Should the state bond for broadband?

UPDATE: See addition at the bottom regarding criteria for bonding projects.

If Minnesota wants to move up in the state rankings for broadband access and speeds, it will need more fiber optic cable in the ground. And one way to encourage that without direct infusion of state money is to allow broadband projects to be included in state bonding requests, even if they ultimately are owned by private companies.

That’s one of the thoughts Rick King had this morning when I caught up with him to get his take on Gov. Mark Dayton’s re-creation of a state broadband task force last week.

King, chief technology officer for Thomson Reuters, led the original 18-month study of the state of broadband in Minnesota. That prompted the 2010 Legislature to establish speed and access goals for the state for the year 2015. Dayton’s new task force, to be appointed by October, is supposed to track how well we’re doing and, by the end of January, recommend ways to do better.

One goal is to make high-speed access available to all Minnesotans, and King thinks the state is making progress. Another goal is to move the state into the top five in access and speed. There isn’t much evidence that that is happening.

“To get higher in the rankings is going to require money,” King said.

Here’s a chart of the Top 10 from a Minnesota task force report last December. Minnesota, not on the list, ranked 24th with speeds just below the national average.

broadband - fastest states - 2010.JPG

A direct state infusion to follow on federal stimulus money that state projects have received isn’t politically likely. But treating fiber projects as utilities and using the state’s bonding authority might make sense, he said. Projects could include “last-mile” fiber to people’s homes and businesses or “middle-mile” projects creating the backbone for service. And in some cases, the ultimate owner might be a private Internet provider. That would require a departure from existing law.

So a recommendation to the Legislature to that end might be one thing to look for when evaluating what the task force cranks out once it gets going late this year.

(Disclosure: King serves on the Minnesota Public Radio Board of Trustees.)

UPDATE: Minnesota Management and Budget spokesman Joel Ludwigson says bonding for technology projects can be tricky and, to this point anyway, has depended on the specifics of the project. The state has not bonded for utility-type projects like King was talking about, but might if at least part of it could be considered a capital project.

The bottom line, Ludwigson said, is the constitutional requirement that bonding be limited to land and buildings. That might be a high bar.

  • Virginia

    I would love to have faster internet broadband. I am affraid the State will bond for it and I will not be able to afford it from Charter Cable or any Cable Company.

  • Eric

    Was/is this a preview to something airing on MPR today? This article has only ONE direct quote from Rick King and it is very brief. I appreciate the paraphrasing, but is this article going to be followed up with something more substantial?

  • Dave Peters
  • Peter Tobias

    The Twin Cities have good internet access, due to the many people living here. I am not opposed to support all areas in Minnesota to get broadband, in fact I support it, but at a price: NO discrimination of the larger cities by the state, for example in distributing LGA, as a hard condition for any money flowing into rural areas. The rural areas must decide if they want equal living conditions and side with the center cities on this or if they side with the Tea Party and prefer each for its own.

  • Gary Hanson

    Well If the work is done and private sector jobs are the ones created to do the work. However I don’t want the state jumping in and doing the picking .. oh big cities get it, certain economic classes get it free. We have enough of that going on now. It should be the States role to set the criterias of the physical project. Not to get into the who gets what and when. Free enterprise should be the answer to the broadband not goverement. Most areas now are held hostage to what service the get. Its either Comcast or infinity – as they like to be called. Or Charter – as my internet always seems to be coming on a charter boat from china at times.

  • Tom

    There is no need for the State to bond to bring wireless broadband to rural Minnesota. The FCC is currently considering an application by LightSqured, a private company, to turn on its patented satellite technology that can bring 4G wireless broadband AND universal cell phone coverage to every rural resident without public dollars or expensive cell towers. Bonding to bring fiber optic cable to every rural resident would cost hundreds of millions of dollars and do nothing to address the lack of rural cell phone coverage. LightSquared’s proposal will bring the best technology to rural consumers without any public investment. This is the best solution of how to address rural technology deficits and Minnesotans should let our congressional delegation know they support this alternative.

  • Kevin Watterson

    I could be wrong, but I can’t recall that we’ve ever put the state’s bonding authority behind something owned by a private company. The constitution lays out what the state can contract debt for in Article XI, Section 5. Section 2 pretty much prohibits the state’s credit from being given to an individual or corporation.

  • Bryan

    It’s the Major Metro and Tier 2 cities that have issues. Smaller towns are already doing FTTH. In fact, you can find many farms getting fiber to the farm throughout MN, ND, SD, IA and WI. Make it easier (less fee’s, Davis Bacon, ect) for others to trench competing fiber and others will come compete to bring up speeds.

  • John Savageau

    Not sure the state of Minnesota wants more government involvement in telecom beyond setting up a basic regulatory framework.

    In nearly every other similar case around the world, promoting private competition and investment is a far more powerful (and successful) option than putting the burden on citizens to fund government managed construction and deployment.

    What really scares me is the line stating “And in some cases, the ultimate owner might be a private Internet provider.”

    Darn right – telecom infrastructure should be owned by private companies. Keep government out of telecom – Minnesota’s existing sorry rating in the US broadband scale should be a warning to all citizens.

    My own state (California) did better than MN, and we are one step above bankruptcy!

    A “former” Minnesotan…

  • Andy

    Free enterprise and the private sector isn’t working for the deployment of broadband in Minnesota or anywhere else.

    The fastest broadband speeds available to private citizens in this country are actually provided by municipal systems. Google Chatanooga or look at Fibernet Monticello in MN.

    There are certain economies of scale and fixed costs that prevent investments into wires going into a house or place of business. A private enterprise is not going to invest in fiber to the home unless it can be assured that it will gain that customer. If they lose that customer to another company’s investment in wire or wireless then that becomes stranded investment that has to be written off as a loss. Private enterprise does not want competition in telecom.

    That’s why it is basically AT&T and Verizon that own the majority of wirelines in the country (CenturyLink in MN) and AT&T and Verizon that have emerged as the primary providers of Wireless. And AT&T and Verizon are responsible to shareholders and the bottomline. If there is not a competitive market that provides alternatives for broadband (or limited competition in the case of cable and comcast) with security, highspeeds, etc., then AT&T and Verizon (CenturyLink in MN) won’t have any incentive (or reduced incentive) to invest in their networks (fiber to the home, LTE in rural areas, etc). The result is broadband availability in Minnesota and the country will not be up to par with the rest of the world.

    The role of Gov’t in the deployment of broadband in MN should be to create incentives to invest in broadband. THere are a number olf ways to do that. That is the role of a taskforce.

    Simply saying that Gov’t should get out and let the private sector act on its own is not an answer. Actually our current state of broadband in MN is the result of such a policy.