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Transcript: Community Broadband Bits Episode 136
Thanks Jeff Hoel for proving the transcript for the episode 136 of the Community Broadband Bits podcast with Dan Dorman on non-metro Minnesota's need for high speed Internet connectivity. Listen to this episode here.
Dan Dorman: With some of my more conservative former members that say it's a private free market, I generally try to remind them, you know, if you're going to have a free market -- and you believe in the free market -- you have to have at least three competitors. And in most places in Greater Minnesota, there's one.
Lisa Gonzalez: Hello. This is the Community Broadband Bits Podcast, from the Institute for Local Self-Reliance. I'm Lisa Gonzalez.
Our guests often include CIOs, municipal utility managers, or other people with extensive technical expertise. Well, this week, Chris interviews a leader in economic development advocacy. Dan Dorman is a business owner and Executive Director of the Greater Minnesota Partnership. He's also served as a member of the state legislature. Dan's unique perspective gives him insight into the needs of Minnesota businesses. And at the top of that list is better connectivity. Working as an elected official at the state level, Dan also saw the influence of big cable and telecom lobbyists. Chris and Dan discuss the Greater Minnesota Partnership and the critical need for better connectivity in the parts of the state beyond the urban center. They address the challenge that lawmakers face. And Dan offers suggestions for improving connectivity, including creating an environment where municipalities are allowed to step in and serve local communities.
The Community Broadband Bits Podcast is a weekly advertisement-free service from ILSR. Please consider contributing to our efforts. Go to ilsr.org and click on the orange "donate" button.
Now, here are Chris and Dan Dorman, from the Greater Minnesota Partnership.
Chris Mitchell: Welcome to another edition of the Community Broadband Bits Podcast. I'm Chris Mitchell. Today, I'm speaking with Dan Dorman, the Executive Director of the Greater Minnesota Partnership. He's a small business owner, and a former representative in the Minnesota House. Welcome to the show.
Dan Dorman: Thank you for having me, Chris. Happy to be here.
Chris: The Greater Minnesota Partnership. Can you tell me a little bit about what that is?
Dan: I sure can. We are an advocacy, or lobbyist, group that advocates on behalf of Greater Minnesota, specifically dealing with economic development issues. It's not that we don't care about education or things like that. That's just not our focus. Our focus is on economic development issues. How do we grow a tax base? How do we create jobs? How do we get better quality of life in Greater Minnesota?
Chris: Now, when you say "Greater Minnesota," I, as a Minnesotan, think all of Minnesota is pretty great. But for people who aren't as familiar with how we label things around here, what's Greater Minnesota?
Dan: Anything outside of the Twin City metropolitan area. And the Twin City metropolitan area, to be very precise, is defined as the seven-county metro area, even though there's a broader definition that includes some of the areas around it. But we are everything outside of that seven-county metro area.
Chris: Great. And you're also comprised of all kinds of different entities, right? I mean, you've got businesses, economic development groups, local governments. You know, what else is there?
Dan: Our local chambers. There's some nonprofits. Higher-ed institutions. So we are -- we have a variety of membership that really -- and economic development touches them all. It's important to all of them. That's why we've got such a broad base. Plus, the other bonus to that, or feature, is that it gives us a little more pizzazz when we're before the legislature. If we were just a city group or a group of chambers or even businesses, it doesn't have the same panache as, say, that whole group put together. So, we want to attract a wide variety of members. And we think that will give us the best strength in St. Paul.
Chris: And something that seems to be uniting all of these different groups -- something that I believe the listening tours across the state has shown -- is that just about everyone is concerned with Internet access. How much of a priority is that for you?
