A Comparative View of 2016 State Broadband Plans

This year, the Minnesota legislature is paying a lot of attention to broadband for its benefits in economic and social development. After Minnesota failed to reach its initial broadband goals, it becomes apparent that Minnesota needs to increase its investment in our telecommunication infrastructure. The House and Senate have different approaches on funding broadband infrastructure as well as the prioritized beneficiaries of the funds.

Minnesota’s Current Broadband Situation

According to the Minnesota Broadband Task Force’s 2015 report, about 99 percent of urban households have access to broadband with at least 25 megabits per second (Mbps) download speed and three Mbps upload speed, which is the minimum speed under the FCC’s definition.   However, only 47 percent of Greater Minnesota households have access to such speeds. The Broadband Task Force suggests this disparity in Internet access calls for a large investment, up to $3.2 billion, to connect every household and business in Greater Minnesota. Two years after the Border-to-Border Broadband Development Grant program launched, Minnesota has appropriated about $30 million, which leverage about $41 million from private investment. This year, however, Governor Mark Dayton proposed $100 million to be set aside for broadband, while the House of Representatives and the Senate are currently working on their versions of broadband funding.

The Senate Proposal

Senate’s plan to fund broadband is close to what the Governor proposed. It includes $85 million for the Border-to-Border Broadband Development Grant program in FY 2017 and an updated state broadband goal. According to this plan, more than half of Greater Minnesota areas that lack of wire-line access to broadband service with the speed of 25 Mbps download and three Mbps upload will be considered unserved areas. This baseline will allow more communities to be eligible to apply for the state grant. Moreover, the speed baseline for underserved areas at 100 Mbps download and 20 Mbps upload will help drive Minnesota to meet its speed goal by 2026, since many areas in Minnesota will be eligible to apply for the grant under this definition.

The House Version

Minnesota’s House of Representatives is taking a more reserved approach, looking to provide $40 million ($15 million for FY 2017 and $25 million for FY 2018) to fund the Border-to-Border broadband program. The House also updated the speed goals to match the Broadband Task Force’s recommendation, which is similar to the Senate’s; however, the House’s broadband plan has more specifics on how the grant should be spent.

  1. Incumbent right of first refusal – The language of this plan is to give incumbent service providers, such as CenturyLink and Comcast, the right to choose to build the infrastructure in the areas that applied for the grant. The applicant will have to withdraw its application if an incumbent provider expresses its interest to begin construction within 12 months of the date the grant will be awarded.
  2. Unserved/underserved definitions – Unlike the Senate version, which defines the unserved and underserved areas based on the state broadband speed goals, the House takes a more conservative approach on these definitions:
    1. Unserved areas are areas in which households or businesses lack access to wire-line broadband service at the speeds equal to or greater than 10 Mbps download and three Mbps upload.
    2. Underserved areas are areas in which households or businesses lack access to wire-line broadband service at the speeds greater than 10 Mbps download and three Mbps upload but less than 25 Mbps download and three Mbps upload.
  3. Matching fund – This will help stretch the public dollars and put emphasis on development in the unserved areas. The plan will match one public dollar to at least one private dollar for projects in unserved areas and at least three private dollars for projects in underserved areas.
Key summaries on both versions of broadband development plan

Key summaries on both versions of broadband development plan

 

Leveraging Federal Funding

Both the Senate and the House of Representatives are aware of the Connect America Fund Phase 2 (CAF II), which is a federal initiative to  subsidize Internet service providers to build infrastructure and make telecommunication services more affordable in rural areas. The FCC has awarded about $85.5 million to four providers in Minnesota (CenturyLink, Consolidated Communications, Frontier, and Windstream) to build infrastructure where “broadband” is not accessible (see picture below.) However, the problem with CAF II is that the FCC only requires the new networks support broadband service with the speeds equal to or greater than 10 Mbps download and one Mbps upload, which are lower than those in its own definition of broadband. The House version of the broadband development plan relies more on this federal funding than the Senate, which may raise some doubts as to whether Minnesota will be able to meet its statutory broadband goal in 2022. Residents and businesses across the state, especially in Greater Minnesota, should keep their eyes on broadband development, which will be one of the major policy issues in this legislative session.

CAF II Build-out commitments (www.connectednation.org)

CAF II Build-out commitments (www.connectednation.org)