Transcript: Community Broadband Bits Episode 395

This is the transcript for episode 395 of the Community Broadband Bits podcast. In this episode, Christopher speaks with Matt Schmit, Deputy Director at the Illinois Department of Commerce and Economic Opportunity about moving the rural broadband discussion forward in Minnesota and determining the best way to deploy broadband in Illinois. Listen to the episode, or read the transcript below.

 

Matt Schmit: That fiber. It's in the ground. It's going to stay there. It's going to be doing a lot of really good work on the communications for a long, long time.

Lisa Gonzalez: Welcome to episode 395 of the Community Broadband Bits Podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. When Matt Schmit was a Minnesota state Senator, he was one of the lawmakers instrumental in developing the state border to border broadband program. Other states that have since developed similar programs use the Minnesota program as a model. Now, Matt has moved on to Illinois where he's planning on continuing his work to bring broadband to more people in more regions of the state. Last year, Illinois firmed up plans to fund broadband infrastructure as part of their statewide infrastructure plans. Matt will be working diligently on implementing the program.

Lisa Gonzalez: In this conversation, Matt and Christopher sat down to talk about what the process was like for Matt and Minnesota, and what drove him to pursue better broadband for rural areas. They discussed some of the challenges he faced and what challenges he may contend with in Illinois. Christopher and Matt also talk about Illinois new funding approach and compare the program to Matt's work in Minnesota. Now here's Christopher talking with Matt Schmit, former Minnesota state Senator, who's now working to expand broadband in Illinois.

Christopher Mitchell: Welcome to another episode of the community Broadband Bits Podcast. This is Christopher Mitchell with the Institute for local self-reliance, coming to you from Sunny St. Paul, Minnesota, and the first ever interview that I'm doing in my own personal studio slash dining room. Welcome to the show Matt Schmit.

Matt Schmit: Christopher. It's great to join you.

Christopher Mitchell: Well Matt, I've been wanting to have this conversation for a long time. You're someone that I've known for a long time. I really respect in this area, you've done a lot of good work. Now you are the... We might break in the middle of this title for an ad break. Deputy director of Illinois, the department of commerce and economic opportunity.

Matt Schmit: That sounds right.

Christopher Mitchell: Right. I sort of butchered it a little bit there, but that's, you're the Deputy Director, which means you're the, like a vice president effectively.

Matt Schmit: Something like that.

Christopher Mitchell: Yes. And, but what's important is that you're in charge of a really impressive program. Frankly, I think the most aggressive program we've seen from any state, if anyone wants to challenge me on that because New York spent more money, I'll just say I feel like you're actually taxing people to get your money. New York kind of got it for free through the bank fraud lawsuits. And so we've never seen any state raise any kind of money like this for that.

2:37

Matt Schmit: Yeah, I mean it's a really impressive and inspiring commitment that the state of Illinois made the infrastructure. Generally, last session they invested $45 billion in their capital bill for infrastructure around Illinois, 420 of which is going towards broadband. And so I was watching a far from Minnesota and that caught my attention and I think the state of Illinois poised to be a leader on how to do state broadband best.

Christopher Mitchell: Right. So we're going to finish up our conversation on that. That's what we call a T's in the business, I guess. But $420 million. Matt's going to tell us how he's going to spend every last dime. But I want to start by asking you about a program that's near and dear to both of our hearts. And that is the Minnesota, border to border broadband fund. You are essential in making that happen. And let me just say that, I feel like as we get into that, we should know, we knew each other from grad school.

Matt Schmit: We did.

Christopher Mitchell: Yes.

Matt Schmit: We've got stories.

Christopher Mitchell: Right. Mostly of me. I don't want to pretend I was super studious, but I feel like I missed too many opportunities to watch twins games with you.

Matt Schmit: But we talked twins every once in a while. So that was enough. Some good years back then.

Christopher Mitchell: So, let's just, let's start at the beginning. You come into the Minnesota Senate as a young man from rural part of the state, and you set a priority of broadband. How did that come to be?

Matt Schmit: Yeah, so, I joke as I look back and I knew enough to be dangerous. Thanks, in part to our great work at the Humphrey school and we had a telecommunications and broadband forum. Then I was a part of an opportunity to do some consulting during the aura era, a decade back. So I knew enough, I think to know what needed to be changed and where the, I think the opportunities were at the state level.