Dan: Last year, it was our number-one priority. And it will be right up there again this year. Last year, as you referenced, we went on about an eight-city swing throughout Greater Minnesota. And we brought as many people as we could find -- members, non-members, didn't matter. We invited anybody that had an interest in economic development in those communities to come share with us their experiences. And the question -- we followed up with a survey -- was, what is the number-one thing we could work on, in your view, to improve the economic vitality of Greater Minnesota? The results of that survey -- again, it wasn't scientific -- I get that -- but was pretty representational of the entire state. And the number-one concern was broadband. Better broadband. Increased broadband. And, in general, the problem that we face here in Minnesota, if you break down -- if you compare the metropolitan area to Greater Minnesota, or the non-metropolitan area, only about 40 percent of the people in Greater Minnesota have access to the same high-quality broadband speeds that those in the metropolitan area enjoy. It's a problem. And it isn't just about Netflix and Facebook and everything else that we all enjoy. But it's about commerce. It's about economic development. It's about growing our communities. Having vital, healthy communities. And the Internet is so important to that.
Chris: Yeah. If anyone wants to trivialize Netflix, they should talk to a real estate agent that's trying to sell a house that doesn't have good access to Netflix.
Dan: Yeah. Well, lots of luck there, right?
Chris: Right. I mean, that's -- it's one of those things that -- it's somewhat paradoxical to me that we may take the NFL very seriously as a driver of the economy, but we don't take video games and entertainment seriously, you know? But that's an important part of our lives, and the quality of our lives.
Dan: You want millennials, in particular, to live in your community, wherever that is. You think it's important now -- broadband -- give it another 10 years. I mean, it's not a fad. It's not going away. And the communities that successfully put in fiber, and get real competitive -- not just in the speeds availability but on pricing -- they're going to be successful. Those that don't will be left behind. There's just no question. The data's clear.
Chris: One of the things that's just happened is an increase in the definition for the term "broadband." And I suspect that means that a much greater area in Greater Minnesota now will actually be classified as not having access to ANY broadband. What I'm curious about is what the state can do, since the Partnership really focuses on the state. What can the state do to try and improve that, so everyone has really good access?
Dan: We worked pretty darn hard last year to establish a new broadband fund in Minnesota. We were able to get $20 million in that fund. Governor Dayton this week announced that he would support $30 million this year. We were a little disappointed in that number, wanted it to be somewhat larger. But the legislative session has just begun. And it's a long way between now and the middle of May, when it ends. So that's an important piece -- that funding piece. The role that government plays is an important piece in there.
But I think what would really have the best long-term impact -- and we will eventually get there -- is to enable cities to have -- make it easier for cities to do a municipal service, or a community-based broadband. Whether that's a public-private partnership or whether you can't get any local players to want to invest and the city has to do it all, I think that's the key to unlocking a whole lot of development in this area. Because it's the only I know of to really bring true competition to the broadband market in Minnesota, particularly in Greater Minnesota.
Chris: There -- Is there any particular models that you find really inspiring in Greater Minnesota?
Dan: I'll give you two. I'll give you Windom, Minnesota, which is a small community in the southwestern part of the state. In fact, I'm calling from another small town about 20 miles away from Windom. But they have a robust and great community system that other cities could emulate. And it grew out of a local provider that did not want to invest -- said they couldn't built the model. You know, we've all heard that story. It turns out the model is there, as they have proven. But it didn't come on the consumer side. It wasn't the drive, saying, hey, I need to send, you know, e-mail, or something like that. It really came from industrial users telling the city that, you know what, quit worrying about this one industry, worry about all of us. And we need better broadband. And so that's what drove it.
So, locally, close to home, I'd say Windom, Minnesota. On a more national level -- and I'm sure most people listening to this are familiar with the work that was done in Chattanooga. Outstanding. So, it can be done. It is successful. But I think the other thing, that I want to also mention, is just the threat of municipal service, or multiple cities doing it, will force the cable industry, in particular, to start investing. And it may not be all community-owned. It may be combinations. You may start to see investments by others. But I think that's the key to getting that investment -- the key to bringing about competition -- is, frankly, competition.
Chris: I've loved the Windom model as well, ever since I learned about the impacts on the Toro facility, on the local healthcare, the lower prices. I mean, you know, it's -- I think it's a wonderful story. We did it in -- we did interview them in a podcast previously. I encourage people to go back and listen to that. And we also talked last year with Senator Schmit, Representative Simonson, and Danna Mackenzie, with the state, on the loan program, that I think would not have happened without the Greater Minnesota Partnership. So, ...
