MN BEAD Labor Requirements: More Problems Than Solutions? - Episode 602 of the Community Broadband Bits Podcast

Jill Huffman (00:07):
We were so excited for the BEAD program when it was first announced. Just to understand the rules, let alone comply with them. For a company of our size will be a struggles.

Christopher Mitchell (00:17):
Welcome to another episode of Community Broadband Bits podcast. I'm Christopher Mitchell at the Institute for Local Self-Reliance, and I think I might've just missed a word there. It's been that [00:00:30] kind of a day. I am nonetheless excited. This is a conversation that I was hoping to have because it's an area that's topical right now with legislation that has moved forward in Minnesota. And so we're going to be talking about labor requirements and things related to that in Minnesota. That's something that's come up in a variety of states, but here we are in Minnesota with Brent Christensen, who's back for his third time with the Minnesota Telecom Alliance. Welcome back.

Brent Christensen (01:00):
[00:01:00] Thanks, Chris. Great to be here.

Christopher Mitchell (01:01):
And then we also have for the first time, Jill Huffman, who is the general manager of Spring Grove Communications and MiBroadband welcome.

Jill Huffman (01:09):
Thanks Chris. Happy to be here.

Christopher Mitchell (01:11):
Spring Grove Communications and MiBroadband, I believe at least one of those is a cooperative, but I didn't do my research fully. So can you just share quickly with what Spring Grove Communications and MiBroadband are?

Jill Huffman (01:22):
Sure. So Spring Grove Communications is a cooperative serving broadband subscribers in Houston County, Minnesota. [00:01:30] MiBroadband is a partnership of three area cooperatives, one being Spring Grove Communications, the other two being Mabel, cooperative Telephone Company, and the third my Energy Cooperative and electric cooperative serving Southeast Minnesota. So also a broadband provider in southeast Minnesota and northeast Iowa.

Christopher Mitchell (01:48):
Great. And I went to high school in Rochester, spent some time there. My family was there for quite a bit. So I have a love for Southeast Minnesota, and any chance I get to get down there for John Hardy's in Rochester, [00:02:00] I'm down for it.

Jill Huffman (02:02):
Good barbecue.

Christopher Mitchell (02:03):
And so Brent, this in some ways also reminds me of where I learned a fair amount about Davis Bacon was after the 2009 stimulus with BTOP where we saw Kevin Byer and others and actually Municipal Broadband Network, Wisconsin Reedsburg, all trying to figure out how to use federal dollars in ways that did not really disrupt their business models. And [00:02:30] I think what we all share is that we like to see the notion of prevailing wage, the idea that whether it is federal or state dollars, public dollars should not be used to depress the working conditions of people. And yet I find that it's a program that noble intent has been poorly enacted. And so when I dug into it for that, and also in other ways when I was dealing with some paperwork for an unrelated thing, I found that the [00:03:00] wage schedules for people, particularly in rural areas, was out of whack with what everyone was really paid. And so Brent, if I can go to you first maybe to just share, this is not a new issue, but it's something that I feel like has come up before. Yeah,

Brent Christensen (03:16):
It's definitely not new. It's been around for quite a while in Minnesota. They do it regionally and by county instead prevailing wage. And it's not just making sure that we're paying a fair wage, that's the [00:03:30] last of it. The reporting requirements for small companies are very onerous, but the biggest problem that our folks have is the classifications don't match up with what we do. So we had an example that I used in the legislature this session about a company in northern Minnesota that a fiber splicer. It was a project that required for prevailing wage. So they didn't have a job classification for a fiber splicer, so they used a high voltage electrical alignment as [00:04:00] the comparable, well, those aren't even remotely closed. So if we're going to do prevailing wage, then the state and the feds have got to have telecommunications jobs and prevailing wage categories.

Christopher Mitchell (04:12):
Yes. And Joe, I don't know, you've dealt with this before as well. I'm assuming

Jill Huffman (04:16):
We have not done a prevailing wage project, mostly because we don't have the staff to handle the administration side of what prevailing wage requirements would require us to do. That is something that knocks [00:04:30] us out of those types of programs. Being a much smaller provider, we just don't have the resources and the bandwidth. And if we look at hiring consultants, the investment on the expense side, your grant dollars don't cover your expenses to administer the program. And so that would severely cut back on the investment we would be able to do in capital infrastructure just based on what we would have to do to administer prevailing wage.

