State of Minnesota's Border to Border Broadband Fund - Community Broadband Bits Episode 119

00:05:

Danna Mackenzie: What we wanted to do was figure out what is the appropriate and right role for a state to enter into this conversation, and to incent the construction and build into areas of the state where it's currently -- no other incentives have worked to date.

00:22:

Lisa Gonzalez: Hi, and welcome once again to the Community Broadband Bits Podcast, from the Institute for Local Self-Reliance. This is Lisa Gonzalez.

During the last legislative session, lawmakers in the state of Minnesota appropriated $20 million to a grant program to encourage the deployment of broadband infrastructure. The state is now taking applications for that program until October 28th. As part of the measure, the legislature also created the State Office of Broadband Development. In this podcast, Chris visits with two of the lawmakers that were instrumental in passing the measure, Senator Matt Schmit and Representative Erik Simonson. He also visits with Danna Mackenzie, the Executive Director for the State Office of Broadband Development.

In order to get the initiative adopted, it was important to show need, desire, and support for the appropriation. Senator Schmit and Representative Simonson, both from greater Minnesota, explained how they reached out to Minnesota communities, how they took public opinion back to their colleagues, and what they hoped they can accomplish with this modest state investment. In order to learn more about the grant program, Danna helps explain the details about eligible applicants, expectations for its distribution, and some of the requirements for funded projects. When crafting the requirements for the program, the authors wisely chose to include specs that ensure a long-term solution. Here's Chris, visiting with Senator Schmit, Representative Simonson, and, last of all, Danna Mackenzie.

01:51:

Chris Mitchell: This is Chris Mitchell, now, talking with Senator Matt Schmit, of the DFL Party, from Red Wing. Welcome to the show.

01:57:

Senator Matt Schmit: Hey, Chris. It's good to join you today.

01:59:

Chris: So, Senator Schmit, I wanted to ask you, what is the need in Minnesota? Like, how do you quantify what we need here?

02:08:

Sen. Matt Schmit: You know, Chris, I think that's a great question. I think a lot of the states and regions are grappling with that. Obviously, there's different capacities out there, in terms of gigabit, you know, bandwidth, in other areas. We don't have it in much of Minnesota. But what I do is, I look back at the work that we've done as a state in the last ten years. And a lot of that work has been the result of three successive Governor's Task Forces on Broadband. And great philanthropic acts particularly coming from the Blandin Foundation. Local energy, with communities banding together to talk about how to improve their bandwidth and their technology in their own footprints. But the thing that I think we need to focus on is the fact the first Governor's Task Force here in Minnesota adopted a consensus, a set of state speed goals, that we -- that they felt would be important for Minnesota to reach by 2015. And those goals articulated a range of 10-20 megabits per second download speed, accessible to all Minnesotans, in all corners of the state. And also, a minimum of 5-10 megabits per second upload speed, accessible to all Minnesotans throughout the state. And, you know, the federal stimulus and ARRA process allowed us to start mapping the progress that Minnesota's made.

And we've certainly made great strides over the last several years. But one thing is clear: we're going to fall short of meeting state speed goals. And those are speed goals, I should mention, that were put in the state statute following the activity of that first Task Force report. And so, we're going to fall short of those. It looks like maybe 80 percent of Minnesota will hit those goals. And that's going to leave over 300,000 Minnesotans short that access, in 2015. And these are estimates, but it's quite clear we're going to fall short.

And so the question is what to do about it. And, about a year ago, we set off to go and talk to folks throughout the state, with their experiences of accessing the bandwidth they need for their day-to-day lives. We dubbed it the Border-to-Border Broadband Listening Tour. And we met with around 20 communities -- all corners of the state. We had great turnout. We had some staff join us, and the folks from the Department of Commerce were there as well. And it was just kind of a traveling show. We had a -- the Blandin Foundation sent a couple of individuals to a number of these, and recording the contents of the meetings. And it -- high-value sessions, each one of them. We had a cross-section of the community. We had folks from education, from healthcare, from the local, you know, Chamber of Commerce, local elected officials. And just regular citizens who said I take an interest in this; I want my community to be as livable, I want our quality of life to be as high as it possibly can. And we had many of these meetings, anywhere from 15, 20, 30, even 40 people plus, show up, on cold days in the Minnesota winters, to talk about the importance of broadband in their daily lives.