Dan: No, it wouldn't. I mean, it -- to toot our own horn, you know. And you referenced earlier, I spent eight years in the legislature, and the entire eight years when I was there, you know, I only heard one side of the story, one side of the equation. It was the Qwests and the Comcasts of the world and the big cable operators that came and said, you know, this is a private market thing; don't worry about it; it's going to happen; don't worry about how we deliver it; just worry about the speeds we deliver. And, really, until last year -- and I'm not saying that there hadn't been some people come down and talk about it -- but there hadn't been a large effort to actually lobby this issue -- to go over, pound on the doors, set the hearings up, draft legislation. There's a whole lot of things that have to go into it. And so, what we did last year was, now, I'll say, the final mile. We took all of this great work that had been done by people like the Blandin Institute, or Blandin Foundation, and others, talking about the importance and the need and how it could be done, and turned that into actual legislation. And then, it was quite the fight, as you know. I recall one time -- you talked about Representative Simonson -- he had the "Peace in the Valley" meeting, which is, you get both sides in the room, you try to come up with some compromise. And in this one, I participated in it, but I wasn't optimistic, because, frankly, we had some particularly large cable industry that was very happy with the status quo. So, if you're happy with the status quo, man, you're never going to want to come -- you know, change that. And so, we had that meeting, but it just -- it really showed the level of the opposition. There was, I'll say, three folks wearing white hats in the room and everybody else had a black hat on. And there was about fourteen -- so about fourteen to three was what it was. But at the end of the day, we were able to advance the cause and set up that fund. And get some good language.
Chris: Yes. I think the language was quite good. And I have to ask you -- I definitely wanted to talk about your time in the legislature. But had you been familiar with what Windom was doing before you left the legislature?
Dan: Not a clue.
Chris: 'Cause I've been in meetings in the legislature, and the -- right around the time -- it was about 2006 and 2007 -- so it was probably, actually, right after you had left.
Dan: Right after I left. Right.
Chris: And I just remember that Qwest -- at that time, now CenturyLink -- their lobbyists were telling everyone how terrible it was, and it was just -- you know, it was an awful system, and they were struggling, and this and that. And there are still a lot of people that believe that. I'm sure you've run into them on a regular basis.
Dan: Except, of course, the users of the system, that love it.
Chris: Yes, exactly.
Dan: There's some other people that don't like it, but it's not those that use and benefit from that system. But that's a classic example of what we need to do, besides the -- You know, you would have thought, Chris, that, going into last session, there was a couple different proposals, couple different bills, one of them loosely called the "modernization" bill, which, you know, frankly, didn't go as far as I wanted it to go in the area of community broadband. But it would have made it easier for this to happen. And so, in Minnesota, if a city says, you know what, the cable guys are telling me they can't do this, so we're going to go ahead and plow forward, you have to have a referendum. And you have to have a 60 percent majority -- not even just a simple majority. Which seems a little bit un-American. You know, if you think about it, to get this on the ballot to begin with, it takes a positive vote for the elected officials. So the city council -- if we use a city model for a second -- the city council has to vote in the majority to put it on the ballot. And then it has to pass, not only by 50 percent, by 60 percent.
Chris: It's actually 65 percent.
Dan: 65! Even worse!
Chris: Right. Yeah. Yes.
Dan: Even worse. Thanks for that correction! I believe in Windom -- and correct me if I'm wrong -- but I think it too three referendums. And why did it? Because, the first two, the incumbent provider said, hey, don't -- you don't need to do this. We're going to do it. It's right around the corner. Boy, we're drawing the plans up. And, by the way, if you do this, you might lose six jobs. And so, I understand it, the initial reaction of people in the community. Where, boy, we better not do this. We don't want to lose those six jobs. And these guys are saying they're going to do it. Well, lo and behold, they didn't do it. And I think by the time that third referendum came up, it passed by pretty big numbers.
Chris: Well, I think -- the way I tend to think about it is -- as you know from being in elected office, you can find 10-20 percent of people that will oppose ANYTHING.