Brent Christensen (04:54):
Well, and if I could just piggyback on that, spring grove and MiBroadband have done [00:05:00] federal grants. I mean, they've been active in the border to border grant program. I don't know, Jill, how many? Three art reconnects. Four.

Jill Huffman (05:08):
Yeah. Amongst our entities, we have two USDA reconnects that are mostly through the construction phase. We have one that's waiting to start. We have four border to border grants from prior Minnesota border to border grants, and then we also have some in Iowa. So we have done significant grant work. It's just none of those have had those requirements [00:05:30] and those administrative requirements that we have had to do to be compliant in those programs.

Christopher Mitchell (05:36):
Well, one of the things that I think people should appreciate is something that I've come to realize when I started doing this work. And as I mentioned back actually in 2009 when we started learning more about some of the challenges that the smaller nonprofit, which includes both municipal and cooperative models, had in common with for-profit, locally rooted networks that have just [00:06:00] a really wonderful record of investing in Minnesota in the hardest to reach areas was that they all shared the challenges that you've just listed, Jill. These are companies that are not just small, but are actually quite tiny comparatively, but they might have a hundred year history of building and providing this essential service. And so for me, when I dug into it, one of them, the issue that you listed, Brent with a high voltage electrician, I came across [00:06:30] someone who their people were compared to construction workers in Madison and they were in a rural area.

(06:37):
And one of the things that was pointed out to me was what it's like to have a part of your crew have to get a big raise for one project and everyone wants to be on that part of the crew and then they're going to come back and they're going to be paid normal wages. But I think that's one of the things I think people should appreciate is that there is a history in telecom of some firms at sometimes using poorly [00:07:00] paid or poorly trained contractors. But that is not the case for a majority of these projects or perhaps even any of them I don't know fully. But the people that I've met working these crews are generally people that have been doing it for a long time. They like the job, they like being able to work close to home and they're being compensated in a way that seems appropriate. So I dunno if you can share any of your knowledge about that with your clients, Brent.

Brent Christensen (07:23):
Yeah, I can. So this

Christopher Mitchell (07:25):
Session, I'm sorry, I used the word clients, but I didn't say specifically members. Members. So [00:07:30] you're a trade association that includes some of the larger companies, but almost all of the smaller companies in Minnesota.

Brent Christensen (07:36):
So this session when we were testifying on bills, we had some opposition or some proponents for some bills that we were opposing that got up and we're talking about the low wages, the poor safety conditions and all this stuff. And they were going on and on. So it got a little under my skin and I took 'em a little too personally. [00:08:00] And because MTA has operated a safety program for over 40 years, so when you talk about telecom safety, it gets a little personal for me. So we had discussions with one of the unions in particular. We sat down and they were going, but we are going to these sites, we're seeing this stuff. In that conversation, we found out that there were some out-of-state over builders that are building in the metro area that are bringing in contractors that they're not wrong. They're paying low wages to R in [00:08:30] these people to do these rush jobs, but they're not our members.

(08:34):
They're not the people that have participated in the border to border grant program for over 10 years. They're not the people like Jill's company that do the reconnect and they're not the ones that are going to participate in BEAD. And that's going to be predominantly our members of the cable guys or the rural electrics that do broadband. And we have a good track record of safety and paying good wages. And we have to, because if we don't, we're not going to get the workforce. And so [00:09:00] it's a little bit of a carrot and a stick thing. And the prevailing wage requirement is really the stick when they really should be using the carrot and they're, they're going to learn the hard way that the carrot works and the stick. I mean, our whole border to border grant program is built around the carrot, not the stick. And now they're putting the stick out there and that's going to cause people to not participate in BEAD, to pull back on the expansion projects that are doing and it's going to harm [00:09:30] the deployment of world broadband.

Jill Huffman (09:31):
And if I can piggyback as a community-based provider, we know our employees. I mean, I started my morning today with an all employee meeting and all of my employees, I know them. I know their spouses, I know their families. We do other things and we have been proud in our entire history to be a competitive employer in many of our areas where we are community-based providers. We are known to be the best employer in town or in the county. And that speaks to me [00:10:00] that we don't have a wage issue or a benefits issue. We are already doing those things because this is our work family. We go to church with each other, we attend school events with each other, and that also means we want everybody to come home safe Safety is a priority, and my companies are a member of the MTA safety group, and we participate in that program and we're very grateful that program exists because as a small provider, we need that service.