And the message that I heard, time and time again, is that there are pockets of poor service where we're just not cutting it, that we're not competitive, that folks living in certain parts of the state just aren't able to take part in the 21st century economy, let alone just enjoy, you know, basic connectivity. Time after time, in these meetings, these themes were repeated. One, that it really comes down to a fact that, you know, we have hard-to-reach areas in Minnesota, that regardless of, perhaps, the best efforts of some of our providers and cooperatives, there's a shortage of capital, of investment capital to extend networks. And another thing we heard is that Minnesota is really diverse -- geographically, market, and also the players who are providing services to markets. And that we can't have a one-size-fits-all approach if the state's going to do anything in this realm. And the third thing we heard, loud and clear, at every one of these stops, is that folks are tired of talking about this problem -- they want to do something about it.

05:52:

Chris: Hear, hear!

05:54:

Sen. Matt Schmit: Yeah, exactly. You've heard before, right? So it was a great tour, you know. Over 20 stops. We connected with over 450 Minnesotans around the state. And it really set the tone for what we were going to do in the 2014 legislative session. And so -- invaluable process. And I think, in my mind, that reaffirmed the sense that I had long had, that we just weren't, you know, keeping pace with where we needed to go.

And bringing this back to, you know, your original question, you know, how are we doing in terms of meeting the state's speed goals -- where are we at -- Minnesota has made great strides in the last several years. But independent analysis has demonstrated that we're actually slipping, relative to other states, and certainly relative to other countries. So, despite great efforts from the private provider community and other, you know, public efforts along the way, we're not keeping up. And there's more that we can do if we're going to take seriously the charge of being a leader in this space -- not simply meeting state speed goals but being a leader in this space.

And so, I think we've had, you know, great dialog over the last year about what to do. And I'm very optimistic we're in a position right now where we're really going to be able to move that dial, not only relative to where we were a couple years ago but relative to where other states are, and other states are moving.

07:06:

Chris: Well, let me ask you one final question. You worked with Representative Erik Simonson. And he's in an area that I think has cable coverage. You're from Red Wing, where -- Red Wing, at least, is getting some of the best access in the state, thanks to a Minnesota company, HBC -- Hiawatha Broadband. I presume some of the people who are your constituents don't have the greatest access. But the two of you made this a key issue, and build a fund that's going to be focused on serving the least-served people. And I'm just curious, what motivates that?

07:36:

Sen. Matt Schmit: Well, I just think there's a keen appreciation that this is the key investment of the 21st century. And you've heard these analogies before. You had the intercontinental railroad of the 19th century. You had the interstate highway system of the 20th century. Well, the information superhighway is the key medium for the exchange of ideas and goods and services in the 21st century. And we've got to make sure that we have access to it in all corners of the state that no one is left behind.

And just as, you know, we did 100 years ago, and the undertaking of rural electrification, this is the charge of the 21st century, to make sure that folks are connected, that they have access to the 21st century economy, and can participate in that on a day-to-day basis. It's just going to take a galvanized effort, bringing together the best of the public and private sectors and the nonprofit sector have to bear. And I'm hoping that in Minnesota, we're starting that conversation. It's not about who's doing it, necessarily, but how we're moving the dial, and how we're getting, you know, communities, individuals and businesses, families, students, farmers the vital access they need.

08:37:

Chris: Great. Well, thank you for coming on the show.

08:39:

Sen. Matt Schmit: Chris, it's always good to join you.

08:41:

Chris: And now I'm speaking with Representative Erik Simonson, from the DFL, a representative from Duluth, representing District 7B. Welcome to the show.

08:51:

Representative Erik Simonson: Thanks, Chris. Appreciate your having me.

08:53:

Chris: I'm really glad to have you on the show. I was extremely appreciative of all the work you did. You're one of the main reasons that we have this broadband fund. And I think you were the lead author in that house, and really a driving force. So, why don't you tell us, what motivated you to make sure we had this fund to spur broadband deployment?

09:15:

Rep. Erik Simonson: Right. Well, there's a couple of reasons, really. There's actually several reasons, but a couple that really stand out, for me. Being a representative from greater Minnesota, I see and hear about the need for tools for economic development all the time, both from local government -- municipalities that are trying to encourage development within their own jurisdictions, and from business as well. And one of the things that has really risen to the top, over the last ten or so years, has been this need for better broadband capabilities here in Minnesota. This market, this economy in today's world, really relies upon good Internet service. And it doesn't really matter what industry you're in. It seems to be across the board that there's a definite need. And Minnesota has really started to fall behind, if you will, the curve. And this is one of the things that prompted me to get involved with this bill. Because I saw the, you know, the great potential for greater economic development -- especially in greater Minnesota, outside the metro.

10:22:

Chris: That actually leads to my second question, which is, what do you think we're going to see happening as a result of this fund? And how are we going to know if we're successful?

