Broadband In Minnesota
To thrive in the 21st century, Minnesota businesses, state agencies, schools, health care organizations, and private citizens need high-speed Internet access. A recent survey by the Pew Research Center showed that Internet technology is moving so rapidly that people and businesses that can find and digest information the fastest will have a distinct advantage over those that are not as good at retrieving and synthesizing the wealth of information literally at their fingertips.
“Today even applying for a job at McDonald’s, where you don’t necessarily need to know how to use the Internet, requires that you apply online,” says Bernadine Joselyn, director of public policy and engagement programs for the Blandin Foundation in Grand Rapids. Joselyn also serves on the current Governor’s Task Force on Broadband (the third such group convened in Minnesota).
The first two task forces established a goal of ensuring that every Minnesotan have access to broadband connections with upload speeds of 5 to 10 megabits per second (Mbps) and download speeds of 10 to 20 Mbps by 2015. Task force members cited concern over the state’s competitiveness in retaining businesses.
“We still have a ways to go before everyone has access, but the gap is being closed rather quickly,” says Gary Evans, president and CEO of Hiawatha Broadband Communications, Inc., in Winona, and a member of the current task force.
The target speeds were determined with two-way high-definition video in mind. Video applications are key to telecommuting, online education, telemedicine, public safety technologies, and other Internet-based services that Minnesota technology and civic leaders think are critical for the state’s residents and businesses.
How Minnesota Compares
According to data from the 2010 Census, only 57.4 percent of Minnesota households had access to broadband speeds of 10 Mbps download and 6 Mbps upload. And the second broadband task force, under Governor Tim Pawlenty, estimated that 6 percent of Minnesotans do not have broadband access available to them. While access has increased substantially since the last census, many communities still are without high-speed broadband.
Minnesota ranked 24th nationally for universally accessible broadband speeds, according to the second-quarter 2011 State of the Internet Report from Massachussetts-based Akami, a cloud technology company. Minnesota’s ranking was unchanged from 2010 even though the average connection speed increased 26 percent, to 5.7 Mbps from 4.5 Mbps. The state’s steady ranking illustrates the quick pace of improvement nationwide. Rhode Island, the top state in bandwidth accessibility, increased its average connection speed by 34 percent, to 8.2 Mbps in 2011.
Parts of the Arrowhead region and far north-central part of the state, along with areas in the southeastern corner, are still largely without access to broadband, with many still relying on dial-up access to the Internet. The far southwestern corner, the Red River Valley, and parts of central Minnesota remain underserved—either lacking broadband or with only slower speeds available—according to Connect Minnesota, a nonprofit based in St. Paul that pinpoints remaining gaps in coverage across the state (see sidebar opposite).
The Minnesota Legislature established two main goals for broadband during the 2010 legislative session. The first goal is to provide access at minimum speeds of 10 to 20 Mbps for downloads and 5 to 10 Mbps for uploads to all Minnesota households and businesses by 2015. “It’s a big goal, but it is possible,” says Margaret Anderson Kelliher, chair of the current broadband task force and president of the Minnesota High Tech Association. “We are making significant progress toward that goal.”
The second and more overarching goal is that by 2015 Minnesota be in the top five states nationally in terms of universally accessible broadband speeds. Moreover, the statute calls for the state to be in the top 15 when compared to countries globally. “That will be a little more challenging,” Anderson Kelliher says. “It’s always a moving target when you measure against other states and countries. But it’s about global competitiveness, and it’s an important piece to keep in view.”
The governor’s task force could not find data that shows how Minnesota’s broadband access compares globally, but the United States as a whole lags. The U.S. ranked 14th globally, with nearly 70 percent of households having access to high-speed broadband as of November 2011. By comparison, top-ranking South Korea was nearing 100 percent.
Internet service is provided primarily through four transmission routes: wireless radio signal towers that connect to coaxial or fiber cable; coaxial cable, the infrastructure once widely used by cable television providers; fiber optic cables, the primary route used by broadband companies that sell services to telephone companies, Internet providers, and businesses as well as to health care, government, and educational organizations; and copper telephone wires.
“Fiber is the best medium for broadband, and it is also the likeliest medium to stand up over the longer period of time,” Evans says. “Fiber will last for decades.” The lifespan of coaxial cable is about 20 years. Fiber optic cables can also offer expanded capacity as additional bandwidth is needed.