(10:27):
We would struggle on our own to have such [00:10:30] a robust program that I can count on to keep my employees safe. And obviously that is our top priority. We don't ever want to have to go to employee's house and report an incident with an employee to their family members. There are family, and that's part of being community-based providers. So we feel like we're already doing all of these things. We're competitive in wages, we're competitive in benefits. We do professional development and career development. We do employee coaching and mentoring, and then we have a great safety [00:11:00] program on top of all of that, not just in construction safety, but in all safety areas.

Christopher Mitchell (11:06):
Well, I appreciate that, and I've seen that as well when I visited these networks is that these are often jobs that are done by people who love doing it. They're not in it for one year and then out and chewed up by the system. I'm not going to use an example. I was going to say an Amazon warehouse worker. I was going to say, but I also, my organization has strong views on that. Not everyone else always. I don't want [00:11:30] to get into that. So we have limited time. We were talking about this in part because the Minnesota legislature passed the bill and the governor's likely to sign it regarding the BEAD program, which will be distributing a lot of money across Minnesota. I've previously railed about the fact that this is a frustrating thing for me. Funny enough, Brent, I'm sure you can see the humor in it.

(11:51):
I think it's inappropriate to tax the proceeds of an award to build broadband in areas where it's a government thing that we want to have done, and [00:12:00] then we're going to tax both for-profit providers as well as Jill. I think some partnerships are vulnerable to this tax as well. We're going to lump all these additional requirements on that are perhaps well-meaning, but poorly thought out and executed. And so that is frustrating. I was speaking yesterday with someone from another state who is building a, I would say a celebrated nonprofit network they have on the order of 50 million in funds that they've received to help [00:12:30] build into a very challenged area, and 20 million of it came with prevailing wage requirements that again, he has to pay his people. They're all licensed electricians and he's just like, but they're not licensed electricians, and it's really hard to then for 51 million worth of work, he has to, because of 20 million, he has to overpay everyone. And one of the things we were talking about was that it's actually really absurd for licensed electricians then to feel like they're being demeaned because they don't [00:13:00] a person who is learning on the job. That is a good way to learn for a lot of these outside plant jobs. But nonetheless, a licensed electrician is a thing that takes a long time, an apprenticeship.

Brent Christensen (13:11):
Yeah, yeah, yeah. Wait a minute. I just spent all that money on achieving that status and now everybody's going to get paid that I didn't have to.

Christopher Mitchell (13:20):
Yeah,

Brent Christensen (13:20):
I get that.

Christopher Mitchell (13:21):
So it is just like, it's one of those things that I feel like there's a real ignorance about how these job model, how these jobs work. And [00:13:30] the thing that frustrates me is a lack of understanding of the difference between a company that is trying to build a network so they can flip it to a set of ignorant investors in the metro versus people that are building infrastructure that is supposed to be solving a problem for lifetimes of folks.

Brent Christensen (13:47):
They're trying to squeeze everything into one size fits all box and it doesn't work that way. I had reached out to the administration and we've tried everything to remind them that we've been their partners [00:14:00] and we have been active in true border to border broadband for all Minnesotans. I mean, we share that one goal. There's going to be a variety of solutions that are going to get us there. There's not a one size fits all. You got to find the right solution for the right problem. But one thing we have working for us is we have an office of broadband development. They're getting pressure not only from the state on this issue, but they're also getting it from NTIA and the US Department of Commerce. We're [00:14:30] forcing them to make up for the fact that the A CP money ran out. So they're going to put this on the backs of the providers and say, you've got offer this program. Well, that's great if you've got tons of business customers that you could spread this out over. But when you're a small organization like Spring Grove and MiBroadband, you don't have the customer base to self-fund the low income programs and to make that a requirement, they're not going to participate. And if they don't participate, then what happens then people don't get broadband.

Christopher Mitchell (14:59):
We see that with [00:15:00] CTC built in network that's connected Fort Boys, and I'm doing a lot of work with tribes on broadband. And Brent, I appreciate the support that you've shared with us to help in resources to make that happen. But yeah, they have to pull out of Fort Boys because of the acp. They can't just take that hit. And so you take this network and I'm sure Jill, you have areas that you've built with federal dollars that now you will just not be able to serve at the same [00:15:30] level because a big company that has 30 million customers can find a pot to pull money from, but you can't.

