After a Monticello high-speed Internet project got an unfriendly reception from cable television and telephone companies, Gov. Tim Pawlenty's broadband committee decided Friday to drop its list of shovel-ready projects lining up for a share of $6 billion to $9 billion in expected federal stimulus funds.
The funds are expected to be steered to the state as part of the stimulus package being considered by Congress; the amount devoted to broadband projects hasn't been resolved.
The list of ready-to-go broadband projects in Minnesota included a $27.5 million municipal broadband system in Monticello, a $5.4 million Minnesota Department of Health plan to expand rural health care, and a $2,500 project to extend high-speed Internet service to a library in Worthington. Other projects included a $19.6 million plan to provide high-speed Internet to 11 Minnesota communities, including Cannon Falls, Zumbrota and Lake City, and an $18.5 million Internet-TV-telephone system in North St. Paul.
The governor's Ultra High-Speed Broadband Task Force, meeting in St. Paul, voted to abandon the list of ready-to-go projects, saying it was no longer needed because state officials will have less control over how the federal money is spent than was previously thought.
Asked whether the committee's decision to drop the list was related to objections by telephone and cable officials to spending stimulus money on projects that competed with them, Committee chairman Rick King, executive vice president of information provider Thomson Reuters, said the list was being abandoned because "people were afraid it would appear we had vetted the list of broadband projects."
The Monticello broadband project, which city officials said could be completed this year, came in for particular scrutiny. It was funded by city revenue bonds in 2008, but the money has been tied up in court by a lawsuit filed by Monticello telephone company TDS Telecom, which alleged an illegal use of city bonds to pay for the project. The city won in Wright County District Court, but needs federal stimulus funds because the time limit on using the bonds will expire before current TDS court appeals are exhausted.
But some cable and telephone representatives questioned whether the city-owned broadband network should receive federal money.
"In order for your broadband service to grow in Monticello, the existing broadband operators there [TDS and cable TV firm Charter Communications] will have to shrink," said John Gibbs, vice president of state government regulatory affairs at Comcast, a cable TV, telephone and Internet service provider. "And if you drive down the number of customers for the existing broadband operators, there will be jobs lost in Monticello."
"The city's broadband customers would pay less for Internet service than the competition charges," said Jeffrey O'Neill, the Monticello city administrator. "That would help create jobs at our commercial customers."
Others, such as Cathy Clucas, state executive for telephone company Embarq in St. Paul, said the federal broadband money shouldn't be spent anywhere already served by cable or telephone company broadband.
Dick Sjoberg, president of cable TV firm Sjoberg's Inc. in Thief River Falls, Minn., agreed.
"Our first priority should be for spending federal broadband dollars in unserved areas or for education or health care," he said.
Steve Alexander • 612-673-4553