Fund, collected from telecommunications customers like you and me across the country as part of our phone bills.
The money used to be aimed at getting phone service to hard-to-reach areas; now it’s targeted more for high-speed Internet access. Most of the people living in areas without good access are in the service areas of the nation’s huge phone companies.
So the FCC is aiming a lot of the money at those companies to get them to improve service in their underserved areas.
In Minnesota, that’s CenturyLink, Frontier and Windstream. In a few months, the FCC will make those companies an offer: Here’s X million dollars to build out better service to Y thousand residents.
The FCC is still pinning things down but the total for those three is expected to be around $86 million a year to serve some 167,000 locations in the state, according to Tom Koutsky, chief policy counsel for Connected Nation, which hosted a Minnesota-targeted webinar Thursday on the topic. . . .
Got that? That's pre-GOP control of the Minnesota House. The $86 million figure was flashed at Minnesota in 2014, long before the House Republicans were forced to include $10 million in their budget for Border-to-Border Broadband grants.
This is ongoing federal program and that $86 million does not appear to have been "attracted" by the $10 that the Republicans had forced down their throats after GOP bill cuts rural broadband grants.
Where did the $85 million go? As predicted, to the larger telecoms. In Connect America Phase 2 Funding in Minnesota: a blessing and a curse, Blandin's Ann Treacy wrote
Connect America Funds (CAF) Phase 2 is going to be a game changer for the broadband landscape in rural America. The quick explanation is that larger providers were offered the opportunity to accept funding to help subsidize broadband expansion to rural areas. The stipulation was that the provider must provide service that is at least 10 Mbps down and 1 Mbps up to everyone in the service area. They have until the end of 2020 to complete deployment. (There are incremental requirements starting with 40 percent coverage by the end of 2017.)
Minnesota will receive $85 million to serve 170,355 locations. Here’s the breakdown and specifics:
- PC Carrier – Eligible Locations – Support Amount
- CenturyLink – 114,739 – $54,035,149
- Consolidated Communications – 4,266 – $2,516,502
- Frontier Communications – 46,910 – $27,551,367
- Windstream Communications – 4,440 – $1,519,856
- Total – 170,355 – $85,622,874
Minnesota state Border to Border Broadband Grants
On November 20, 2015, DEED issued a press release, Minnesota Awards $11 Million for Broadband Projects that included the following winners:
. . .The following is a list of the 15 recipients awarded funding in 2015:
BEVCOMM Cannon Valley Telecom, Rural Freeborn Fiber-to-the-Premises Project, $149,625
The project will build out broadband infrastructure to provide high-speed Internet service to 43 households and one business in rural Freeborn in south-central Minnesota’s Freeborn County. Total project costs are $393,750. BEVCOMM will cover the remaining $244,125 (62 percent local match).
Community and Economic Development Impact: The project will support various home-based businesses, stimulate economic growth, and encourage innovation and investment. Education, health care, energy efficiency and public safety will improve with high-speed Internet access. The greatest economic development potential of the project will be in crop and livestock production, including advancement in bin monitoring systems, livestock feed and environment monitoring, security, video surveillance and energy management.
BEVCOMM Blue Earth Valley Telephone, Rural Winnebago Fiber-to-the-Premises Project, $142,690
The project will provide high-speed Internet service to 30 unserved households and farms in rural Winnebago in Faribault County in south-central Minnesota. Total project costs are $375,500. BEVCOMM will cover the remaining $232,810 (62 percent local match).
Community and Economic Development Impact: The project will stimulate home-based businesses, economic growth, and innovation and investment. Education, health care, energy efficiency and public safety will improve with high-speed Internet access. The greatest economic development potential will be in local crop and livestock production. Broadband investments will enable area farmers to access applications and tools to make their operations more efficient and enhance their crop production. A second benefit will be better health care, especially in emergency situations. First responders, paramedics and rural doctors will be able to share medical information and start vital treatment to a patient while an ambulance is en route to the hospital.
Consolidated Telecommunications Co., Fort Ripley Phase II, $759,525
Broadband infrastructure will be built out in the Fort Ripley area to provide service to 272 households. Total project costs are $1.6 million. The remaining $839,475 (52 percent local match) will be provided by Consolidated Telecommunications and regional and local development agencies.
Community and Economic Development Impact: A survey concluded that more than 83 percent of respondents in the area would benefit from telecommuting, an option currently unavailable. In addition, the project will enable home-based businesses to develop and expand.
Federated Telephone Cooperative, Swift County FTTP 2015, $4.95 million
The project will deliver high-speed Internet service to 600 households, 425 businesses and 75 community institutions. The project area includes De Graff, Swift Falls and rural parts of eastern Swift County. The project touches 13 of the county’s 21 townships. T otal project costs are $12.5 million. T he remaining $7.5 million (60 percent local match) will be covered by a loan from Swift County to Federated.
