Transcript: Community Broadband Bits Episode 190

This is Episode 190 of the Community Broadband Bits Podcast. Executive Director of the Greater Minnesota Partnership Dan Dorman joins the show to discuss the problem of the doughnut hole in Minnesota's broadband policy. Listen to this episode here.

 

Dan Dorman: In order to qualify for funding, the county seat had to be removed from the project. Now what you have is a doughnut hole.

Lisa Gonzalez: Welcome to episode one hundred ninety of the Community Broadband Bits Podcast from the Institute for Local Self Reliance. I'm Lisa Gonzalez.

As state legislatures consider allocating funds to improve internet access in rural areas, qualifying criteria had become an important issue. In this interview, Chris and his guest Dan Dorman talk about how Minnesota has developed a problem of the doughnut hole. Dan is the executive director of the Greater Minnesota Partnership, a nonprofit advocacy group dedicated to economic development policies and resources benefiting the areas outside of the Minneapolis, Saint Paul Metro Area. 

Minnesota's border to border broadband grant program has awarded grants to sparsely populated areas. As a result towns with a little higher population have not had access to funding. They may be surrounded by high quality internet access in rural areas while business and residents in these towns are stuck with slow, unreliable connectivity that hampers economic development.

Chris and Dan discuss the doughnut hole phenomena as it has occurred in Minnesota, but this could be any state that chooses to provide funding only to the most rural areas with the worst internet access, without considering the areas in between. Here are Chris and Dan Dorman executive director of the Greater Minnesota Partnership.

Chris Mitchell: Welcome to another episode of the Community Broadband Bit's podcast. I'm Chris Mitchell and today I have a repeat guest Dan Dorman executive director of the Greater Minnesota Partnership. Welcome to the show.

Dan Dorman: Happy to be here, Chris. Thanks for asking me to be on. 

Chris Mitchell: Absolutely. I think we have some very interesting discussions ahead, stuff that we've been concerned about in terms of how certain kinds of investment can hurt nearby areas in a more rural setting. We're really going to dive into that here in Minnesota and what's happening. First, I want to focus on the Greater Minnesota Partnership. Can you just briefly remind out listeners what it is?

Dan Dorman: Absolutely. The Greater Minnesota Partnership is a advocacy, lobby organization that focuses only on economic development issues in Greater Minnesota. What we've realized is that Greater Minnesota, as opposed to the metropolitan area, didn't maybe have a clear enough singular voice in the area of economic development. That isn't to say that there's something nefarious that the [inaudible 00:02:45] people are up to, they're just organized better than we were. We're trying to match them on that with our organization. We work economic development issues Greater Minnesota only. Our membership is a variety of people. We have businesses of course, nonprofits, higher ed institutions, chamber of commerces, local EDAs, few other different types of nonprofits. We started three years ago with about thirty members. We went to sixty members, and now we're over a hundred. We've been sowing some great membership growth and we're optimistic about the future.

Chris Mitchell: When you say Greater Minnesota, I think a lot of people instinctively think small, rural towns, counties that have very low populations density. What is Greater Minnesota?

Dan Dorman: We would define it, the legislature in fact defines it, is everything outside of the 7-county metropolitan statistic area. It would include a couple of the collar counties near the metropolitan area, but it does include everything from folks that live in a township, that don't live in an organized city, to people in small towns up to the folks that live in Rochester, Duluth, or the regional centers in Minnesota as well.

Chris Mitchell: Last time we talked, we were focused mainly on this program which Minnesota has developed, and I think which we continue to be thankful for the Minnesota legislature and the governor for putting some money aside for investment in what they're calling border to border broadband. We've argued that there should be more money. Today we're going to talk more about how the program could be strengthened. If people really want to get more into that, we're not going to get into that history so much. We're going to focus on what's happening today. People can go back to that previous show which will be linked to in the show notes.

I think a good way to start would be, can you tell me what the problem is in Lac qui Parle County out in Western Minnesota near the South Dakota border?