Christopher Mitchell: Right. And you'd also attended the broadband communities events.

Matt Schmit: Well, thank you very much I did that. Yeah.

Christopher Mitchell: So, I mean you made an effort to educate yourself.

4:23

Matt Schmit: Yeah. And so I knew it was in an area that there was, I think the right energy and investment percolating in Minnesota with the folks like the bland and foundation and others had done really important work. There had been past efforts to do more in broadband and we knew that with the surplus that the state was facing and the opportunity for some serious investment in smart policy that paired with it, that we could make a difference.

Christopher Mitchell: Was that 2014?

Matt Schmit: That was... So I ran in 2012 [crosstalk 00:04:50], when I was . I put 30,000 miles on my Jeep that I no longer drive. We knocked on tens of thousands of doors, 20 parades around Southeastern Minnesota. And the issue of broadband came up a lot during the course of that campaign, but it wasn't something I ran on. And so I think we take office in 2013, we were staring down actually a pretty serious budget deficit at the time. And so there were some big issues that the state had to address structurally, but a focus on infrastructure. And as our economy turned around and we started having some funding opportunities. Well, that gave rise to a serious commitment to broadband.

Christopher Mitchell: And one of the things that I felt like made a difference was a listening tour around the state. And so this is different from what you just mentioned, where you were campaigning. You're in the office, and then you decide to go and listen across the entire state of Minnesota to what people are saying.

Matt Schmit: That's right. And so turning back this clock here, 2013 was my first year in the Minnesota State Senate. And what we started out by doing is creating our office at broadband. We wanted a one stop shop for all things broadband and state government kind of tear down those silos that separate state agencies, and also serve as a resource for folks who are interested in improving their broadband from community to community around the state. And so we created the office in 2013 and then during the legislative interim that followed, we knew that we wanted to take additional steps on the broadband front. And so I don't know why I waited until December and January of 2013, 2014 to embark upon a 20 city listing tour around the state of Minnesota.

Matt Schmit: We talked about how cold it is outside the day. I remember vividly being in Park Rapids, Minnesota in January of 2014, holding kind of a listening session with community members. I think it was a Monday morning and the schools had been closed by governor Dayton because it was so cold. And my Jeep barely started up that morning. I had stayed at my grandparents the night before in the good old town of Crosby-Ironton. Made it into Park Rapids not knowing what to expect. We had over 50 people in the morning. Schools were closed on a frigid day in Minnesota, January wanting to talk about broadband. And that's when I knew that this was an issue that folks really deeply cared about, and wanted to make some traction on. And so, we had made several stops, 20 about around the state leading up to the 2014 legislative session.

6:59

Matt Schmit: And that road show that listing tour gave us invaluable feedback and what communities were looking for, and the things that we took away from that, it's a big state. The state should be a facilitator, not apply a one size fits all approach to addressing the challenges. That the basic challenge was one of funding and in market failure and that we needed an infusion of state dollars, to get the job done. And third folks were tired of talking about it, they wanted the action. And so I can't tell you how many times I shared that message with my colleagues in the Senate and other stakeholders. Unfortunately, I think the perfect storm, if you will, the right factors came together for us to get the job done that year.

Christopher Mitchell: I sometimes think about this in relation to reading history and how conversations in the 19 teens about electrification and imagine how people felt in the 1930s when it started being built to some of their farms. It's easy to read about that transition period. It's much harder to live in those 20 years, perhaps while you're writing for it to happen. Because I just think about people that I talked to last week who are really tired of hearing people talk about it.

Matt Schmit: Well, exactly. I mean, it just, it's a great reminder. All the work and the attention and the investment that's been made, there's still a lot of work left to be done and in arguably the hardest part is ahead of us. That that last 5%, 10% in some cases, it's going to be the hardest for States to drive towards in terms of universal access and ubiquity.

Christopher Mitchell: So at the time you're doing the listening tour, there's also, this is the major priority for an organization called, I think the partnership for greater Minnesota cities or the partnership for greater Minnesota. There's also the coalition of greater Minnesota cities. It's basically the smaller cities in the state, they're also the cities that are just not a part of the twin cities Metro. They did a a lot of editorials and op-eds and things like that. Our business chambers were talking to their elected officials about it. And so in some ways, I think at the time those of us watching and even participating a little bit felt like, wow, there's so much attention on this. It has to go somewhere.