Jill Huffman (15:41):
And as we continue, as we've made good progress through the border to border program to date in the state of Minnesota, many providers have come forward and done a lot of good solid work and we've made progress, but that means the areas that we're getting down to are the least financially feasible projects. I don't [00:16:00] think I'm the only provider saying we went after the most financially feasible projects first because they're closest to us by geography or due to terrain. You're familiar with southeast Minnesota. We have some rock issues here. So we are getting to the ones that are harder and harder, and for us being cooperatives, we're able to extend that feasibility a little further out than some other providers maybe would. But there already a little bit tenuous at best from a financial feasibility study. And to lose [00:16:30] the A CP program and have rate setting come into place being required to offer a package at a specific price that will be statewide, if not nationwide, maybe just won't work for our area. Then you add additional administrative costs, you add additional construction costs, and all of a sudden BEAD looks less and less like an opportunity to do what we've set out to do, which is bring broadband to those on an underserved locations in [00:17:00] our area. And we've been working hard for six years and it's hard to reach this cliff where now we're like, now what are we going to do?

Christopher Mitchell (17:08):
There's a couple of things I want to hit before we finish up because one is, and the last thing will be what we can do about this still, and I'm hoping that there's some wiggle room for the legislature to improve this to work before the money's handed out because there's still, we're hoping that the money gets handed out more rapidly for some reasons, but I think the legislature will be meeting [00:17:30] before anyone's drilling anywhere. But one of the things we talked about, we haven't talked about was the requirement for certification requirements for drilling. And it just so happens that I'm coming literally from yesterday, from working in a, we did an event in the yard of the Bureau of Street Lighting in Los Angeles, which is building fiber underground in LA to try to encourage more investment and open access network that can be shared.

(17:59):
And I was speaking [00:18:00] with people because they demonstrated the directional boring machine, and I was talking with them about how they got into the work. It's a question that comes up with a lot of the folks we work with. And they were saying that for many of them, they started on the crew doing more simple manual labor and then they observed and they were trained in on the job over a period of three months from when they started learning how to operate the machine to when they were actually in the seat operating it. Los Angeles is, I would say, a town [00:18:30] that is known for regulating to make sure that things are done in a safe way. I see the same thing. I mean it's actually when we do our tribal broadband bootcamps, we talk about the beauty of working in telecom is that you can come in with a basic set of skills, a willingness to work, to show up on time, to put the hours in, and you can progress up to a very highly paid job without having to go through long programs and classroom work because that's something that is not appealing to many of the people that we're working with in that context.

(19:00):
[00:19:00] And so it sounds like Minnesota's now requiring this, and Brent, I think you can maybe describe it briefly what the requirement is.

Brent Christensen (19:06):
Yeah, first of all, you just pretty much read my biography. I mean, that's how I started out and I didn't go to school for this and here I am. Yeah, they totally missed the mark on the broadband labor bill. They were so focused and it was written by people that don't understand our industry, and it was so focused on directional boring to all else. And I feel like we beat our head against the wall trying to explain [00:19:30] it to 'em. But the way that the bill passed is everyone that works in the installation of broadband, regardless of their job, is going to have to be trained and certified in directional boring, whether they do that or job or not, and whether there's a directional boring machine onsite or not. So if you're operating a plow machine or not just, but you're hand digging doing those things, you're going to have to be certified in a skillset that you may or may not do.

(19:58):
And to your point, that's [00:20:00] how you learn to do it is by getting in there and proper instruction and stuff. So that's one of the problems. The other problem is the certification requirements are going to be put out by the Department of Labor and Industry who have no idea how broadband installation is done. They admitted it. They said that the only saving grace at the last minute, we were able to get some language in there that says that they have to consult with the office of broadband development. If not for that, who knows what they'd come up with And it's [00:20:30] totally missed the mark. The only saving grace in all this is these requirements don't go into effect until July of next year. And some of 'em go off, get pushed off until January of 26. So there is time to fix this, but it's a train wreck waiting to have it

Christopher Mitchell (20:49):
Right. We in a half hour. It is difficult to cover the various requirements of BEAD, and I have had guests on that have made the case that this is a 42 and a half billion dollars. Of course it's going to come with some conditions. [00:21:00] And I spent a lot of time, I've spent a lot of time myself feeling like those are not very well l designed and applied. I feel bad. I know some of the people that are working at NTIA and they are good people who are doing their best and overwhelmed, but I'm glad to hear you say that because I'm hoping the next legislature we can do some work and I'll be happy to help with that to help the legislature understand this. I mean, one of the things, what I love telling people about directional boring, you just need people that are just standing there with shovels to [00:21:30] make sure as you're crossing other infrastructure, you're not hitting it. A person that's just sitting there with a shovel does not need to know how to jump into the seat in a moment's notice. That's not how it

Brent Christensen (21:37):
Works, right? They know they need to know how to work the locator, so they need to know where the drill head is and they need to make sure that they're going up and around or down or however it needs to go to stay away from everything else. That's oversimplification for sure. I mean, it's not an easy job. I've actually done it and wasn't very good at it, so I didn't do it very much. But to have people and require [00:22:00] 'em to be focused only on that one part of the overall construction job, I mean that construction of broadband is far more complicated than that. And to be focused on that one thing is just totally missing the mark.