Community and Economic Development Impact: The project will help support job creation and economic prosperity throughout the county. More than 500 jobs are expected to be created over the next few years, related to farming, home-based startups, commercial expansions and more. Nearly half of the county’s 800 farms are in the project area.Halstad Telephone Co., Gentilly Township, $424,460
Halstad Telephone Co. will build out infrastructure in Gentilly Township in Polk County to provide high-speed Internet to 114 households, 20 businesses and one community anchor institution. T otal project costs are $931,000 . The remaining $504,540 (54 percent local match) will be provided by Halstad Telephone Co.
Community and Economic Development Impact: The project will enable more effective agricultural management and teleworking opportunities.
Hiawatha Broadband Communications, Whitewater area in Winona County, $247,000
Hiawatha will partner with Winona County to build out broadband infrastructure in Elba and Norton townships, including Whitewater State Park. The project will provide improved Internet services to 418 customers, including 135 households, 70 businesses and five community anchor institutions. T otal project costs are $773,320 . The remaining $526,000 (68 percent local match) will be provided by Hiawatha and Winona County.
Community and Economic Development Impact: This area contains Whitewater State Park (which attracts 300,000 visitors annually), Whitewater Wildlife Management Area, Crystal Springs Fish Hatchery, 75 farms, 32 businesses, a school and numerous public institutions. The project will improve business and economic opportunities, education, health care and public safety.
Midcontinent Little Fork Middle Mile, $277,448
Midcontinent will build out broadband middle-mile infrastructure between Little Fork and International Falls. The project will provide high-speed service to 258 Internet users. Total project costs are $584,100 . The remaining $306,652 (52 percent local match) will be provided by Midcontinent.
Community and Economic Development Impact: The community will benefit from increased speed, capacity and reliability of Internet services.MVTV Wireless Middle Mile, Southwestern Minnesota, $808,080
This project will improve services to 6,000 households and businesses that are MVTV customers in 20 southwestern Minnesota counties, with leverage possibilities for another 29,000 customers. The counties are Blue Earth, Chippewa, Cottonwood, Jackson, Kandiyohi, Lac Qui Parle, Lincoln, Lyon, Meeker, Murray, Nicollet, Nobles, Pipestone, Rock, Redwood, Renville, Sibley Swift, Watonwan and Yellow Medicine. T otal project costs are $1.85 million. MVTV will cover the remaining $1.04 million (56 percent local match).
Community and Economic Development Impact: The project will improve broadband access and speeds for more than 3,000 farm-related businesses and 6,000 rural residents across nearly 30,000 square miles.
New Ulm Telecom, Goodhue Fiber Project, $115,934
New Ulm Telecom will build out middle- and last-mile infrastructure in Goodhue Township near the city of Goodhue to provide service to 24 households, businesses and community institutions. Total project costs are $244,073. New Ulm Telecom will cover the remaining $128,139 (53 percent local match).
Community and Economic Development Impact: Nearly all of the broadband service in this project area is for farms, home-based businesses or telecommuting. Without this investment, many residents might be forced to shut down businesses, move or find alternative educational opportunities.
Otter Tail Telcom Fergus Falls 864, Highway 59, $295,432
Otter Tail Telcom will extend its existing fiber cable at the north edge of Fergus Falls to serve 56 households, seven businesses and one cell tower . Total project costs are $621,962 . Otter Tail Telcom will provide the remaining $326,530 (52 percent local match).
Community and Economic Development Impact: The project will improve broadband service for several existing businesses and work-from-home residents. In addition, it will add value and create potential shovel - ready status for a new industrial park.Otter Tail Telcom, Highway 59/94, $164,207
Otter Tail Telcom will build out middle-mile broadband infrastructure north of Fergus Falls, near the Highway 59/94 intersection, to provide high-speed Internet service to 21 households and multiple community institutions. Areas north and south of Elizabeth are included. Total project costs are $345,699 . The remaining $182,437 (53 percent local match) will be provided by Otter Tail Telcom.
Community and Economic Development Impact: The project will provide increased connectivity to the Fargo/Moorhead area and redundancy for the Minneapolis middle-mile facilities. All customers served by Park Region Telephone Co., Otter Tail Telcom and other neighboring telecoms will benefit from the added connectivity. Remote clinics and hospitals associated with Sanford Health will have a seamless data flow of records, x-rays, scans and other medical information. Schools and libraries in the region also will benefit.Paul Bunyan Central Itasca County Fiber, $1.98 million
Broadband infrastructure will be built out in Itasca County in portions of Balsam, Lawrence and Nashwauk townships and the former Iron Range Township that is now located within the city of Taconite. High-speed Internet service will be available to 1,193 households, 53 businesses and five community anchor institutions. T otal project costs are $5.52 million. T he remaining $3.54 million (64 percent local match) will be provided by Paul Bunyan Communications, Itasca County and the Iron Range Resources and Rehabilitation Board.