10:32:

Rep. Erik Simonson: Well, I think, you know, what I think will happen is, we've got this fund, now, that's got $20 million in it. And the language around the fund is designed to promote, you know, strong public-private partnerships. And really try to capture as much private investment as we can in systems. And my hope is that we see a significant amount of applications come into DEED for these dollars. Because I think the need is out there. I think it's been demonstrated. And now, with this fund set up, and the application period opening, I think we'll see a significant amount of applications that will far exceed the amount of money that we've appropriated -- which, in theory, should demonstrate the need for a further appropriation for Minnesota.

11:17:

Chris: Would you say, then, that you expect that a number of people will be surprised at just how much motivation there is in greater Minnesota to invest in better networks?

11:27:

Rep. Erik Simonson: That's my assumption. You know, I think that is what I believe, based on the conversations that I've had throughout Minnesota. I think, you know, there's this significant need out there. I don't think anybody questions that. It's a matter of how we capture that need, and turn it around to provide something that will facilitate further investment, and building these networks out, and providing the service that folks need. So, I'm expecting to see a pretty significant amount of applications.

11:56:

Chris: And one of the things that I think people should realize is that you and Senator Schmit really pushed hard for a $100 million fund. And we're going to see a continued discussion as to how much as to how much money the legislature should put into this. How do you recommend people get involved to make sure that their views are being heard, in terms of needing more investment in these networks?

12:19:

Rep. Erik Simonson: Right. And the $100 million came as a recommendation from the Broadband Task Force. And I think it's important to put that into perspective, that, even at $100 million, that doesn't come anywhere near meeting the statewide need, if you will. So, $100 million is really sort of a drop in the bucket, in terms of total need. And we, of course, settled and received $20 million. But as we go forward, I think that, now that we've got a process in place, and we've got an ability for municipalities and private business and others to kind of demonstrate their need through a process, I think it will become fairly evident about the size of the need here in Minnesota. And I think people really need to make sure that they go through the application process, and, more importantly, talk to their own legislators, both in the House and the Senate, and the Governor's office, about, you know, what the need is in Minnesota. Because, in my mind, the Internet really has become what I'm calling, basically, critical infrastructure now -- no different than electricity or water and you know, sewer lines were many years ago. This is the need of today. It's the need of tomorrow. And if Minnesota wants to remain, you know, nationally and globally competitive, this -- these are the types of things that we need to do.

13:39:

Chris: All right. Well, thank you for joining us.

13:41:

Rep. Erik Simonson: You're welcome. Thanks, Chris. Appreciate it.

13:43:

Chris: I'm speaking with Danna Mackenzie, the Executive Director of the Office of Broadband Development for the state of Minnesota. Welcome to the show.

13:50:

Danna Mackenzie: Thank you. Glad to be here.

13:52:

Chris: Yes. I'm glad you're there, also, actually. I was thrilled when you got the position. You came down from Cook County. And it's a very good thing for the state to have you in that position. So, thank you. I understand that you have some checks you're going to be cutting in the near future. There is a Broadband Fund that some people fought very hard to establish, to make sure that Minnesota has more investment in Internet networks. Can you tell us what this fund is all about?

14:22:

Danna: I sure can. Yes, the legislators and the Governor put into place a general fund appropriation of $20 million in 2014, to really look at -- how can the state incent the deployment and the build-out of broadband infrastructure, out into the places that are least served, and most difficult to serve, frankly. And so, this $20 million fund is really our -- the starting point of the conversation for the state on what the most appropriate involvement for the state is, in that equation.

14:55:

Chris: What is the actual name of the fund?

14:59:

Danna: It is the Border-to-Border Broadband Development Grant Program.

15:04:

Chris: So, we have this Border-to-Border Fund -- I'll just simplify it -- and it's $20 million. How is that going to be split up, ultimately?

15:12:

Danna: Well, it's really focused on the un- and underserved areas of the state, like I mentioned, which means that we are expecting to see applications from all over the state for projects that probably look at serving the small pockets of areas that are unserved. So, we anticipate -- this grant has a legislative cap of $5 million per award. So, obviously, a $20 million fund isn't going to go a long way. But we anticipate anywhere from 15 to 50 applicants, and we hope to fund anywhere from 5 to 20 projects, using that funding source. And, again, the projects that are eligible are focused on unserved areas. And that funding is actually eligible to be distributed to a wide variety of applicants. And the legislators were -- deliberately wanted to welcome all comers who had the wherewithal and ability to build and sustain the project into these unserved areas. So, the legislation outlines that the money is available to both for-profit businesses, including existing providers, cooperatives, nonprofits, government entities, tribal entities. So, it's a pretty wide variety of eligible applicants that we expect to see come in the door, here, in the next four weeks.

