Minnesota Providers Push for Draconian Limits on Public Networks in Minnesota

Minnesota is one of the eighteen states that have enacted specific barriers to prevent the public sector from building networks (protecting incumbents from any competition). It presently has the uniquely high - 65% - referendum requirement on communities that want to build a network that will offer telephone services (which thereby includes all fiber-to-the-home triple play networks).

However, up in Cook County, they could not meet that threshold. They had a referendum in which 56% voted yes - a majority but not satisfactorily large for a 1915 MN law. State Representative Dill and Senator Bakk realized this was crazy - state law set too high a bar for the County they represented. Cook would be unable to build the network they need - remember that the whole County was isolated following a single fiber cut because Qwest does not invest in communities where profits are scant (let's not blame Qwest though - private companies are not supposed to be charities and they should not be expected to build the essential infrastructure communities need).

Rep Dill and Sen Bakk introduced a bill to reduce the 65% to 50% referendum but the private providers must have thrown some sort of tantrum. Before the bill could even be heard, incumbent providers had reached some sort of a deal with Rep Dill and Sen Bakk, agreeing that they would not oppose the bill if it only applied to Cook County. Cook would be able to build its network, but all other local governments, many very rural and in similar but not equal severity, would be stuck with the 65% referendum requirement if they wanted to build a similar network. In the House, this "compromise" has flown through multiple committees with little debate.

In the Senate, some fought back, wondering if perhaps massive incumbent providers shouldn't be the ones to determine if communities can build modern networks -- especially when the providers won't. So the bill was introduced in the Senate. It was quickly amended to the incumbent demanded-text, but was then amended back again to a 50% majority for all MN (better than the 65% in current law). This was all in the Senate Committee dealing with Telecom. Confused yet?

It was next forwarded to the Committee dealing with Local Government, where the providers had created a new, super secret compromise with a number of Senators. Providers agreed to the 50% language for all, if they got some draconian additional language that made it incredibly difficult for communities in other ways. Just before the meeting, Qwest's lobbyist was hanging with some of the cable co lobbyists - that combination never bodes well for those of us that want competition.

As a side note, the 65% to 50% requirement should not require appeasing the incumbent providers. They already have tremendous advantages -- including decades of generous government subsidies and massive scale. The idea that Qwest, a massive company operating in 14 states, needs to be protected from a small community in outstate Minnesota baffles me. We need more competition, the incumbents shouldn't be able to attach conditions, further privileging their advantages in the market.

The Committee offered an amendment (attached here) that represented the provider "compromise." In return for incumbents not opposing the change to law, communities would have a 50% referendum requirement in addition to a variety of additional requirements, some far more onerous than the 65% referendum represented. In particular, the local governments would have to provide detailed business plans to their competitors, word the referendum in a specific manner not previously required by law, and subject any agreement between the local government and an entity related to the network to competitive bidding requirements -- which would totally disrupt the freedom of communities to choose their partners based on criteria they feel most important.

In short, the Committee took a bill intended to lower the barrier to entry for communities to build the networks they need, and they RAISED it. One might expect such a significant shift was debated, perhaps hotly. It was not. I was the lone testifier about the amendment but I might as well have sung a song. There were no questions, no discussion. Just like that, it was over. Few had known of the amendment's existence, let alone read it. Without so much as a word, the Committee announced its intention to create more barriers for community networks -- the one hope for competition and modern infrastructure in Minnesota outside the metro area.

More on this to come -- I certainly hope some of the Senators come to their senses. I do not know where the bill is headed next because its status is not yet updated, some 24 hours after the Committee adjourned.

These are the comments I intended to offer on the bill before it was hijacked by the amendment:

I am Christopher Mitchell, a researcher at the Institute for Local Self-Reliance. We are a 35 year old non-profit in Minneapolis that focuses on policies that encourage community development. Five years ago, we developed an interest in telecommunications because we recognized these networks are a necessity for communities. My research has focused on community networks, particularly fiber-to-the-home deployments.

I support this bill because it lowers a significant barrier to building the telecommunications infrastructure needed by Minnesotans. People in rural areas have found themselves unable to enjoy modern broadband technologies because building these networks is incredibly expensive and offers little hope of profits for the private sector absent public subsidization.

Just as many rural communities built their own electrical networks to ensure they could partake in the essential utility of their day, some have now started to build these broadband networks. The private sector is unable in many cases and unwilling in others, to build the necessary networks. Communities must already overcome many barriers to build a network.

Some, like the high cost of building a network, are inevitable. But the 65% supermajority, unique in the nation, is not.

The 65% referenda requirement invites providers who do not want to deal with competition to spend heavily, knowing that they only have to convince or confuse a minority of voters to maintain the status quo.

In truth, ILSR believes Minnesota should join the majority of states that have enacted no state barriers to public ownership of networks. In a time when the State itself has recognized the value of greatly increasing access to broadband networks, it should not be creating additional barriers to discourage the people most motivated to build them. After all, local governments are already structurally accountable to their citizens. If they cannot build these networks, the odds are that no one will.

To the extent we want to encourage competition in policy, barriers to public ownership have the opposite effect. Too many of our rural areas cannot attract even a single broadband provider. They will certainly never see the benefits of competition unless freed to build their own network.

One hundred years ago, we saw the results of expecting the private sector alone to build the electrical infrastructure. Some 90% of farms had no access. Though private utilities argued then that electricity was too complicated for local governments, the public sector stepped up and ensured all Americans could benefit from that essential technology.

I urge the Committee to reduce, or ideally remove, this barrier to essential infrastructure.

Photo by Jackanapes, used under creative commons license.