Christopher Mitchell (22:12):
So Jill, as we're running out of time, can you just, I share a little bit. I mean you, you're coming into this, I feel like from my talk with Brent, I'm sure that you're the same way as everyone else that I've met, which is that you have a pride, but you also have a weight on your shoulders of making sure that you are making decisions that your business will be able to survive [00:22:30] in a time of unknown labor costs, of a variety of other challenges that are coming down the pike. And it's got to be just frustrating to try to go to bed at night thinking about is this worth getting into or not when you don't even have a full sense of the scale of responsibilities that will come with taking the money.

Jill Huffman (22:47):
So for six years, we've been very focused on bringing broadband to UN and underserved locations that surround us in every direction north, south, east, west. That's been a marching mission from our partnership [00:23:00] board, and it's so appreciative for our board of directors who have been committed to that for so long. And we were so excited for the BEAD program when it was first announced thinking this is it. If we can get here, we should be able to meet our mission and reach those last locations that we've been working towards to now be here at the moment where we think, oh boy, I'm not sure this is the right fit for us. I'm not sure we have the resources we will need to do it, do it well and do it right. [00:23:30] Just to understand the rules, let alone comply with them for a company of our size will be a struggle. So it is very stressful now to be working with our board of directors to say, if this all stays the way that we see it today is this, and this is no longer an option for us now, how else could we go about meeting our goal and serving our members? Because again, we're owned by cooperative. So these are cooperative members of one of our owners, and that [00:24:00] is our driving mission is to bring this service, and we're just really backs against the wall to figure out how to get it done.

Christopher Mitchell (24:06):
And so we've seen in Illinois rules that I would argue were not the best executed, resulted in cooperatives and local ISPs having to give the money back. And so this is not something where I can see some people being like, oh, ISPs are just grumbling about all this free money. This is actually a real thing that we really have to wrestle with. So [00:24:30] Brent, you'll get the last word. I think

Brent Christensen (24:32):
Just echo what Jill has said and what you've said. I mean, you've outlined argument very, very well, and it's not just BEAT is the shiny object right now, but we've still got money in the border to border grant program that's going to be going out the door. There's a lot of other federal issues and state issues that we're dealing with, and the roadblocks that they're putting up in front of providers is going to slow down the goal that we all have [00:25:00] of making sure every Minnesotan has broadband.

Christopher Mitchell (25:02):
And I'm going to take the last word back, one last thing I want to say, which is that these over builders in the metro are not going to change their practices because of this. That's the part that just really gets me is that if that's the challenge that we want to fix, and I share CWAs concerns and I'm a willing partner of CWA in many things, but this is not the way to address those very real issues that should be addressed. [00:25:30] Okay. Well, I really appreciate your time for both of you coming on the show. Thank you. And I hope that we're able to improve this and make sure that you can get the money and make these connections in the way that we all want to see it get done.

Brent Christensen (25:44):
Well, thanks for having us on. I mean, I always enjoy doing this, so happy to help. Anytime.

Jill Huffman (25:49):
It was great to meet you. Thank you so much.

Ry Marcattilio (25:52):
We have transcripts for this and other podcasts available@communitynets.org slash broadbandbits. Email us@podcastmuninetworks.org [00:26:00] with your ideas for the show. Follow Chris on Twitter. His handle is at Community nets. Follow community nets.org stories on Twitter, the handles at muni networks. Subscribe to this and other podcasts from ILSR, including Building Local Power Local Energy Rules, and the Composting for Community Podcast. You can access them anywhere you get your podcasts. You can catch the latest important research from all of our initiatives if you subscribe to our monthly newsletter@ilsr.org. [00:26:30] While you're there, please take a moment to donate your support in any amount. Keeps us going. Thank you to Arnie Sby for the song Warm Duck Shuffle, licensed through creative comments.