9:03

Matt Schmit: Yeah. I mean, again, I'd referenced it earlier that the perfect storm, we had a lot of great contribution and it was the greater Minnesota economic development partnership, that was forming at the same time and they had their own road show, so to speak, where they were engaging individual communities. I think selling the vision of collaborating over investments in greater Minnesota rather than competing for scarce resources.And I think there was a great vision and they pulled the members that they were talking to individually and also collectively.

Matt Schmit: And in the feedback they got is broadband was perhaps the number one issue in communities around the state that year. Certainly a top three issue around the state. And so, you look back and you really see an opportunity that that congealed, we had the office abroad man that had been formed, I'm going to start, I had turned the corner on a decade of running deficit after deficit. So we were looking at having some resources available not only to balance our budgets too, but also to invest in critical infrastructure. And then you have the interests around the state.

Matt Schmit: Blandon was doing what they've done really well for 15 years now. You had the partnership that had formed to engage communities around greater Minnesota. And then you also had the work of the governor's task force that was shining a light on some recommendations. And for far too long, those recommendations just sat dormant in reports that were issued annually. And unfortunately we had an opportunity in 2013, 2014 in the years that followed to actually do something with all of that.

Christopher Mitchell: I feel like the natural conclusion of what you've been saying is, and so everyone was really focused on making sure we got a really strong bill through the Korean broadband program. And yet that's not how I remember it.

Matt Schmit: Yeah. I mean, here's the, you look back, it's kind of like history, right? You look back and you say, Oh, "it's so neat." This was tough. And right now I think people around the country look at Minnesota's office of broadband and our border to border broadband fund is being nation leading. And in other States, I think to their credit have emulated what we've done in Minnesota. And maybe taking it a step farther. I certainly, that's what we want to do in Illinois. But I think you look back, it was tough sledding. We had, industry opposition, certainly skepticism among, maybe some more senior members of our legislature.

11:09

Matt Schmit: And so it wasn't a slam dunk. We had to work really, really hard. And I can remember in 2014, appealing to the governor's office. Hey governor, you're going to have a supplemental budget this year. I think $100 million is the right investment to make. And I'm in a governor's office and at the time is governor Dayton and Lieutenant governor, Tina Smith, very interested in what we were talking about, very sympathetic. But this was not included in their budget. And so that was a blow. But fortunately we were able to build momentum moving forward and that first year we got a down payment on that $100 million, we've got $20 million.

Matt Schmit: And so we cracked open that door. We got our foot in the door, and I think looking back, every dollar that Minnesota has spent on broadband is been a great investment. And, I think the one regret I'd have is that we haven't done more faster in Minnesota, but the fact that the office is open, doing great work in the fund, continues to be funded is a Testament to its staying power.

Christopher Mitchell: I would really emphasize that bit about not having wasted any of the money, because the program was designed in ways that I think are really intelligent, and some states haven't taken that and understood the value of that. In terms of making sure that anything that's funded by the state, usually it's matched funding, it's all matched funding. But anything that states spends money on has to be upgradable to a hundred megabits per second.

Matt Schmit: Symmetrical.

Christopher Mitchell: Symmetrical, which means you're investing in long lasting infrastructure.

Matt Schmit: Exactly.

Christopher Mitchell: Whereas the federal government office has spent a lot of money, billions upon billions of dollars on infrastructure that is obsolete before it's even turned on.

Matt Schmit: Unfortunately. That's right.

Christopher Mitchell: Now I'd just like to say that I actually think that was one of the things that the, my idea is originally that I made it through, because I was working with some of the folks that were brainstorming on how to design a program like that. And so I take a little bit of pride in that authorship. I think, I say that knowing that I probably wasn't the only one. But, that's something that I think we really got right. And I'm really excited to have been a part of that.

13:07

Matt Schmit: Yeah, I'll tell you, I think it's great to look back and so many are proud of the effort that we put forth in Minnesota. And I think that that's great. I can remember trying to put together a bill and put the ideas that we were thinking on paper and having great, Senate council for instance, who write the bills, who do incredibly good work looking at me and saying, "Matt, what are you trying to do here? This hasn't been done before." And so, it was a lot of fun, kind of inventing something new from scratch and not emulating another state but rather saying, Hey, if a state is going to get into this, what should we do?

