Broadband debate heats up at Minnesota Capitol

Lt. Gov. Tina Smith was in Sherburne County recently to talk up what's suddenly become a major priority for Minnesota's political leaders: spending tens of millions or more in taxpayer dollars to extend high-speed broadband Internet to parts of the state that lack it.

"We're here to celebrate a hugely exciting project that is really in my mind a poster child for successful public-private partnerships," Smith told a group of community leaders gathered at Becker Furniture World, whose flagship store sits in an industrial park recently wired for broadband.

"It's been phenomenal to have that kind of bandwidth available to us," said Robb Feldhege, Becker Furniture's IT manager. It's allowed for much more efficient and cost-effective technology links between the main store and locations around the Twin Cities, he said.

But just across Sherburne County, on the south side of Princeton, Sandy George wishes for the same kind of high-speed access at Crystal Cabinets, where she's the IT manager.

"It's become challenging to provide enough bandwidth for employees to do their jobs," George said. The company's cabinet designers use sophisticated software requiring high bandwidth that's tremendously costly to provide at the company's design facility. It's not available at all to employees who live nearby and want to work at home.

The underground fiber wires that deliver high-speed broadband access have been laid in fits and starts throughout Minnesota, creating a hierarchy of haves and have-nots around a technology that's increasingly essential to doing business in the modern economy. Thanks to complicated eligibility rules and overlapping private interests, download speeds available in one community or part of a county are often not yet available in directly adjacent areas — or only at absurdly high prices.

With Smith as chief saleswoman, Gov. Mark Dayton's administration is pushing, in the current legislative session, for a whopping $100 million, one-year investment in rural broadband expansion. Republicans who control the state House countered with a smaller offer of $40 million over two years.

To date, state funds have come slowly. Following Dayton's promise as a candidate in 2010 to deliver border-to-border broadband connections, the Legislature under DFL control in 2014 spent $20 million on broadband expansion. In 2015, after Republicans took over the House, the Legislature coughed up another $10.6 million for the state's new Office of Broadband Development to distribute.

The state's investment leveraged about another $41 million in private investment. Combined, that money has helped wire 22 outstate Minnesota cities. Most are very small, like 222-population Beardsley in Big Stone County; 136-population Jupiter Township in Kittson County; and 643-population Littlefork in Koochiching County.

"We need more money in the fund to make it more effective," said Margaret Anderson Kelliher, a former state House speaker from Minneapolis who now leads the Minnesota High Tech Association. Advocates note that some states, particularly ones with vast swaths of remote rural area like North Dakota and Alaska, have put a greater emphasis than Minnesota on broadband expansion.

The tax dollar tap is about to start flowing more freely. If Dayton and lawmakers can agree on broadband spending this year — a big "if" given the low expectations at the Capitol for the final work product of the politically divided Legislature — then it's likely to fall somewhere between the $40 million sought by the House GOP and the $100 million that Dayton wants. It could end up as one of the single biggest state expenditures this year.

On top of that, Minnesota is due to get $85 million a year over six years from the federal government's "Connect America" initiative.

But there's not universal agreement about the best way to spend all the broadband money. At the Legislature's direction, the Office of Broadband has put its emphasis on connecting what it has labeled "unserved" areas. That leaves home and business owners and elected officials in many areas with the official designation of "underserved" wondering how much longer they have to wait to get a piece of the action.

In Becker, a state grant of about $150,000 made up about half the funding for the $325,000 project to wire Becker Furniture World and its industrial park neighbors. But most of the developed portions of Sherburne County, immediately northwest of the Twin Cities Metropolitan area, are not eligible under current state standards for broadband grants.

That's despite the fact that many Internet users there are subject to sky-high prices, usually at the mercy of providers who often have the corner on local markets.

"Right now we're paying $2,300 a month for 20 [megabyte] service," said George, at Crystal Cabinets. "Go to downtown Minneapolis and you pay $350 a month for a gig of service" — several orders of magnitude faster than what's available in Princeton.

Lobbyists for cities across outstate Minnesota have been pushing to loosen the eligibility rules that have largely left behind cities with populations over about 3,000 people. They argue that broadband money might be better spent in more populated outstate areas that have greater economic development potential, rather than on expensive fiber extensions into remote regions that often only serve a few users.

"Those counties that have the fiber-optic infrastructure — they're getting the Shutterflys, these big firms that are data dependent," said Sherburne County Administrator Steve Taylor. Shutterfly is an online photo company that opened a $60 million facility in Shakopee in 2014.

Senate DFLers, who have proposed $85 million for broadband expansion this year, are also looking at tweaking eligibility rules for the state grants. Dayton said last week that he's open to the discussion — but quickly added that the higher spending amounts proposed by he and DFL allies would make those decisions easier.

"If we have sufficient money to move forward we'll be able to make decisions on a variety of spectrums," Dayton said. "Let's look at and see what we can do, and then if we come back in a year or two from now and do it better, more power to us all."

House Republicans, sensitive to a rural power base stocked with voters who have lived with the challenge of slow Internet service, unquestionably moved closer to Dayton last week in laying out their $40 million proposal. Republicans have relied in recent years on a message that DFLers have ignored rural concerns in favor of Twin Cities interests.

Rep. Ron Kresha, R-Little Falls, defended the GOP's lower spending proposal for broadband. The Republican proposal carves out some of the money specifically for better broadband access in schools, and also targets some spending toward communities statewide where the affordability of broadband is an issue.

Still, the dollar difference between the two parties is likely to be fodder in the fall for DFL candidates trying to unseat rural Republicans.

"The governor's approach has always been a dollar amount — an aspiration," Kresha said. "But we've had to actually put solutions together."

Christopher Aadland, a University of Minnesota student on assignment for the Star Tribune, contributed to this report. Patrick Condon • 651-925-5049