North Dakota Nearing 100 Percent Fiber Connectivity

North Dakota Welcome Sign

With the incoming Trump administration and the ascendance of GOP leaders taking aim at key aspects of broadband expansion initiatives embedded in the Bipartisan Infrastructure Law, industry insiders expect the $42.5 billion Broadband Equity, Access, and Deployment (BEAD) program to likely get a major facelift in the coming months.

GOP Senate leaders have signaled they will push for BEAD to be scaled back or reconfigured.

One way they may do that is to remove the law’s preference for funding fiber network deployments and create a path for subsidizing Musk’s satellite Internet company, arguing that Starlink would be a more cost-effective solution to bring broadband to rural America.

Late last week, in fact, NTIA released its “Final Guidance for BEAD Funding of Alternative Broadband Technology.” And while the updated guidelines still considers fiber deployments as “priority broadband projects,” the agency administering the BEAD program now explicitly says that states can award “LEO Capacity Subgrants.”

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North Dakota State Seal

Meanwhile, like snow falling quietly across a prairie, an impressive milestone is inching its way to completion in North Dakota. In one of the most rural parts of the U.S., the Peace Garden State is close to being the first in the nation in which every home and business has (or will soon have) access to fiber service, the gold standard of Internet connectivity.

“I think we have the best chance possible to be the first — and maybe the only — 100% fiber state. We are in a unique position that we have the dollars to pay for it,” Brian Newby, the State Broadband Program Director recently told Telecompetitor.

‘Only About’ 2,000 Locations Left To Reach

An estimated 95 percent of households in North Dakota – including nearly eight out of 10 farms – have access to broadband at speeds of at least 100 Megabits per second (Mbps) while close to 70 percent have access to Gig speed fiber service.

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North Dakota Fiber Access Map

It’s why the state’s BEAD allocation is set at only $130 million, just $30 million more than the $100 million minimum.

The relatively small amount of BEAD funds for North Dakota in comparison to other states is because there are not many unserved locations left in the state.

Still, state broadband officials claim $130 million from the infrastructure law will be enough to reach all of its broadband serviceable locations with fiber.

As it stands now, Newby told Telecompetitor, the state is using $37 million in federal Capital Projects Funds, courtesy of the American Rescue Plan Act, to build out fiber to 2,200 locations. After that there will only be about 2,000 locations left in the entire state without access to fiber, Newby estimated.

Those funds include grant awards for Halstad Telephone Company (Cass, Grand Forks and Traill Counties); Moore & Liberty Telephone and Griggs County Telephone (Steele County, Cass County); Northwest Communications Cooperative (Portal, Burke County); Nemont Telecommunications (East Westby-Divide County, Williston-Williams County); Polar Communications (Walsh, Grand Forks, Traill, and Steele Counties); Red River Communications (Rural Wahpeton, Richland County); and West River Communications (Grant County)

“If you were to go nuts and say (the remaining 2,000 locations) will cost twice as much as the locations reached through Capital Project Funds, that would be $75 million. We’d still have $45 million for non-deployment efforts, after administrative costs.”

Co-ops and Independent ISPs Lead the Way

The digital landscape in North Dakota is a testament to the demand and desirability of deploying fiber, as well as the economic feasibility of doing so – even in extremely rural areas with rugged terrain.

How North Dakotans find themselves in such an enviable position (ranked among the 10 best states for Internet connectivity by US News and World Report​) can be attributed to a mix of public and private investment led by a small cadre of non-profit member-owned cooperatives and a handful of small independent Internet service providers (ISPs).

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North Dakota case study cover

North Dakota’s fiber boom was built on the back of the Obama administration-led American Recovery and Reinvestment Act passed by Congress in 2009, which established the Broadband Technology Opportunities Program (BTOP) and funded the creation of the state’s broadband office within the North Dakota Information Technology Department, as we detailed in a case study “How Local Providers Built the Nation’s Best Internet Access in Rural North Dakota.” The law also funded the deployment of hundreds of miles of fiber, connecting the state’s universities and anchor institutions.

At about the same time, the state’s 18 small independent telcos,15 of which are cooperatives, were eager to get fiber to its sparsely populated rural regions outside of its major population centers in Fargo, Bismarck, and Grand Forks where the cable monopolies were focused.

To reach the 96 percent of the state outside of its city centers, those small independent providers began working with the National Information Solutions Cooperative (NISC), an IT cooperative that supports rural utilities and independent broadband companies.