Dan Dorman: I think that Lac qui Parle County is just a great example to use of what happens if we have such restrictive language like we do now in Minnesota. It really prohibits grant money from going to the majority of people that live inside a city. Lac qui Parle County, a fiber project was done, or a broadband project was done several years ago, but in order to qualify for the funding the county seat Madison had to be removed from the project. Now what you have is a doughnut hole. You have everyone in Lac qui Parle County with really good broadband with the exception of the folks that live in the county seat who have substandard broadband. I'm not sure how they're going to ever get that fixed if we don't change the language in the program. Right now the way it sits, if a provider in the city, or wherever, were to come forward in Madison, which is the county seat, apply for a broadband grant in Minnesota, they wouldn't be eligible. What we're trying to do is find a way to fix that to make communities like Madison eligible for funding.

Chris Mitchell: In the past, Madison was the reverse doughnut hole, where they had, for the time, comparatively better access because most of the county was stuck on satellite and dial up, whereas Madison had very slow DSL and very poor cable service, but it was something. Because of that something, they were not able to get any support, at that point, from the federal government, but also what you're saying is the Minnesota state program basically has the same thing. How would you describe the way the state program is structured with regard to where the program can invest and where it cannot?

Dan Dorman: I would split that in two separate areas. The technical aspect of it, which says that the Lac qui Parle County, prior to the build update they went through, so that had not been done what will happen now is the same thing. Madison would be excluded and the rest of the county could get upgraded. Technically it works very similar to how the federal funding did. It pushes the funding into the most remote areas. Certainly, not saying that those folks don't need to be brought up too, because they do. That's the technical side. 

I think the political policy, "How did we get here?" side of it is where the story is. I think that if you go back two years to where the program started, there was language put in that mirrored the federal language that, again, forced it into the more remote areas. That mix is really important, Chris. We talk about how do we get to real dollars, not ten million dollars a year. We really won't make any improvements at ten million dollars a year. How do we get that number up? How do we get a better mix? I believe that the only way to get there is by making sure that more people in Greater Minnesota qualify for funding.

As it is right now, we asked the office of broadband for a list of cities that would qualify for funding. We analyze that, and here's what I can tell you, that only two percent of Greater Minnesota residents that live in a city, live in a city that would qualify for funding. That means that ninety-eight percent of the folks that live in a city in Greater Minnesota aren't going to see any improvement under this program if we can't change the language. Another way to look at that is only eighteen percent of the total residents in Greater Minnesota live in an area that would qualify for funding. I applaud the governor's and Lieutenant governor coming out and recommending a hundred million dollars in funding, I'm just not sure we can get there with a program that excludes so much of Greater Minnesota, and will continue to create things like the doughnut hole in Lac qui Parle County.

Chris Mitchell: For people who aren't as familiar, this program was created about three years ago. It first got twenty million dollars. In the second year it only got ten million dollars. I think many of us have been very frustrated at whatever the flaws of the program, it deserved more money in years in which we had a budget surplus. I very much agree with you. The idea of putting so much more money into it is flawed if we're going to leave out the population centers, no matter if they already have some cable or DSL service. 

The thing that I've seen, and I'll point names, and you don't have to, is that when this debate was happening, the cable lobbyist were so savvy. In particular Comcast, who in my experience, as the best lobbyist in Minnesota on these matters. The other cable companies join them, but I think Comcast often leads it. I think their position was basically, "We don't care if the state spends a bunch of money improving access, we just want to make sure that in no possible world will it ever result in competition or new service being provided where there's already a cable company operating."

I think that the argument that they made was persuasive with legislators, which was basically the state should not put a dollar into a city that has slow cable service if that dollar could be spent on someone who has no options. I'm curious how you respond to that.

Dan Dorman: I think you're exactly right. Number one I was surprised by the veracity and amount of money that Comcast, I will name them because they were there and they did spend a ton of money influencing this program.

