Minnesota broadband companies condemn ‘burdensome’ ‘Internet for All’ rules.

WASHINGTON — When the president of a trade association representing Minnesota’s telecommunications industry was asked how many of his members would participate in a $652 million federal program aimed at providing Internet access to those who don’t have it, he was quick to respond.

“Zero,” said Brent Christensen, president and CEO of the Minnesota Telecom Alliance.

His group represents 70 companies that provide advanced telecommunications services, including wireless video and high-speed Internet, to Minnesota’s metropolitan and rural communities. Many of the smaller companies in his organization already operate in hard-to-reach rural areas and want to expand their services.

But Christensen said neither would apply for federal grants because of the regulations involved – particularly the requirement to provide low-cost services to low-income households in exchange for subsidies that would allow internet providers to expand their networks. .

“Putting these obligations on small rural providers is a huge hurdle,” Christensen said. “Most of our members are small businesses and cannot afford to offer a low-cost option.”

State cable operators have also reacted sharply to a new initiative called the Broadband Equity, Access and Deployment (BEAD) program.

“Providing a low-cost option just won’t work for smaller providers,” said Melissa Wolf, executive director of the Minnesota Cable Communications Association.

So what was once thought to be a solution to Minnesota’s unequal Internet access problem may end up being a fiasco.

This time last year, the federal government announced that Minnesota would receive $652 million to help achieve the lofty goal of “internet for all” in the state. Currently, about 12% of households in the country, mostly in rural areas, do not have access to the Internet.

BEAD is administered by the National Telecommunications and Information Administration.

Funding for the program came from the massive infrastructure bill Congress approved in 2021, which allocated $42 billion for all states to improve internet access. But the money came with strings attached – federal regulations that Internet providers in Minnesota say are “onerous.”

Especially when these federal regulations combine with new labor requirements imposed on the ISP industry by the state legislature earlier this year.

These new regulations include requiring companies receiving state subsidies to pay workers a “prevailing wage,” which is the base hourly wage paid to most workers in a particular occupation on public works projects. The federal government does not require BEAD grant recipients to pay the prevailing wage.

Christensen said the federal government’s current payroll does not include telecommunications jobs that state statute requires internet providers to have. So, companies in Minnesota would have to pay more because they would have to use a similar but higher-paying classification.

Thus, Internet service growth in Minnesota may slow even before BEAD is implemented.

A smaller, 10-year-old state initiative called the Border to Border grant program would be funded only through 2025. The plan called for BEAD to take over the task of providing internet services to the unserved and underserved. Now it’s at risk.

“(BEAD) sounded like a great idea, but when we dig into it, it’s not much,” Christensen said.

Wolf said, “it’s becoming clear that participating in the program may be too risky.”

Lobbying for change

Fifteen states have received full approval of their BEAD plans, but Minnesota is not one of them. It recently won approval for “Volume 1,” a submission detailing the state’s five-year action plan to close the digital divide, identifying unserved and underserved areas of the state, and outlining how to create a competitive grant program.

The second submission, Volume II, focuses on essential elements of the state’s BEAD implementation plan and requires all grantees to commit to “providing the customer with the most affordable total price for 100/20 (megabits per second) service in the proposed service area.”

The state agency responsible for this process, the Department of Employment and Economic Development’s Office of Broadband Development, is still negotiating with NTIA for approval of Volume II.

“We haven’t finalized anything with NTIA at this point,” said Bree Maki, executive director of the Office of Broadband Development. “So it’s still a work in progress to make sure that, you know, we’re looking holistically again at what’s available for people to use services, but also (asking), ‘How can we make sure that providers are delivering services?’

Since the final plan has not been approved, state ISPs are lobbying the Broadband Development Office and, in some cases, NTIA, demanding changes.

“We are still at a place where there is hope that this process can be changed,” Wolf said.

Comcast, the state’s largest internet provider, said it was waiting for a final plan. “We cannot decide whether we will bid until we know the final rules,” Comcast spokeswoman Sena Fitzmaurice said.

As other ISPs have picked up on this story, Fitzmaurice praised the state’s phasing out Border-to-Border program, which provided nearly $350 million in grants to the industry. “We had a good working relationship with it,” she said.

Meanwhile, Wolf said: “We understand that the situation needs to change, but we have observed that (BEAD) is completely different from border to border.”

Despite protests from state ISPs, Maki is confident the BEAD program will launch late next year or early 2026.

BEAD regulations require the state to wait 365 days after final plan approval to select ISPs as subcontractors.

Wolf pointed out that there may be few takers.

“Without people submitting applications, it will not be possible to gain access to the ‘internet for all’,” she said.

MinnPost Greater Minnesota reporter Ava Kian contributed to this report.

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