Matt Schmit: What sorts of things should we expect of applicants? What kind of technology should we be investing in? What sorts of expectations do we have for longterm return on investment?And so that's something that, you know, I really point to, I think the scalability requirements, the fact that, we want to engage providers and partnerships and communities around the state, those are the sorts of things I think are a hallmark of a successful program. Not picking winners and losers necessarily. But we're saying if the state's going to invest money, it's got to be serving our communities and end users well into the future.

Christopher Mitchell: And the program is open to all, very few municipalities have even applied. And which I think was one of the concerns of the small telephone companies originally and the small telephone companies were in fact I think quite skeptical, and now are probably one of the bigger defenders of the program.

Matt Schmit: Yeah, I mean I think there was certainly a lot of skepticism among the provider community and it's just going to be focused on competition. It's just going to be upending the Apple cart. Is there going to be an opportunity for us.

Christopher Mitchell: Heavenly forbid it focus on competition.

Matt Schmit: And so that's a piece that I would say you look back, we didn't take that issue on head on. We didn't have a conversation about competition in Minnesota, and I think a lot of folks around the country are interested in that conversation. We are much more focused on ubiquity and making sure that every last home and business and farm and community anchor institution gets connected. Minnesota is not there yet. It got some work to do, but hopefully we're poised to get there within the Donovan decade of such investment.

15:10

Christopher Mitchell: Well, this is where you can certainly, you can give me a hard time on this Matt, because I think one of the challenges that we've seen since then is the... By not taking on competition, we left the population centers in rural regions behind because they don't qualify. And so for years they haven't lobbied to support the fund. To me, and this is a, there's, we can, we have had podcasts talking about these policy issues. I'm not saying it's obvious that you pick one way or a different way for dealing with, how to deal with areas that already have basic broadband connections. But, is I remember at Comcast was one of the biggest lobbyists on the bill and they were never going to expand in rural areas. They were never going to apply for a grant.

Matt Schmit: Yeah. And so I think, I respect a lot of the interests that were part of the conversation. I think if you look at how broadband is provided and how folks connect with the internet, it's diverse. It's complicated. It's not one kind of provider. It's a lot of different providers offering different services. And I think that's great. I think it's good that folks have choice in their complimentary services. And the thing that we always kept coming back to is the need for making smart investments that truly would stand the test of time. And so I think if you look at the reactions that folks have had, I think a lot of the fear and the skepticism, did not prove out.

Matt Schmit: That I think the approach that Minnesota embarked upon was very constructive and it's helped a lot of communities, and it has helped a lot of providers get to areas that they otherwise could not. And so I think if you look at the regrets, I think you just, you want to make sure that a community that knows it's got to do better on the broadband front has a path forward, and give them opportunities for partnership, for leveraging funding, for making a vision that truly is rooted in reality in terms of being competitive in the 21st century, giving that vision a path forward.

17:02

Matt Schmit: And so I think that that's something that if I were to look back and say Minnesota could do more of, is just making sure that we're not just striving towards basic ubiquity, but that we are putting our communities and our homebased businesses and our school children, in a position to compete truly in the 21st century. And I think that's something that, I think we should always take a look at. Is what we have good enough, not only for now but for the years ahead.

Christopher Mitchell: So let's talk about the politics of that moment again. I want to come back to that because-

Matt Schmit: Is last over that I attended.

Christopher Mitchell: We did and I made a mental note. I know that this is something that I appreciate that, I don't want to put you on the spot. I, it can be hard to talk about things that you know about in part because of closed room meetings and seeing what's going on. And you don't want to say negative things about people who are also doing good things in your eyes. I'm glad that you're out of state now.

Matt Schmit: Thanks.

Christopher Mitchell: It just in the sense of being able to talk about this sort of thing. And I mean, frankly, I think you're one of the best people to be, that I could imagine to do the Illinois program. So I'm thrilled about that. And it's, that's sort of what the, where that was coming from as opposed to I wish you lived 400 miles away from me.

Matt Schmit: Well, thanks for clarifying. I was thinking you're saying that Minnesota just isn't big enough for the two of us, and maybe that's true.