Chris Mitchell: An amazing thing is Comcast service territory is like ninety-nine percent in the metro area. At no point-

Dan Dorman: That's Greater Minnesota, perplexed the heck out of me that they were so vehemently opposed to this or trying to get language that would hurt. You look back at that, I addressed some of these issues with some of their lobbyists when the program's being set up, and one of the questions I asked was, "Gee, you're working really hard to cut yourself out of any possibility of a grant. Why would you want to do that?" I own a small retail store [inaudible 00:10:41] mention it in this podcast, we'll get you a discount, but in my world if somebody wanted to create a fund for tires, I'd be all about that. 

I said to the Comcast representative, "Why would you want to work this hard to cut yourself out?" The answer was, and this is what [the compelling 00:10:59], it sounds so good, is, "Oh, gee, we're fine. Don't worry about us. It's just those poor people out there with no service. That's who needs the help. It isn't us. We're going to take care of everything. All is well." That sounds so good until you look back at history and see what has happened with federal funding, for example. That's how we ended up with the doughnut hole in Madison.

Ultimately if you follow it forward to what it leads to is, you hit it right on the head, it is primed to make sure there's no competition in areas where they effectively have a unregulated monopoly. That's not a healthy situation for consumers or for the businesses in those communities. 

Chris Mitchell: If we look at a county that has poor access throughout, and you put some money into improving that access in the economic center where you can actually get some economic development, what does that do for the whole region? Is there a multiplier effect of sorts, or is that just something that will only benefit the city?

Dan Dorman: Clearly it has a multiplier benefit in, in fact, more than just the city because generally a city is where most of the economic development takes place within a county, particularly in Greater Minnesota. Most businesses, in fact, from an land use standpoint, that's where you want it to occur because you have the sewer and water and other critical infrastructure there. You want to encourage that growth in the city centers, but where do people live? Oftentimes they live somewhere near the city. They don't all live in the city. In fact, you could look at a city like Perham, they have more people coming inside to Perham to work during the day than there is in total residence. A lot of people live right around the city. Obviously, if you help those businesses expand, create better paying jobs within the city, that brings up the whole region.

Chris Mitchell: What happens when, in a place like Madison, you can only get better internet access by leaving the city? What happens to the communities?

Dan Dorman: You'll start to see that community go the other way. They'll start to lose population. They will not build a tax base that will help them be vibrant. I think ultimately, it sounds overly dramatic, but if that I not fixed in the future, those communities will start to die and other communities, that are surrounded, that got the upgrades will start to grow. I think that an example of this, Chris, that we should all really keep an eye on is Kandiyohi County in the city of Willmar. The city of Willmar is the hub, and there's some discussion there about, "What do we do?" 

From my view I can always tell when there's been an active local provider because you start to get the comments of, "Oh, gee, things are fine here in the city. Let's just do the rest of the county," like what happened in Lac qui Parle. If that happens in Kandiyohi County, that would be devastating for the city of Willmar in the long run. They may have adequate, I would argue they don't, but they may have what they think is adequate broadband for their businesses today, but that if you upgrade the rest of Kandiyohi County, leave the city of Willmar out, and somebody needs to expand next time, they're going to look at the other communities within Kandiyohi County, or outside of the county. You're going to start to see Willmar decline.

Chris Mitchell: This is where my organization is a fierce opponent of Walmart. I would say that one of our critiques of a store like Walmart is that it drags the boundaries of the community out. It hurts main street in a way that forces a community to build more and more infrastructure that's harder to support because it's so dispersed. I think that's one of the dynamics you may see here in terms of dispersing the tax base in ways that just, it doesn't benefit anyone in the county because it's so much harder to support people when they're that spread out.

Dan Dorman: Right, no question about it. I think, Chris, and I've used the analogy as well, people will talk about, "Well, this is like rural electrification," right? You've heard that. We ran electricity out to the farm, and this is the same thing. You know what? It really isn't. There's one difference. When we electrified the farms, which was clearly a good thing, it was the same service that folks in town had. What we're doing now is we're saying, "You folks in town, we'll give you an upgraded gassing ramp, but because you have that upgraded gassing ramp, we're going to run super fast electricity out to the farms and it'll all work out." That's what's happening. 