Chris: And so, if you need 35 percent to shoot something down, that just means you have a company that has almost unlimited spending, just needs to go out and find and extra 15-20 percent of people. That's no way to decide whether or not to invest in an infrastructure.
Dan: Frankly, I want to get rid of it. Because, in my view of the world, I love -- you know, I represent a lot of cities, and those folks work awful hard to get elected. They're pretty darn close to their residents, right? Somebody's mad about something, they're generally going to call the mayor or the city council long before they think about, well, maybe I should call my state rep or my senator. So they're close. They're on the firing line. They've got to take that vote on the city council to move forward on things like this. Personally, I think that should be good enough. If people in the city don't like what they're doing, they'll vote them out.
But, OK, if we've got to go through the extra step of something -- you have to go through a referendum -- it should at least be a 50 percent referendum. The 60-65 percent is, as you pointed out -- it's just a way for the "anti" folks to make it easier for them to kill, and really not, then, a representation of the will of the people.
There's an American flag, and I'm going to wrap myself in it as we are talking about this issue.
Chris: Well -- and it's the only place in the United States where you need a super-majority for this kind of an issue. Everything else is a simple majority, where it's required.
Dan: And it does speak to the power, you know, of the other side. And what a good job they have done lobbying on the other side of this. Because we couldn't even get a hearing on that bill last year. And so it was easier to get the fund created -- a $20 million fund set up -- than it was just to go from 65 to 50 percent. I mean, that's crazy if you think about it.
Chris: Well -- and I'll just point out that a city can actually vote to condemn the existing utility by a majority vote. But it would take a super-majority for them to build their own. Which is somewhat misplaced priorities, I think.
Dan: But don't forget, though, the cable -- I'm not an anti-cable guy, but -- you know, maybe I am -- but at least I understand who they are. In fact, I own a tire store. I'd like nothing better than to have an unregulated monopoly. I wish everybody in Albert Lea, my home town, could only come to me and buy tires. First thing I could tell you I'd do: raise my prices.
Chris: Yes! And that's what history shows.
Dan: I think I'd have plenty of good customer service, but we wouldn't be maybe as pushed to do it when we're -- we have to compete in the free market. But I can guarantee you, if we had an unregulated monopoly, I'm sure I'd be entitled to a little more margin.
Chris: Right. Well, I want to dig into something that is actually even more complicated. Which is, there's a fear that -- among many of us -- that, in the legislature, we're going to see a debate, that the state should only put money only where there is exactly zero service providers today, rather than areas where people have, you know, maybe just very slow DSL that isn't very good. And so, I'm curious where the Partnership comes in, 'cause you represent people from both groups.
Dan: Right. Our preference, last year, when that debate came up was to -- my experience, both while I was in the legislature and after I'd left -- if you send a pot of money to one of the agencies, whether it's the Department of Transportation or, in this case, the Department of Employment and Economic Development, and you say, here's a pot of money, here's the general parameters. So we looked at it from an economic development standpoint. We thought -- personally thought the best models were blended. You know, you had a community of "underserved" and a community of "unserved" around it. We thought those were pretty good models. Right? But we really did not want to tie the hands of Danna Mackenzie in the broadband office. We thought they would do a very good job. The cable industry and others were paranoid about that, and they wanted to -- ah, I shouldn't say paranoid, but -- they were, for a variety of reasons, some apparent, some not, they wanted to send it only to people who had no service. And it sounds like a compelling argument. I mean, how do you argue against, oh, these poor people? They just have no service. Don't you care about them? And that's interesting, but it's also cutting themselves out of it. In that trying to find "Peace in the Valley" meeting I referenced earlier, I asked one of the cable lobbyists. I said, you know, you guys are working pretty darned hard to cut yourselves out of a grant fund that you could pick up 50 percent of an upgrade. Why would you want to do that? I mean, if somebody wanted to pass a $20 million tire fund, and somebody at the state was going to pay for 50 percent of tires, I'd be all over it. So I said, why would you guys want to do that? And you got the old -- oh, we're fine. Don't worry about us. It's just those poor people that have no service. Well, I've got to tell you, if I put simply my tire-guy hat on, I am motivated by profit and shareholder return. Now, the shareholders are my family. I want to do it honorably. I want to make money. I want to pay people well and do good things for the community. But I operate that business to make money, and it is about return on investment. It's no different than that -- the cable companies. And so when they said, gee, don't worry about us, it's about them, that's just code for, we really don't want to upgrade our system, stay the heck out of this.