“Fiber optic cable was first deployed 20 years ago, and the technology is still state of the art. What changes is the equipment at the end of the cable,” says Walt Prahl, president of business and wholesale solutions for Enventis, a subsidiary of Mankato-based HickoryTech Corporation. Enventis was founded in 1997 to install and provide broadband in Minnesota and surrounding states.
Fiber optic cable is placed below ground, typically in ditches along secondary highways, but the above-ground optronics equipment is housed in a data center or other environmentally controlled building. “Since 1997, we have changed our optronics numerous times—about every four to five years—as technology continues to evolve to get more bandwidth,” Prahl says. “The cable only gets replaced if it gets cut or damaged.”
Funding for broadband infrastructure across Minnesota has been provided by both public and private investment, with the bulk of investment made by private enterprise. “The quality of broadband that you have depends on who your provider is,” says Bill Coleman, president of Community Technology Advisors, an organization in Mahtomedi that helps clients develop broadband infrastructure and adoption programs. “Communities served by small rural telephone companies probably are already 100 percent served [with high-speed broadband]. But if you are on the side of the [rural] road served by one of the large telephone providers, there’s a good chance you don’t have broadband at all, because they have not made the necessary infrastructure upgrades.”
Through its Rural Utilities Services program, the U.S. Department of Agriculture provides small rural telephone providers low-interest loans and grants to install fiber optic cable. Without this funding, many communities might not have gotten broadband, because providers wouldn’t find it economically feasible to provide the infrastructure to low-density populations.
Small rural phone companies also receive funds through the Federal Communication Commission’s (FCC’s) universal service fees charged to everyone who has telephone service and from fees charged to long distance phone service providers (called interexchange carriers) to connect and terminate long-distance calls.
Paul Bunyan Communications, a cooperative based in Bemidji, has received between $50 million and $75 million in low-interest loans from the USDA since 1999 to provide broadband to everyone within a 4,500-square-mile area stretching from north of Park Rapids to Wakish and from Grand Rapids to west of Bemidji, according to Brian Bissonette, spokesperson for the co-op. Last fall, Paul Bunyan received a $19.7 million loan to provide fiber cable to rural Park Rapids and Trout Lake township.
Originally, the plan was to connect 4,000 locations, but the co-op has scaled back those plans due to an FCC reform order issued last year that scales back the interexchange carrier connect fee, and eliminates it by 2018. “The change will make it much more difficult for us to provide services in areas with low-density populations,” Bissonette says. While the termination fee is still active, Bissonette says the FCC is considering eliminating that fee as well.
Coleman estimates that 50 percent of a small rural phone company’s annual revenue is generated through the FCC universal service fee and the interexchange carrier fees. “Small rural phone companies serve high-cost areas,” Coleman notes. “Instead of subsidizing the end consumer, the FCC subsidizes the telecom companies.”
Another injection of funding, however, arrived when President Barack Obama signed the American Recovery and Reinvestment Act (ARRA), otherwise known as the stimulus package, on February 17, 2009. This bill provided $7.6 billion for broadband projects across the United States. Minnesota received $238 million in funding, with the bulk of it to be used in northeastern Minnesota (see table opposite). At least $25 million of in-kind or private contributions have been added to these projects.
ARRA also provided nearly $9.5 million to fund two other projects: new and upgraded public computer centers on the Twin Cities campuses of the University of Minnesota and broadband adoption programs through the Blandin Foundation.
Once ARRA projects are completed, many more residents and businesses will have access to high-speed broadband. “I’m reasonably satisfied that the gap between the haves and the have-nots has narrowed significantly,” Evans says. “Now there are probably only about 10 percent without access to broadband. We probably will get to the point where there are still some people without access who don’t care and who don’t want it—they might be living in the middle of the forest.”
Evans’ company serves 16 markets in southeastern Minnesota. “The southeast portion of the state is pretty well served generally,” Evans says. “The people not adequately served are those in the very rural countryside in deep valleys with tree-covered hills. From a wired perspective, these people have copper infrastructure available, but they probably don’t have fiber or coaxial cable.” The bluff area of southeastern Minnesota doesn’t receive strong wireless signals.
Hiawatha Broadband is currently completing a $20 million project, funded by the company, to bring fiber cable to six communities: Dover, Eyota, Elgin, Plainview, Lake City, and Red Wing. Evans notes that while it is crucial to provide access to all of the state’s residents, the real impetus behind the race to connect is not residential Internet access, but improvement in health care, private and public safety, education, and jobs in rural areas.
