In a recent article, the Star Tribune asks if Minnesota cities are shut out by broadband rules. Of course, this applies to all cities, not just those located in Minnesota. I'll soon put up an overdue piece with our reaction to the broadband stimulus rules - in particular, the decision of NTIA to ignore the public-interest requirement for private companies. In the meantime, this article has gotten some attention - thanks to Eldo Telecom for touching on it. Many Minnesota cities are giving up hope due to rules that privilege private companies who already have the necessary data and the means to jump through the red-tape hoops required by NTIA.

The problem, as city and county broadband planners see it, has less to do with technology than with the sheer legwork required to create an acceptable proposal. Applicants must prove that all the areas they propose to serve would meet a narrow federal definition of being underserved -- that 50 percent or more households in the area lack broadband access, or that fewer than 40 percent of the households already subscribe to broadband. That puts the burden on cities and counties to undertake expensive and time-consuming door-to-door surveys, because telephone and cable companies don't reveal which areas they serve.

In the meantime, private companies like Qwest are not even sure they will participate as they do not like the requirements that grantees operate the network without discriminating against some kinds of content (meaning they want to charge more to visit some sites than others). Though Qwest has not been as bullish on this money-making idea as AT&T, one assumes it is not too far off. Telephony's Ed Gubbins also comments on the many municipalities that have little hope of grants under NTIA's rules:

One group of broadband stimulus hopefuls that has been in large part swept out of the running by the specifics of the plan is individual municipalities of any size.

Ann Treacy of Blandin on Broadband has covered the latest meeting of the Minnesota "Ultra High-Speed" Broadband Task Force. (Quotation marks used because the task force has dwelled on FCC-style 1990's broadband rather than the broadband experienced in our international peers.) The issues raised in this session are applicable to most of America. Brian Redshaw, the city Administrator of Hibbing, describes some of the concerns of those living on Minnesota's Iron Range (located in Northern Minnesota) and how they attempted to solve their own problems. Unfortunately, the incumbent providers - Qwest and Mediacom - hypocritically sabotaged community efforts despite the fact that they have no plans to bring modern networks to the Range. Ross Williams, a local businessman makes a great point: our lives are rich because of the investments made by the generation before us. As we make decisions about networks today, are we building infrastructure for future generations? I would respond that if we are subsidizing slow DSL, then we certainly are not.

In a quick followup, the Minnesota Supreme Court has affirmed the obvious by refusing to review the Appeals Court decision in the TDS (acting as "Bridgewater") v. Monticello case. This means the Appeals Court decision stands; Minnesota cities have the authority to bond for broadband networks. Read our previous coverage of this case here. When TDS originally sued Monticello, the City had to place the investor money (raised via non-recourse revenue bonds) into escrow for the duration of the case. If the case were not resolved by June 19, 2009, Monticello would have had to return the funds to the investors, leaving it unable to finance the project. Bonding again would have almost definitely resulted in less favorable terms than those achieved before the economic meltdown. Following the Appeals Court decision, on June 2, 2009, TDS could have had up to 30 days to request review from the Supreme Court. John Baker, an attorney from Greene Espel who represented the City throughout the process, asked the Supreme Court to expedite the review in order to prevent TDS from merely using its thirty days to run out the clock (thus winning the war while having lost every single battle). Today, the Supreme Court sided with the Appeals Court and an obvious reading of Minnesota law: Minnesota cities are well within their authority to bond for and build broadband networks. Monticello will immediately start work on the city's publicly owned fiber-to-the-home network. TDS has argued that such a network would now be redundant as they built a fiber network while abusing the courts to stall for time. However, it remains to be seen if TDS is truly connecting all homes with fiber, or is still using copper for that final connection (much like AT&T does in its U-Verse). The top TDS advertised speeds are 25 down and 10 up, which can be achieved with VDSL. If TDS has truly built a fiber-to-the-home network, Monticello will be the first place in the U.S. with competing full fiber networks. However, I'm not sure that TDS will be able to compete with FiberNet Monticello on some fronts as TDS offers it television via a partnership with a satellite company. Monticello will undoubtedly have more local content and probably better customer service. Lest you think the court battle is over, Monticello is entitled to recover some of its costs due to the lawsuit.

Monticello, a small town in Minnesota just outside the metro area, once again prevailed in court against frivolous charges from TDS Telecom, the incumbent telephone provider (doing business as Bridgewater in the court case). Monticello, after learning that neither TDS nor Charter were interested in building a modern broadband network in the community, spent years studying the issue and eventually opted to build their own network. After the city secured revenue bonds to pay for the project in spring 2008, TDS began a campaign to delay the network -- a tactic commonly used against community broadband networks across the country. They filed a lawsuit they could not win, but it prevented Monticello from starting the network. While they waited on the court date, Monticello lost the construction season and investor money sat in escrow. Despite winning court victory after court victory, the citizens of Monticello are unable to build the network they voted for with a stunning 74% yes on the referendum. When the lawsuit was dismissed from district court, TDS waited as long as possible before appealing the decision in fall 2008. Due to the overburdened and under-staffed courts, the Court of Appeals took another half year to rule. Today, the Court handed down the judgment, finding in favor of Monticello:

Therefore, based on a plain and obvious interpretation of the term "public convenience" and the general intent of the legislature to promote telecommunications, the district court did not err in dismissing the action for failure to state a claim. Regardless, even if this court were to accept Bridgewater‘s reading of the statute, the Fiber Project arguably qualifies as a utility or utility-like project. A Minnesota statute generally restricting the ability of Minnesota municipalities to issue bonds for projects outside of their jurisdiction provides an exception for bonds issued to finance property for "municipal public utilities." Minn. Stat. § 471.656 (2008). That same statute defines "municipal public utilities" as "the provision by a municipality of electricity, natural gas, water, wastewater removal and treatment, telecommunications, district heating, or cable television and related services."

The main question that remains is this: will TDS find it more profitable to appeal again and delay the inevitable competition?