New rules could jeopardize rural broadband initiative

Ana Radelat

MinnPost

When the president of a trade association representing Minnesota’s telecom industry was asked how many of his members would participate in a $652 million federal program aimed at providing internet access, he was quick to respond.

“Zero,” said Brent Christensen, president and CEO of Minnesota Telecom Alliance.

His group represents 70 companies that provide advanced telecommunications services, including wireless video and high-speed internet, to Minnesota’s metropolitan and rural communities. Many of the smaller companies in his organization already operate in hard-to-reach rural areas and are eager to expand their services.

But Christensen said none of them would bid for the federal grants because of the regulations that would come with it — especially the requirement to provide low-cost services to low-income households in exchange for grants that would allow internet providers to build out their networks.

“To put those obligations on small rural providers is a hell of a roadblock,” Christensen said. “Most of our members are small and can’t afford to offer a low-cost option.”

The state’s cable companies have also turned sour on the new initiative, which is called the Broadband Equity, Access and Deployment (BEAD) program.

“Providing a low-cost option just won’t work for smaller providers,” said Melissa Wolf, executive director of the Minnesota Cable Communications Association.

So what was once thought of as a solution to unequal access to the internet in Minnesota could turn out to be a bust.

Last year at this time, the federal government announced that Minnesota would receive $652 million to help reach the lofty goal of “internet for all” in the state. Currently, about 12 percent of the state’s households, mostly in rural areas, lack access to the internet.

There is currently work being done in Carlton County, primarily in Thompson Township, this summer. (See the Pine Knot story from the June 14 issue.)

BEAD is administered by the National Telecommunications and Information Administration.

Funding for the program came from a massive infrastructure bill approved by Congress in 2021 that set aside $42 billion for all states to improve access to the internet. But the money came with strings — federal regulations that Minnesota’s internet providers say are “onerous.”

Especially when those federal regulations are coupled with new labor requirements imposed on the internet provider industry by the state Legislature earlier this year.

Those new regulations include requiring companies who receive state grants to pay workers a “prevailing wage,” a basic hourly rate paid on public works projects to a majority of workers in a particular occupation. The federal government does not require BEAD grant recipients to pay the prevailing wage.

Christensen said there are no telecom jobs on the federal government’s prevailing wage list, which the state statute requires internet providers to use. So companies in Minnesota would have to pay more because they would have to use a similar, but higher-paying, classification.

So expansion of internet service in Minnesota may slow even before the BEAD program is implemented.

A smaller 10-year-old state initiative, called the Border-to-Border grant program, has funding only through 2025. The plan was to have BEAD take over the job of bringing internet service to the unserved and underserved. Now that is threatened.

“(BEAD) sounded like a great idea, but when you get into the nuts and bolts of it, it’s not a great deal,” Christensen said.

And Wolf said “it’s becoming clear that it might be too risky to participate in the program.”

Lobbying for change

Fifteen states have received full approval of their BEAD plans, but Minnesota is not one of them. It recently received approval of “Volume 1,” a submission that details the state’s five-year action plan to close the digital divide, identifies unserved and underserved areas in the state and outlines how a competitive grant program would be set up.

The second submission, Volume II, is focused on the nuts and bolts of the state’s BEAD implementation plan and requires all grantees to commit “to provide the most affordable total price to the customer for 100/20 (megabits per second) service in the proposed service area.”

The state agency in charge of the process, the Department of Employment and Economic Development’s Office of Broadband Development, is still negotiating approval of Volume II with NTIA.

Since a final plan has not been approved, the state’s internet service providers are lobbying the Office of Broadband Development, and in some cases the NTIA, seeking alterations.

“We’re still in a spot where there is hope that the process can be changed,” Wolf said.

BEAD regulations require a state to submit a final proposal within 365 days of their plan being approved to select internet providers.

Wolf indicated there may be few takers. “Without people applying they are not going to reach ‘internet for all,’” she said.

The Pine Knot News edited for length this story created by news partner MinnPost, an online news site that covers the people, places and issues that shape Minnesota. For more, visit MinnPost.com.