State would benefit from sizable broadband fund

  • Article by: EDITORIAL BOARD , Star Tribune
  • Updated: March 19, 2014 - 7:26 PM

Greater Minnesota’s future depends on high-speed Internet access.

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Telephone poles in Two Harbors, Minn., were readied for fiber-optic cables in 2012.

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Dave Horning says his tire and repair business in Herman is taking a competitive beating because he lacks affordable high-speed Internet and the access to timely supply and pricing information that it would provide.

Justin Dukek wants a bigger market for his signage and advertising business. But with Internet access at only 12 megabits per second, he has trouble serving clients far from his operation in Bagley.

Jody Reisch works for an East Coast company from his home in Luverne; his wife works for a company in Sioux Falls and can work at home, too. That became much more expensive when they moved three years ago and discovered they had lost access to affordable high-speed Internet.

Horning, Dukek and Reisch are among dozens of Greater Minnesota residents who have come to the State Capitol this session to plead for help in improving broadband access. They aren’t seeking mere convenience, an exotic lifestyle, or a deep discount at taxpayers’ expense. Rather, they’re asking that their communities be given a chance to survive economically in the 21st century. That’s how essential high-speed Internet has become.

Their pleas deserve heed. In fact, a meaningful response from state government is past due. In 2010, the Legislature and then-Gov. Tim Pawlenty set in law the goal of at least 10 to 20 mbps for downloads and 5 to 10 mbps for uploads throughout Minnesota by 2015. But no state funds were applied to that effort that year, or since.

The market hasn’t stood still in the intervening years. The share of state households with Internet service at or exceeding those speeds grew by 18 percentage points from April 2011 to October 2013, according to a report of the Governor’s Task Force on Broadband.

But that leaves nearly 30 percent of Minnesotans, and more than half of Greater Minnesota residents, still lacking affordable access — and, too often, any access at all — to the Internet speeds required to conduct a video chat or participate in a webinar. Forget about taking an online high school or college class, consulting with a physician in another city about a changing medical condition or serving business clients around the world.

The Governor’s Task Force does not think the state’s statutory broadband goal can be reached by the end of 2015, or anytime soon, without state and local government giving the market a push. Gov. Mark Dayton said recently that he concurs in that assessment. But his spending recommendations to the 2014 Legislature did not include his task force’s recommended remedy — a $100 million fund, from which competitive grants would be awarded to public-private partnerships committed to bringing broadband to places without it.

Dayton, who campaigned in 2010 on a promise to achieve “border-to-border broadband,” said on March 6 that he does not believe applications for grants would be sufficient to warrant creation of a fund this year. Advocates counter that such projects will never appear without a state incentive for their creation. That argument rings true. If market forces alone were sufficient, Minnesota would not rank 23rd among the 50 states in broadband availability.

The time is right to initiate a broadband incentive fund for another reason: This year, the state can afford it. That could not have been said through most of the last 14 years. An improving economy is generating forecasted revenues through June 30, 2015, that exceed scheduled expenditures by $1.2 billion.

About half of that surplus appears headed for tax relief, including the repeal of an ill-advised sales tax on telecommunications equipment enacted last year. Repealing that tax is among the recommendations of the broadband task force. It’s much in order. But that tax has been collected for less than a year. Clearly, an additional prod is needed. Establishing a competitive grant to leverage private and local government investments in broadband would be a fitting onetime use of a surplus that may not recur.

More significant is the prospect of a substantial and lasting return on the investment. For Greater Minnesota businesses, a $10-for-$1 return was projected by a recent analysis sponsored by the Blandin Foundation. Conversely, the cost of not investing is the continuation of what a Moody’s report described last year as “increasing divergence” between the state’s metro and non-metro economies. That’s a costly and damaging trend.

Is an eye-popping $100 million fund needed this year? A smaller amount might be considered a down payment. But it will take a substantial sum, wisely used to leverage other funds and applied to areas of greatest need, to make a dent in a deficiency that will cost upward of $3 billion to completely eliminate. The conventional legislative competition for dollars tends to whittle big proposals down. But the opportunity to boost Greater Minnesota’s potential, and the downside of inaction, should raise this proposal to unconventional status.

  • All over the map

    Wide variation existed in 2013 among Greater Minnesota counties in the percentage of households served by nonmobile broadband at speeds of at least 10 megabits per second for downloads and 6 mbps for uploads. Some examples:

    • Kandiyohi, 6.07 percent.

    • Beltrami, 98.4 percent.

    • Douglas, 5.57 percent.

    • Goodhue, 61.65 percent.

    • Rock, 15.05 percent.

    • Blue Earth, 17.53 percent.

    Sources: Governor’s Task Force on Broadband 2014 Report and ConnectMN.

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