Chris: Well, there's actually a fiscal responsibility element to this as well. Which is that -- I think the state has an interest in -- if it's giving out money, to do it on a one-time basis. And to have networks built that can sustain themselves, without any ongoing subsidy. And if the cable guys have their way, what happens is, you build these networks only in the most unsustainable regions. And they may not be able to continue on. Whereas, if you use the word, which you used, which is "blended" -- if you blend together a couple of different areas, then you have the best chance at financial sustainability, which is the goal.
Dan: Right. And if it's not successful, they can come back and say, see, we told you this was a bad idea. Let us take care of it.
Chris: Right. Right. There's definitely that. Although I think they'd rather keep the monopoly than just be right in rhetoric.
Dan: Oh, absolutely. It is about keeping that unregulated monopoly. And, you know, to some of my more conservative former members, who say it's a private free market, I generally try to remind them, you know, if you're going to have a free market, and you believe in the free market, you have to have at least three competitors. And, in most places in Greater Minnesota, there's one. And, you know, you don't really compete against yourself. That is a problem. So for those that are free-market people, they ought to be there with us on this issue, to bring about competition. Competition is a wonderful thing. It can do, and bring about, some great things. But if you don't have competition, and you don't have regulation, you've got a problem. I also remind some of the conservative Republicans that this is a -- if you think about it, Chris, in some ways, this is a government-created problem. We deregulated an industry without making sure there was robust competition in all areas. We asked for this problem. Now we need to fix it.
Chris: Right. I would certainly agree with that reading of it. I think -- you know, it's one of those things where, when they were working on this bill in 1996, they totally underestimated the way in which the federal regulators and the future Congresses would be fooled by the arguments of those very powerful industries, to maintain their monopolies.
Dan: And I don't think people really understood what was going to happen. I mean, Internet, schmiternet, at that time. Right?
Dan: I mean, people didn't see what was going to happen. They didn't see -- You know, one of our new members is the MCEE. They came to us and they said, man, we want to help you. And their big deal was broadband. Their company is a nonprofit but they're interested in energy efficiency -- how do we make homes, businesses more energy-efficient? And they're saying, you know, the technology that's coming, right? And we have to be prepared for the future. The technology is coming. We're going to be more and more dependent on robust broadband. If you don't have it, you're going to, again, be a second-class community, relative to the communities that do have it. This is rapidly becoming a -- not something that's nice but something that's necessary. And, I think, within ten years, it will be a necessity, or your community will start do die.
And I know that sounds really draconian, and, like, boy, no, it isn't going to be that way. But it isn't just these guys trying to get energy efficiency. Go talk to you doctor and find out how you’re going to get medical service. It's likely that, you know, within not too many years, we're going to be talking to somebody on our iPad, over -- well, it probably won't be over Skype because it isn't safe enough -- but over some secure connection. That is where your initial consultation will occur. So, it's great. You can have all the high-speed broadband you want at that medical facility, but if you're -- like, in my case, six miles away -- and until recently the only thing I could get was a crappy DSL service which rarely got over a megabit download speed, that wasn't going to cut it. And so that's going to be a problem. Education delivery. There's just so many things. And I know I'm preaching to the choir. But I don't think you can understand -- or, a lot of people can't understand how important this is going to be. We've seen some of the work done by -- who's the Canadian group that Blandin's hired?
Chris: SNG. The Strategic Network Group with Michael Curry.
