Big ISPs Never Stop Trying

A bill has been introduced in the Minnesota legislature (Minnesota HF 3605) that looks to bypass the normal way of making State broadband grants. The bill is described as a line-extension funding mechanism that would provide funding to bring broadband to homes that have no broadband alternative.

I like the idea of ISPs being encouraged to extend their service areas. Cable companies for years have been faulted for not building the next half-mile or mile past where service stops at the edge of every city. The households outside of an existing cable network often have the least chance of finding any other broadband solution since the lousy FCC maps often identify them as having great broadband options when they have none. But I have a lot of problems with this particular bill as the way to reach such homes:

• The bill doesn’t define what it means for a household to not have available broadband. For example, there are very few homes in Minnesota that are not in the range of a WISP.
• The amount of possible compensation, at $25,000 per home is far too high. As Ann Treacy of the Blandin Foundation points out, the average state broadband grant in previous years has averaged $2,225 per household. Even the new federal grant programs that will provide up to 75% of the cost to build to remote locations will likely be providing less than $10,000 per customer in the highest cost places and far less in many others. The $25,000 cap sounds like a land grab by ISPs to snag $25,000 in funding while spending a few thousand to bring broadband. This is a waste of state money, and ISPs should only be reimbursed for some portion of what they spend.
• I think I’m most bothered because this could be a way to fund cable company expansion in places they should have expanded with their own money. Many cable companies have ignored pleas from residents living outside of towns, even when the areas in question have a high enough housing density to meet the cable company’s supposed construction metrics. This bill should have a density test and should not be using grant money to reach households in areas that don’t need grants. Perhaps there also ought to be some kind of distance test, with this money unavailable near to towns.
• The awards are to be made by a reverse auction, by individual address. I know that realistically that only the big companies will wade through the needed paperwork to chase funding in this complicated way. This is essentially a separate auction, by customer. ISPs with the staff to wade through the process can grab the full $25,000 per potential customer.
• Households kick off the auction by signing up on a state portal. This bill creates a big burden on a state broadband office to verify that each address doesn’t already have a broadband option – and also that somebody else isn’t already scheduled to build in the area.
• Two-thirds of the bill addresses easements, which seem completely unneeded. Homes and businesses must actively join the list of eligible households – and it seems highly unlikely that a home is going to ask to get better broadband and then refuse to agree to an ISP going onto the property. This seems more like a backdoor way for the cable companies to get into MDUs or housing developments that want to charge for easements. This bill is not the right way to deal with that access issue, and unsurprisingly, this bill is written 100% in favor of the ISPs.
• This potentially could create a huge funding obligation for the state. Every home with broadband could enter the portal, and that would mean the end to normal state broadband grant programs – it means the state will have agreed to fund broadband to everywhere that needs it at $25,000 a pop – if the state passes this it better be ready to write some possibly huge checks. And that’s probably the second most troublesome issue with this idea. While described as a line extension bill, every home in the state without good broadband could join the portal. If this is really a line extension bill, then why not only make it eligible within some set distance from existing broadband networks?
• I’ve read the bill several times, and it looks like it excludes electric cooperatives from participation – but legalese is sometimes hard to understand, so I’m not certain.

Again, I’m not against the idea of funding line extensions. But this bill was clearly written by the big ISPS who are going to use it to make a profit while expanding networks. The reverse auction is too slanted towards big ISP, too burdensome for the state, and could fund areas that don’t really deserve grant funding. Minnesota already has a grant program that can fund these same areas, and there is a huge pile of federal money coming to the state later this year. I’d say the big ISPs have done an end-around the normal grant process with this legislation so that they don’t have to play in the sandbox with everybody else. Unfortunately, the latest I hear, the legislation is moving forward.