Community and Economic Development Impact: The area is home to an estimated 3,500 people and about 100 small businesses. The project will open up new markets, provide new options for training and education of employees, increase opportunities for sales and marketing, and deliver additional business-related resources. In addition, it will improve the region’s viability and attractiveness to telecommuters, freelancers and others who depend on technology and the Internet for work. Health care services also will improve.Runestone Telephone Association, Holmes City, $189,990
The project will provide high-speed broadband service to 93 households, 14 businesses and one community anchor institution in Holmes City in Douglas County. T otal project costs are $428,060. Runestone will provide t he remaining $238,070 (56 percent local match) .
Community and Economic Development Impact: In addition to bricks and mortar businesses, numerous home-based businesses and telecommuters will have improved services. Thirty-two local children who are either home schooled or attend school in Alexandria also will benefit. Many of them cannot complete daily assignments, participate in team projects, or conduct research necessary for papers and reports.West Central Telephone Association, Highway 71 Wadena North Expansion Project, $189,525
The project will provide high-speed broadband service to 162 households, 43 businesses and three community anchor institutions. P roject costs are $2.12 million. T he remaining $1.93 million (91 percent local match) will be provided by the West Central Telephone Association and by local and regional organizations.
Community and Economic Development Impact: The project will help struggling small businesses, provide tele-health services to assist seniors, address a shortage of mental health workers, and provide online education and other learning opportunities.Winona County Hiawatha Broadband Communications, Cedar Valley Area, $314,450
Broadband infrastructure will be built in and around the Winona County communities of Witoka and Wilson, affecting 256 households, 117 businesses and three community anchor institutions. Total project costs are $973,000. The remaining $658,550 (68 percent local match) will be provided by Winona County and Hiawatha Broadband Communications.
See much overlap? These funds aren't "matched" or "attracting" the federal money, as far as we can tell, unless we count those 272 households in the Fort Ripley area for which Consolidated received $759,525 in state money in November--AFTER the CAF grant to Consolidated in Minnesota was handed $2,516,502 for 4,266 customers in later summer.
Correction: We've struck the passage above, as it was based on a misunderstanding that two similar-named corporations were the same entity. Diane Wells Telecommunications Manager in the Office of Broadband Development at DEED sent us the following factual correction in an email. From this information we concludes that there's no overlap at all in the state and federal funding:
The Consolidated Telecommunications Company (CTC) that was awarded a broadband infrastructure grant on November 20, 2015 by DEED in the amount of $759,525 is the company based out of Brainerd, MN.
The Consolidated Communications Holding, Inc. company that accepted CAF II funding in Minnesota is actually based in Illinois and bought the company previously known as Enventis (and before that HickoryTech, which owned the incumbent telephone companies Mankato Citizens Telephone Company and MidCommunications). Enventis was a rate of return company in MN, but since it was bought by Consolidated Holdings, which was a price cap carrier, the incumbent telephone company areas in Minnesota were reclassified as price cap carrier areas and eligible for the offer of support to price cap carriers that the FCC made as part of CAF II. Thus, Minnesota ended up with four price cap carriers and all accepted the CAF II offer of support for MN (CenturyLink, Consolidated Holdings, Frontier and Windstream).
It’s confusing and the post implies they are the same company. But the Consolidated (CTC) that received the state grant is a totally separate, unrelated company to the Consolidated Holdings company that accepted the CAF II FCC offer of support. They have a similar name—and I think we’ll really start seeing the Consolidated up in Brainerd calling itself CTC to distinguish itself.
Bluestem can only conclude after reviewing the information that Lt. Governor Smith is correct--and the Republican rhetorical efforts to conflate the two funds as one pot of money would in the end shortchange Greater Minnesotans, rather than equal the DFL House and Governor's plans. [end correction]
Use critical thinking on House Republican broadband claims
Timelines are very effective tools for examining claims of "attraction," and the announcement of the federal program before the Republican caucus took the House suggests that they're scrambling to recover from session headlines like Tom Scheck's GOP bill cuts rural broadband grants,
But before we say that Kresha's statement that the $10 million in state funding "attracted" the $86 million in 2015--that was forecast in 2014 when the Speaker's gavel was a mere glint in Ben Golnik's eye--is "Pants On Fire" misinformation, we'll wait to hear from the experts.
Meanwhile, readers and voters should ask Republicans touting how they matched state and federal funds just what they mean.
The latest annual report from the Office of Broadband Development can be read here.
Photo: Cow band Internet.
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