Dan: Strategic Network Group. Exactly. They're talking of -- I've seen some work they've done for the city of Fergus Falls. You know, in the coming years, in the coming decades, that 25 percent of all new jobs are going to be dependent on broadband. If you don't have it, you're not going to compete. And as a former EDA professional in the city of Albert Lea, a town of about 20,000 in southern Minnesota, I can tell you that things have came up and said, tell us about your broadband, the answer wouldn't be, well, jeepers, you come, and you give us about a year and a half or so, and we can probably have some fiber out somewhere near you. You would not make that first round. And so it is rapidly becoming as important as, do you have electricity and running water? We're not too far from it being as important as that. They will go to the next community that already has that done. That's why Windom upgraded theirs, to keep Toro, but also to make them competitive for that next business that comes, particularly in -- you know, the financial services, engineering. There's just so many things where this is critical.
Chris: Well, the canals redrew the maps. The highways redrew the maps. The railroads redrew the maps. And if I was in Vegas, I'd be betting that a fair number of maps will be redrawn as a result of this. I think, you know, the idea of people praising Chattanooga around the world -- you know, just ten years ago, would have been a surprise to many people.
Chris: So ...
Dan: Or our friends in Cedar Falls, Iowa, where President Obama was -- what, a week and a half, two weeks ago, to talk about community broadband. Absolutely. The communities that are out ahead of this will be more successful than those that aren't. And they'll get left behind. And they'll want to understand why this happened. What happened to us? Well, you know, we need to be proactive here. We cannot sit back and wait. I mean, I can tell when -- Recently, I was visiting with some of the Governor's staff, and I'm over cooling my heels waiting to get in the door, and out comes some of the Comcast lobbyists. I don't know that we saw the same people, but I thought it was kind of interesting. And we're in there in this meeting, and one of the issues we touched on was broadband. And I started to hear that, well, yeah, but, Dan, is this really important? Isn't wireless about to take this over? And I thought, huh, it sounds like the Comcast lobbyists. And the reality is -- and here was my answer -- you know, I'm a small-town tire guy, but let me tell you what I do know. CenturyLink is running ads in the metropolitan area saying we're spending hundreds of millions of dollars running fiber all over the place. Big cable operators in the metropolitan area running fiber. And then there's this other company you may have heard of, that's run some fiber, called Google. They're some pretty smart fellows. If there was about to be this huge technological shift that was going to make fiber obsolete, I don't believe that those entities we just talked about would be running fiber. They would be ahead of that curve and stop. And so I think it's -- I bet, Chris, if we went back a couple of generations, when we were trying to get electricity to every house, we'd have heard the very similar arguments. As, well, they really don't need actual electricity; those lamps they've got are fine. What do they need that electricity for?
Chris: It is ...
Chris: You're right. It is shocking, just how similar the arguments are. In a number of cases, I think you could just replace a few words in entire magazine articles and still be spot on...
Chris: ... from a hundred years ago. Yes. But let me draw this to a close. It's been wonderful having you on. Is there anything that you want to hit before we turn off the mike?
Dan: No, I think that we've covered it. And the more I think we can do to encourage competition, whether it's a blended system, of public-private partnership, or, where that can't happen, -- I mean, I've even talked to some -- I think, are very conservative Republicans -- that get this. They'll say, boy, I really don't want to do it, but if that is the only way we can get competition -- 'Cause most of them, once you talk to them, do get competition -- are in favor of community broadband. And I think that's a good thing. We just need to, you know, keep singing the praises of what's happening, and what will happen if we're not successful. 'Cause, you know, my fear is, what's really going to happen in a community like Albert Lea, or others that are similarly situated, is that you've got a cable system that's fairly antiquated that, you know, we'll let her operate for another 5-6-7-8-9-10 years, and then walk away. And then the community is going to be saying, what the heck just happened? And they they'll be scrambling and behind the eight-ball. I don't want to see that happen to Albert Lea. And I don't want to see that happen to other communities either. It's -- we need to start going. Great start in Minnesota last year. But we've scratched the surface, and need to push forward faster.
Chris: Excellent. Well, I'm glad the Partnership is out there doing this work. Take care.
Dan: We appreciate your help, and if anybody has some ideas or suggestions, send them our way.
Chris: We'll do that.
Lisa: Send us your ideas for the show. E-mail us at email@example.com . Follow us on Twitter. Our handle is @communitynets .
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