U.S. Sen. Amy Klobuchar and U.S. Rep. Collin Peterson met with about a dozen Internet service providers in Detroit Lakes on Friday, Feb. 24, to help solve a nagging problem—how to get high-speed Internet service out to everybody, even rural areas where there is only one home or farm every mile or two.
One possible solution—put funding for it in the new Farm Bill, which would cut red tape, simplify the regulatory and funding process, and put the focus on rural areas where the need is greatest.
"We'll have to be very specific, or it will get eaten up," warned Peterson, who is the ranking Democrat on the Agriculture Committee.
"I got on Commerce (Committee) in part so that I could work on this," Klobuchar said. "I was hearing stories of farmers going to a Wilmar parking lot to get their business done because they can't get wi-fi."
About $230 million in federal money has gone to Minnesota for broadband, versus about $35 million in state money, so the federal effort has not been unsubstantial, Klobuchar said. But a sustained effort is needed, with a steady funding source.
Klobuchar will recruit six senators who are focused on rural issues, while Peterson will recruit six similar House members, and the group will work with industry experts to thresh out a feasible funding plan.
One goal of the new Trump Administration is a major nationwide infrastructure improvement project. Rural broadband is vital for the economy and should be included, Klobuchar said. "We should seize this moment with this administration," she said.
The biggest problem is that it's costly to cover rural areas, especially thinly populated rural areas. It might cost $500 or less to hook up customers in town, but as much as $40,000 per customer in, for example, Otter Tail County sugar beet country where there's just one farm every couple miles, said Dave Bickett, general manager and CEO of Park Region Mutual Telephone Co. and Ottertail Telcom in Underwood.
It cost about $800,000 to build out broadband to 110 people in one lake area, he added. "There's no way we would be able to afford that without (government) funding," he added.
One rural area east of Thief River Falls has 355 people with no Internet service provider. It would cost about $4 million, or $12,000 per customer, to build that out. Even with a 50 percent grant match, that's hard to justify on a cost-benefit basis to a board of directors.
"Even on a 50-50 match, we can't get a traditional bank loan," Bickett said.
Mark Birkholz, director of southern markets for Arvig Communications, and Gary Johnson, CEO and general manager of Paul Bunyan Communications in Bemidji, were among a half-dozen or so service providers and others who met with Klobuchar and Peterson at the Detroit Lakes Library.
They had high praise for the Minnesota state agency that works with broadband but not so much for federal agencies.
Federal money is capped and often comes with so much regulatory requirements that an additional staffer must almost be hired to deal with it all, Bickett said.
A big problem is that federal funding from the Universal Service Fund is largely tied to taxes on landline telephones, which are fading away as cell phones take their place. Logically, Internet taxes would replace landline taxes, but there is such fierce sentiment in the U.S. House not to "tax the Internet" that it's politically difficult to make that switch.
So those taxes are now up to 18 percent to 20 percent on landline phones. And since funding follows those phones, broadband-only hook-ups are not realistic in many rural areas, and a land phone has to be part of the package.
It all means that costs are falling heavily on rural areas.
"We need to get the House and the Senate together, get the rural people together and start making some noise," Peterson said to Klobuchar. "I agree," she replied.
Federal funding also penalizes Internet service providers if they provide service outside their specific areas, even if a neighbor across the street has no service provider and is begging for broadband.
The Trump Administration has also hit the pause button on one initiative that was about to go into effect to provide broadband to lower income, underserved areas such as Indian reservations.
"We serve three tribes, how do we afford it?" said Johnson, of Paul Bunyan Communications. "It was a lifeline for broadband, we were about to hit go, now there's a big pause button at the FCC."
One solution to providing rural broadband might be for counties to get involved
"Itasca County is a great example," said Johnson. The county there has done everything it can, including putting in county dollars, to connect the islands of broadband to work towards covering the entire county, he said.