This story was originally published by MinnPost.
WASHINGTON — When the president of a trade association representing Minnesota’s telecom industry was asked how many of his members would participate in a $652 million federal program aimed at providing internet access to those who lack it, he was quick to respond.
“Zero,” said Brent Christensen, president and CEO of 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 are eager to expand their services.
But Christensen said none of them would bid for the federal grants because of the regulations that would come with it — especially the requirement to provide low-cost services to low-income households in exchange for grants that would allow internet providers to build out their networks.
“To put those obligations on small rural providers is a hell of a roadblock,” Christensen said. “Most of our members are small and can’t afford to offer a low-cost option.”
The state’s cable companies have also turned sour on the new initiative, which is 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 of as a solution to unequal access to the internet in Minnesota could turn out to be a bust.
Last year at this time, the federal government announced that Minnesota would receive $652 million to help reach the lofty goal of “internet for all” in the state. Currently, about 12% of the state’s households, mostly in rural areas, lack access to the internet.
BEAD is administered by the National Telecommunications and Information Administration.
Funding for the program came from a massive infrastructure bill approved by Congress in 2021 that set aside $42 billion for all states to improve access to the internet. But the money came with strings — federal regulations that Minnesota’s internet providers say are “onerous.”
Especially when those federal regulations are coupled with new labor requirements imposed on the internet provider industry by the state Legislature earlier this year.
Those new regulations include requiring companies who receive state grants to pay workers a “prevailing wage,” a basic hourly rate paid on public works projects to a majority of workers in a particular occupation. The federal government does not require BEAD grant recipients to pay the prevailing wage.
Christensen said there are no telecom jobs on the federal government’s prevailing wage list, which the state statute requires internet providers to use. So companies in Minnesota would have to pay more because they would have to use a similar, but higher-paying, classification.
So expansion of internet service in Minnesota may slow even before the BEAD program is implemented.
A smaller 10-year-old state initiative, called the Border-to-Border grant program, has funding only through 2025. The plan was to have BEAD take over the job of bringing internet service to the unserved and underserved. Now that is threatened.
“(BEAD) sounded like a great idea, but when you get into the nuts and bolts of it, it’s not a great deal,” Christensen said.
And Wolf said “it’s becoming clear that it might be too risky to participate in the program.”
Lobbying for change
Fifteen states have received full approval of their BEAD plans, but Minnesota is not one of them. It recently received approval of “Volume 1,” a submission that details the state’s five-year action plan to close the digital divide, identifies unserved and underserved areas in the state and outlines how a competitive grant program would be set up.
The second submission, Volume II, is focused on the nuts and bolts of the state’s BEAD implementation plan and requires all grantees to commit “to provide the most affordable total price to the customer for 100/20 (megabits per second) service in the proposed service area.”
The state agency in charge of the process, the Department of Employment and Economic Development’s Office of Broadband Development, is still negotiating approval of Volume II with NTIA.
“At this point, we haven't finalized anything with NTIA,” said Bree Maki, executive director of the Office of Broadband Development. “And so it's still sort of a work in progress, making sure that, you know, we're holistically looking again at what is affordable for people in order to have the services, but also (asking), ‘How can we make sure providers provide the services?’”
Since a final plan has not been approved, the state’s internet service providers are lobbying the Office of Broadband Development, and in some cases the NTIA, seeking alterations.
“We’re still in a spot where there is hope that the process can be changed,” Wolf said.
Comcast, the largest internet provider in the state, said it is waiting to access a final plan. “We can’t decide if we’ll bid until we know what the final rules are,” Comcast spokeswoman Sena Fitzmaurice said.
Like other internet providers reached for this story, Fitzmaurice praised the state’s sunsetting Border-to-Border program, which has provided nearly $350 million in grants to the industry. “We worked well with it,” she said.
Meanwhile, Wolf said “we understand that things have to be changed, but what we’ve seen is that (BEAD) is totally different from Border-to-Border.”
Despite the protests of the state’s internet providers, Maki is confident the BEAD program will roll out at the end of next year or the beginning of 2026.
BEAD regulations require a state to wait 365 days after final approval of a plan to select internet provider companies as subcontractors.
Wolf indicated there may be few takers.
“Without people applying they are not going to reach ‘internet for all,’” she said.
MinnPost Greater Minnesota reporter Ava Kian contributed to this report.
This article first appeared on MinnPost and is republished here under a Creative Commons license.