16:43:

Chris: Well, I think that was -- I was very glad to see that. And, in particular, I just think it's always noting that, for states that do have a number of reservations, that -- people sometimes forget, but it's very important to include the tribal entities. Because if you think rural Minnesota has it bad, a lot of times, the tribal areas are even lacking access to telephone, around the United States. So, it's just an important thing for people to be aware of.

17:07:

Danna: I agree. And I think it will be interesting to see how the tribal governments respond to this opportunity.

17:13:

Chris: So what are the, sort of, requirements that come along? I remember actually making a recommendation that there be a number of more requirements than were ultimately adopted. But there's one in particular that I think is just a very smart move. So, If I was to get some of this money to deploy a network, what would the state require of me if I accepted it?

17:35:

Danna: I think the biggest one, other than the ones we've already mentioned -- which is to be serving the un- and underserved areas -- is that any technology that's funded using these dollars must be scalable to at least 100 megabits per second connection bi-directionally, which -- obviously, the intent of that was to make sure that these are long-term investments, and not something that might turn around and become obsolete in a very short period of time. So, while the language of the grant and the law is agnostic as far as the technology used to deliver those services, the applicants need to prove, through engineering documents, that anything that they intend to install is, in fact, scalable to those levels.

18:19:

Chris: Yeah. I'm just glad to see that, because, I think, in some areas, we've seen government funds used to build networks that some might say were obsolete before they were finished. And I'm very glad we won't be seeing any of that here in Minnesota. One of the -- the last question I have for you, actually, is: I think Minnesota is really leading the way for a number of other states in this, because, while we've seen a lot of elected officials say broadband's really important, and we need to figure out how to get better connections, Minnesota has actually put out $20 million. And a number of us hope for more. But $20 million is more than most states are putting up right now. So, what other kinds of lessons might you suggest to similar people in your position in other states, as to what they can learn from Minnesota?

19:05:

Danna: Well, as you might guess, we're a little bit early, as far as the grant itself, in being able to discern what lessons we're going to learn from that process. But there are a couple of things that have kind of led us up to this point that might be useful to consider. And one of the first I would mention is the Task Force. It's really a useful policy mechanism to have an external group, or body that is charged with deliberating on the value of various broadband policy options. And the fact that that group includes both public and private representatives is an important piece. It provides information and informs legislative discussion, in such a way that gives them, really, kind of a jump start on the debate, as they move into a fast-moving session. So -- and that information is also very useful for a Governor's office, when determining their position on an issue. So, I would say that somewhat independent, or outside, group, looking at those issues, is a helpful policy lever.

The second thing I would note is, the creation of the Office of Broadband Development is, in our case -- really has shown its value, in creating a focal point for broadband issues in state government. I turns out there's a lot of moving pieces that are happening in various areas and agencies. And, in many cases -- in fact, a lot of cases -- not even with the awareness of the people working on it, how it dovetails and is important to broadband advocacy and furthering broadband in the state. So the idea that the state's created that focal point. And, which also, in turn, acts as another policy lever, in moving policy and programs forward.

And I think the third piece is just the beginning lesson of the incentive program. What we wanted to do was figure out what is the appropriate and right role for a state to enter into this conversation, and to incent the construction and build into areas of the state where currently no other incentives have worked to date. And that includes the successful business model. And we are already seeing that the communications between providers and communities are changing, and moving forward in a way that we hadn't seen prior to having this incentive program on the table.

So, those are kind of my three first lessons.

21:41:

Chris: Now let me just ask you, as sort of a bonus comment: There was some concern from some, as this bill was making its way through, that there might not be enough interest from parties in Minnesota for a fund. Do you think there's any danger that you won't get enough applications?

21:57:

Danna: I am fairly comfortable that we're going to get plenty of applications. We are in daily conversation with communities and providers that are working on applications. And, just very briefly, you are probably aware, one of the things we used was the FCC's Rural Broadband Experiments Letters of Interest, to gauge volume of demand. And with over 60 letters of interest, and $600 million in proposals in that list, we're pretty confident that there is a demand out there.

22:29:

Chris: And that was just for the state of Minnesota, from those projects, right?

22:32:

Danna: Correct. Yes. Thank you for that clarifying statement.

22:34:

Chris: Well, thank you so much for coming on this show. And we wish you luck in evaluating all the applications.

22:39:

Danna: You're welcome. Thank you for the opportunity.

22:42:

Lisa: If you're interested in learning more about the Border-to-Border program grants, you can visit the Minnesota Department of Economic Development website to download an application and other relevant materials. Remember, the application deadline is October 28th, 2014. So don't delay.

Send us your ideas for the show. E-mail us at podcast@muninetworks.org. Follow us on Twitter. Our handle is @communitynets. Once again, we want to thank Jesse Evans for the song, "Is it Fire?" licensed through Creative Commons. And thank you for listening. Have a great day.