As former NISC sales manager Kim Robinson told ILSR in episode 288 of our Community Broadband Bits podcast, in the mid to late aughts (2005-2009) “we were seeing the demand for more and better Internet speeds and access.”

“Most of the money that we put into (fiber) projects … were through loan programs,” recounted Robinson, who now serves as chief growth officer for SRT Communications, a Minot, North Dakota-based telecommunications cooperative.

“There were some stimulus grants available and some combination of stimulus (funds) and loans. But the majority of it was loans, for the co-ops as well. A lot of it was just reinvesting back in the network.”

“How we operate the business is a lot different than you'll see with the big guys. Our goal isn't to put money back into shareholders pockets. Our goal is to provide the best service possible and keep reinvesting in that network.”

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North Dakota Schafer

Robinson said the business plans called for a 40 percent take rate in the first five years of build-out.

Thanks to a marketing campaign several months before local providers began building the networks, “we were at 45 percent before we started putting fiber in the ground."

"After the first year," she added, "in those first areas we built, we were over 50 percent or close to 60.”

By 2018, just two years before the pandemic underscored the need for universal broadband access, “the reality is we're seeing better fiber builds in the rural areas than the urban areas,” she said.

“While there are cable companies that are picking up the slack there, we aren't seeing as big of a movement. They just haven't made the same investments in the infrastructure so the service in those areas I think is subpar to the very rural areas of the state.”

All Fiber or Close Enough?

Even now, four years after the onset of the pandemic, the dynamic remains the same – with cooperatives, independent telcos, and tribally-owned ISPs like Standing Rock Telecommunications leading the charge.

The one hiccup to reaching the state’s goal that Newby sees is whether a waiver for ISPs having to pay federal income taxes on the BEAD grants will be granted. “I have providers saying if they have to pay the federal income tax, they won’t do it,” he said.

Also, Newby added, is a concern that NTIA will reject some proposed BEAD locations for fiber connectivity because of the high-cost of deploying fiber to a few outliers: “what we don’t want to happen – we’ve been saying this pretty publicly a lot lately – is to have $100,000 budgeted for a location and have NTIA say, ‘That’s too much, so you have to use alternative technology.’”

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NTIA logo

The issue Newby raises – whether the NTIA will allow the state to use BEAD funds to deploy fiber to even extremely high-cost locations underscores dual issues with the BEAD program that’s coming to the fore in North Dakota faster than in other states.

The first is the burden of federal taxes on the grant winners alluded to by Newby. The second is whether it is a wise-use of BEAD funds to forgo the use of alternative Internet access technologies to connect the most-expensive, hardest to reach locations.

The upfront capital costs of building fiber networks are certainly more expensive than other types of Internet access infrastructure, though fiber is indisputably superior. It’s the only technology that can handle the increasing demand for bandwidth and symmetrical upload speeds both now and 50 years into the future. Also, fiber networks, once built, are easier to operate and less expensive to maintain, as North Dakotans are now seeing.  

Still, there’s a valid argument for making fixed wireless or LEO satellite broadband like Starlink a part of the BEAD mix, as Maine is doing and New Mexico is considering.

Depending on the state and the geography, some unserved locations in rural areas may require $100,000 for a terrestrial wireline connection – with a mix of homes that are only inhabited for a few weeks a year by the family of billionaires or with year-round residents who can barely afford basic utilities.

Spending $100,000 on these households may mean many other households are left unserved or served with crappy connectivity.

That may not be the case in North Dakota. But in states with far more unserved and underserved locations it may make the most sense to deploy alternatives to fiber, whether it be fixed wireless or satellite service.

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North Dakota Fargo sign

The final complicating factor for North Dakota in reaching 100 percent fiber access: it seems unlikely that, while North Dakota may surpass 90 percent fiber access across the state, actually getting to 100 percent with BEAD funding seems like a stretch.

There are hundreds – possibly thousands – of locations in Bismarck and Fargo that have relatively good cable connectivity, but none of Newby’s comments have suggested that BEAD funds will be directed there, to add a new fiber option for those households.

Still, however this ultimately plays out, North Dakota continues to improve what is already one of the best connected states in the nation.

Listen to the full episode of episode 288 of our Community Broadband Bits podcast on how North Dakota became a national leader in fiber connectivity below:

Header image of Welcome to North Dakota sign courtesy of daveynin on Flickr, Creative Commons Attribution 2.0 Generic

Inline image of Schafer, North Dakota courtesy of Jimmy Emerson on Flickr, Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic

Inline image of Fargo population sign courtesy of Wikimedia Commons, Creative Commons Attribution-ShareAlike 4.0 International

 

 

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