Christopher Mitchell: So the one I want to get to though is, as someone, I didn't follow this as closely, people like Chris Henjum, Tim Flaherty, Dana McKenzie was even, she wasn't even in the broadband office yet, but was like a person who was like, who was thinking about this and how to shape the program and then she was in the broadband office and she was still playing that role of trying to think then with her state hat on and people who aren't familiar, Dana McKenzie I think is one of the main reasons for the success of the program. But my point is just that there was a lot of people who are working very hard because leadership of the Republicans, leadership of the DFL, neither of them wanted to prioritize this. I think most of them were hoping you would just quiet down and go away.

19:00

Matt Schmit: Yeah. I think probably on multiple fronts, that may have been the case, but we knew that we were right on this issue, and we knew that there was a need for investment and that just simply waiting for the market to take care of it. We were going to lose that case. And so, I look back now and I say we absolutely did the right thing and we have a lot to show for it. But at the time there was a lot of skepticism. And where does that come from? Well, I think, God bless them, but the industry is very well represented at the Capitol in St Paul. And I think at the time I was counting scores of lobbyists, and I know over time that that number increased.

Matt Schmit: And I think the point isn't that they were, hurting our chances or undercutting our effort. But there are narrow, parochial interests that are represented a lot of times. And so if you're talking about my legislative colleagues, they were getting one message typically on broadband, and they weren't necessarily having constituents come to the Capitol rallying around broadband. We learned during the time that it was a top three issue for a lot of groups around the state. But if you've got your day on the Hill and you're going to talk about healthcare access or education-

Christopher Mitchell: Rural transportation.

Matt Schmit: ... rural transportation, broadband might not come up in every conversation. And so that's something that we've seen change over the years. The Minnesota Rural Broadband Coalition has taken off. And I think that's certainly added value to the conversation around the state. But you look at the setting that we had in 2013 and 2014, a lot of what lawmakers knew was based upon their conversations with lobbyists, representing a very narrow kind of perspective and interest. And that's just the way it works. And so I think in this issue and other issues, I think it's a challenge for lawmakers to just make sure that you're getting a diverse view of the landscape.

Matt Schmit: That you're telling, that you're asking your constituents about these issues, your community members, your community anchor institutions. I have without a doubt confidence that folks took the time to talk to their local libraries or their EDAs or other folks who are on the ground really close to these issues. They would know that the broadband is a top ticket issue. And one of the anecdotes that I just loved is on this listening tour. We talked to a lot of real estate agents, and they say Matt, it used to be in Minnesota, the first question that a family would ask when moving to a new town, how were the schools? And they said, that's still an issue that comes up a lot.

21:17

Matt Schmit: But typically enroll Minnesota, the internet access and if it's available or not, is the first question that's asked. And so that really was eye opening. When you think of, wow that's on the top of minds of families as they look to raise their kids and locate in one part of the state or another. Just, it just speaks to I think, the different aspects of the conversation. And that if you're just talking about the issue from one perspective and that of the industry, you're going to get one piece of a very valuable conversation, but you've got to round that out with on the ground perspectives in your communities.

Christopher Mitchell: Let me ask you, and this is a chance to, for you as a Minnesotan, it's hard. I grew up in Pennsylvania. It's easy for me to toot my own horn, but Minnesota, they drum it out of you at an early age. So let me ask you, is there something that you and representative, then representative Simonson now Senator Simonson did to make sure that this would happen? Despite the fact that it was really the two of you against leadership.

Matt Schmit: It's a really interesting dynamic. And so you look back, now Senator Eric Simonson from Duluth, he was a fresh face at the Capitol, a representative representing Duluth at the time in the house. And so he and I carried the bill in 2014 for the infrastructure funding, basically our border to border broadband bill. And we had a number of coauthors and all of those folks really helped us out, but it was difficult to get our legislative leadership to rally behind this. And I have to look back and I have to give a lot of credit to the house DFL leadership at the time.

Matt Schmit: And I think that, the leaders that were in place were instrumental in making sure that this happened because I think that there was a lot of energy coming out of the house committee hearings, throughout the course of the 2014 session. And so a lot of credit goes to the, and I think the house leadership. On the Senate it's kind of ironic because we had a leadership structure that was very heavily tilted towards rural interests.

Christopher Mitchell: Unfortunately Senator Bach had, most of his constituents had decent broadband at that point.

23:17

Matt Schmit: And I just had to say I don't... This isn't a criticism at all. I think it's really kind of an information issue and I think understanding where the challenges are and what industry is capable of and where investments are going. And I think that stood in the way. And perhaps there was an element of a youngish Senator coming in and saying, "Hey, we're going to go on a statewide listening tour." I'm not running for statewide office. Believe me, that's never happening.