If you think about that, think about it in those terms, what's the natural progression is going to say, "Hey, I don't want to be in this somewhat nice gassing ramp area. I'm going to go over there where they've got this great electricity." That's what we're doing. We ought to reverse that. We ought to get behind the governor's request for that hundred million dollars, but only with changes to make sure that more people qualify for this funding. I know the city of Austin is looking at one, and there it's the school district wide. It isn't simply the city. It isn't just the townships, but everybody's vote is going to come up together. I think we achieve more, get further when projects like that are also eligible for funding.

Chris Mitchell: One of the things that I think projects like that, which I think of as blended projects, where you have some people that are in the hardest to serve areas, and you have some people in areas which are often already have some level of service, although it's generally not very high quality service, and you blend them together. One of the benefits is that project is more financially viable moving forward. I think one of the dangers of a program like Minnesota's is that it's encouraging subsidies to areas that might be the hardest to maintain over time. The risk is, and I don't think we've seen any danger of that yet, because I think the office has done a good job of providing oversight. I think a lot of the co-ops that I'd like to see getting this money are very responsible, but a danger would be that if you're building in non-blended areas, the costs of maintain that network over the long haul may require more subsidies. We should be fiscally responsible in doing a one time infusion that solves this problem for the long term.

Dan Dorman: I agree. The other thing that we have to be aware of, Chris, what will happen because I saw it last year, is the same people that force, I would call, bad language will then come back and say, "See? This program's a failure because look at all these maintenance costs. They can't even pay the maintenance costs. That's why the government shouldn't be pawing around in it." I think that there's, I don't know how intentional it was, but that is the result of what can happen. Last year, what I saw was, people did the math on the hook up of the grants in round one, took it around to every legislature and said, "See? Look at what we told you. This is really costly. This is why we don't do it." The same people were saying, "Boy only go serve those really hard to get to areas at high cost," then came back later and used that as a reason to fight against the program.

Chris Mitchell: Right, if you were building in an area like Austin, then you'd need less of a subsidy overall because you were mixing and matching the way, for a hundred years, effectively we did with the telephone company to make sure everyone had service.

Dan Dorman: Exactly.

Chris Mitchell: One of the things that I find interesting about all of this, is in this industry I find a number of damned if you do, damned if you don't approaches. I think that Lake County did the responsible thing. They built to everyone it he county, and even some of the folks in Saint Louis County. What they found was just incredible opposition from Mediacom  and Frontier because, even though Mediacom and Frontier hadn't bothered to upgrade the two major population centers, which are relatively small, they fought tooth and nail to make sure that those people would not have another choice, and so Lake County had has just a tremendous fight on its hands because it didn't want to create doughnut holes. 

Dan Dorman: Right, and I applaud them for not because they shouldn't. When I get asked a question, someone is all, "What if somebody comes...," actually, "Boy I hate this program because someone might come and take my big customers from me." Chris, in my tire business, you know how I assure somebody doesn't take my customers from me? I take care of them. I concept design. We invest in equipment. We invest in technology. We invest in educating our employees, whatever we have we make sure that we're able to compete so nobody can come in and take my customer from me. That's what these companies should do rather than say, "Oh, we don't want to build out, so we don't want anybody else to." Go take care of your customers and you won't have a problem.

Chris Mitchell: Yeah. Nobody wants to switch cable or telephone companies. It's not like someone's sitting at home and thinking, "Yeah, next month I'm going to change again." People hate switching. It's a measure of how frustrated they are when they only have that one choice that treats them poorly, that they do want to switch because nobody wants to switch. No one wants to get new email address, see if things work. They're worried that they may not. There's so many hassles involved with it.

Dan Dorman: Yep, exactly. 

Chris Mitchell: Anyway, I think I'm getting a little bit too worked up about this, perhaps. Although, frankly, a lot of people need to get more worked up. I wanted to be very clear. What is the partnership's position on the program? This is something that you're not opposing now, you're working with the legislature to change it. Is that right?