Enventis has been laying fiber optic cable since 1997. As of mid-July, it manages 3,250 miles of fiber cable in Minnesota, Iowa, North Dakota, South Dakota, and Wisconsin, with roughly 75 percent in Minnesota. Enventis serves businesses and anchor institutions (health care, government, and educational organizations) as well as other cable companies, phone companies, interexchange carriers, and wireless providers. Enventis received an ARRA grant of nearly $17 million and committed $7.2 million of its own money to provide access to anchor institutions in 36 rural communities in 23 Minnesota counties. Partners on the project include the Mayo Clinic, the University of Minnesota Office of Information Technology, and the Minnesota Office of Enterprise Technology.
The Enventis project involves two routes and 428 miles of cable. One cable route, which runs from Minneapolis to Duluth, is basically complete. The other will stretch from Brainerd to Fargo and is slated for completion in 2013. When both routes are finished, 80 community anchor institutions, more than 886,000 people living in 315,000 households, and more than 74,000 small and medium-sized businesses in Minnesota will have access to low-cost, high-capacity broadband services.
Another project in Jackson, Nobles, and Cottonwood counties in southwestern Minnesota is also nearly complete. The $12.7 million ARRA project will connect eight communities—Wilder, Heron Lake, Brewster, Round Lake, Lakefield, Jackson, Bergen, and Bingham Lake—according to Dan Olsen, general manager of Southwest Minnesota Broadband Services in Lakefield.
“The demand is unbelievable,” Olsen says. “We can’t keep up. We have 1,300 pending home installations.” As of mid-July, Southwest Minnesota Broadband Services had laid 200 of 250 miles of cable, and had already connected 1,250 homes. Prior to getting broadband, these communities, which include many farming operations, might have only had weak wireless signals or sluggish dial-up connections.
While computer literacy, including Internet use, will influence whether communities will thrive in the new century, a shocking number of Minnesota businesses and residents are not Internet savvy, and some don’t seem to be in a rush to adopt the new technologies.
“We know that rural Minnesotans haven’t always adopted broadband even when they have access,” Anderson Kelliher says. “To get broadband to all Minnesotans, we need more Minnesotans to adopt broadband. Low-density population areas are less likely to have broadband available . . . because of the high cost per household to provide service.” According to Connect Minnesota’s recent report, “Broadband and Business 2012,” approximately 40,000 businesses in Minnesota still do not use broadband technology, and more than two out of five retail businesses do not subscribe to broadband even though the average cost of service for Minnesota businesses is only $63.53 per month.
A recent University of Minnesota study, “Assessing the Digital Presence of Rural Minnesota Businesses: Basic Methods and Findings,” shows that across 23 rural Minnesota communities only 42.6 percent of businesses have a website and a mere 9.9 percent use social media. Businesses in growing rural communities, as opposed to those with stagnant or declining populations, were more likely to have websites and to use social media.
“As our world becomes more connected, customers are more likely to search for many products and services online,” the university study reports. “More than 60 percent of purchase decisions start with research on the Internet; 23 percent of adults use their mobile phones to search for places (business, restaurant, coffee shop, resort, or lodging, etc.). As such, most businesses would benefit by at least examining their digital presence options.”
Broadband is an indispensable infrastructure for rural communities, says the Blandin Foundation’s Joselyn. The organization has been working with rural communities to both secure broadband access and to adopt the new digital technologies since 2003. Blandin and its partners secured an ARRA grant of nearly $4.9 million to promote Internet adoption in rural communities and added another $2.7 million of their own to the project.
One of the project’s target goals is to set up 11 demonstration communities using the Minnesota Intelligent Rural Community (MIRC) approach to determine priorities. For instance, Winona community leaders have determined that they need to increase Internet access in campgrounds and parks to compete for tourists, while other communities are focusing on goals such as e-health and distance-learning initiatives.
“Compared to the rest of America, rural Minnesota is leading adoption,” Joselyn says. “And MIRC partners are adopting at a faster rate than others.” According to a study conducted at the University of Minnesota–Crookston, about 64 percent of rural Minnesotans with access to broadband have adopted the new technologies, compared with 55 percent for all of rural America.
“To be successful in the new economy, communities need to be connected,” Joselyn says. “Access denied is opportunity denied.”