Dan Dorman: That is correct. We passed a resolution, our board did the other day, that says we support the governor's request for a hundred million dollars with changes to the program that will allow for more economic development oriented projects, city projects, to be able to move forward. 

Chris Mitchell: Right, and one could imagine even having the program earmark some funds. This is something that I've encouraged in New York state where they're doing five hundred million dollars, is to say, "You don't have to spend all the money in the same way. If you want to save say half of that money wants to go only to the people that have absolutely no options, fine, but some of the other money should be set for some of the economic development wins that Greater Minnesota needs to make sure that people still want to live near those population centers."

Dan Dorman: We think that would be a very good way to get at what we're talking about because then you still help the people that have that incredibly poor service, but you don't kick the rest of the people out either. Everybody comes up together. I met with a group called Rural Education Folks, they're one of the groups at the table. I said, "Well, jeez, we're concerned. We want to make sure that that kid that has no internet access doesn't have to drive into town." That's that buy in to the, "Boy let's only fund these projects." I said, "Well, that's great, but let's say you get a hundred percent of the money now, but it's ten million dollars. You'd be much better off getting fifty percent of ... Let's say we don't get to a hundred million, let's say we get to sixty million, you'd be better off getting half of sixty million than you area hundred percent of ten million." A way to get more money into this program that will benefit everybody, isn't to say, "Hey, just take care of me only." It's to say, "Look, we're in this together. Let's not leave anybody out."

Chris Mitchell: I think that's a great place to wrap up because I moved here from Pennsylvania, and one of the things that I've loved in over twenty years, twenty-five years of living in Minnesota is the sense that we are looking out for each other, and we're embracing policy that allows us all to do better, rather than just one or two people to do better.

Dan Dorman: Right. That has been a strong Minnesota tradition in this area. We have forgotten it. We had a meeting the other day in the office, and I always talk about the fact that the speeds are behind Belarus. It turns out we're also behind Romania. That's just ridiculous in Minnesota. In fact, Chris, the sad news is since we started the program two years ago, Minnesota has slipped in its state rankings. As a state that prides itself on being so forward thinking, in this area, we've really dropped the ball. I was a little bit disappointed in the governor's task force. I think they backed away on some of our broadband goals. We were going to be top five by 2015. Clearly we didn't make it, but just simply push that out to 2022 or 2025 isn't the answer of how we get there. We need to step our game up and get there quicker.

Chris Mitchell: I absolutely agree. I think that's one of the dangers of these task forces is, again, that they tend to be captured by incumbent interests who have an interest in delaying those sorts of things.

Dan Dorman: Particularly if you work on, and I believe they do, they work on consensus. I've never been a bid fan of consensus anyway, because I don't believe in anything really meaningful, you can get consensus. If you can get eighty-five percent, or eighty percent, or ninety percent of the people in one direction, it's time for that train to leave the station because usually the compromises you make to get that last few people to ride into camp, likely really hurt the program. I think that's what is hurting the broadband task force.

Chris Mitchell: I think that's a very accurate statement. I will say that as someone who tends to be a bit of a contrarian, I just find it hard to be in majorities. It can be a challenge.

Thank you so much for coming back on the show and talking about these important issues with us.

Dan Dorman: Absolutely, look forward to visiting with you in the future and working with you as we help make Minnesota broadband a reality.

Lisa Gonzalez: That was Chris and executive director of the Greater Minnesota Partnership, Dan Dorman. Learn more about their position on the border to border broadband development grant program and the organization at gmnp.org.

Send us your ideas for the show. Email us at podcast@muninetworks.org. Follow Chris on Twitter. His handle is @muninets. You can now follow muninetworks.org stories on Twitter where the handle is @muninetworks.org. We want to thank Kathleen Martin for the song Player Versus Player licensed through Creative Commons. We want to thank you for listening to episode 190 of the Community Broadband Bits Podcast.

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