Matt Schmit: But the point was, we want to get these stories, these anecdotes are so powerful. And that's why we went around the state and talked about the issue and we had a lot of our legislative colleagues join us. And so it wasn't just me on a road show, but it was me and the local Senator or representative of a given area. And so you start that conversation that was so meaningful in the moment. But also it's something that you hearkened back to in the legislative session that followed.

Christopher Mitchell: I think Senator buck wanted you to do more listening.

Matt Schmit: Yeah, perhaps. So, I tried, so I don't criticize anybody. I think a lot of it comes down to competing priorities, in a large caucus with senior members, perhaps a little information asymmetry. You had kind of the red herrings of a 5G's coming is going to solve all our problems. Well, this is seven years ago folks.

Christopher Mitchell: No, I actually think, I mean now we do a 5G, I think the 4G was the line of the day.

Matt Schmit: That's right. Exactly. Because I mean-

Christopher Mitchell: Because 4G was still being rolled out to rural areas at that time.

Matt Schmit: You're exactly right. And so I think the point is, all these different investments and technology, in my view, they compliment each other and we should never say one versus the other. But if the state's going to invest in something, it's got to stand the test of time, it's going to be a longterm investment. And I'm really proud of that that's the tack that we took. And I think if you look at the map of Minnesota, we're filling that in and it's really great to see the progress that's been made. I think my main regret if there was to be one here is on the funding side is that we weren't able to get significant serious funding upfront and we weren't able to give communities and providers a chance to plan into the future.

Christopher Mitchell: Yeah, I was just going to say that-

Matt Schmit: That's a big issue.

25:14

Christopher Mitchell: That's what you can do now. And that's what's so exciting. I feel like, and this is where I had so many conversations in recent years because we have this, in Minnesota, we have these things called billion dollar surpluses. Others-

Matt Schmit: Its a long time running.

Christopher Mitchell: ... Other States don't, aren't familiar with that. So I mean, especially our lovely state to the East Wisconsin.

Matt Schmit: For instance.

Christopher Mitchell: Yes. The reason I bring that up is that I've long said if we really want to get the most out of this program, we would set aside, like maybe four years worth of funding so people would have a sense of how to plan local companies. I mean the co-ops that have really made the difference, the telephone cooperatives in Minnesota of expanding access. And I don't want to say anything to denigrate the role of the local telephone companies, but I feel like Minnesota telephone co-ops, a few of them have really been the leaders of expanding to new areas of Rome, Minnesota.

Christopher Mitchell: They can only expand so much per year. I mean there's small firms and so the answer I always get back though was, well, we can't commit future spending to the next legislature to put that money in there. And I'm like, no, put that money in there now, we have it. You can spend it now and have it dispersed later, but it doesn't catch on with people.

Matt Schmit: Yeah. And I think that's really unfortunate because, I look at a lot of public policy through the lens of a small business or even a family sitting around a kitchen table, not unlike the one that we're around right here.

Christopher Mitchell: It's a beautiful table.

Matt Schmit: It is a beautiful table, and thank you Christopher, welcoming me into your home here today. But I think the whole idea here is you want to be able to plan, into the future. Three to five years is ideal for a small business to understand what's coming down the pike, what sorts of resources you're going to have available and how you might face projects. So I'm going to say you could only get $5 million at a crack, but if you knew that you were going to be able to go back and have a second or third phase to a project, you could do something pretty ambitious and incredible.

27:06

Matt Schmit: And we never gave applicants that opportunity because we always funded it one year at a time. And that's just really regrettable because I think we knew this was going to be a valuable program and we knew that the need was out there. And especially after that first year, we knew we were getting great applications and that great deployments were going to result from it. And so it's too bad that support for that didn't galvanize. If you're going to do 20, 30 million dollars a year, that's okay. But I think giving folks a chance to plan is helpful. I know that there have been some changes. I think last year it was a two year appropriation. I think a lot of folks would have liked to have seen more, probably a lot more.

Matt Schmit: But the point is, it's a step in the right direction on the planning side of things. But you know, I think if, if we're going to truly silver or challenge meet our goals, achieve ubiquitous access around the state, significant investments are going to need to be made and it's going to have to be sustained over a period of time, and to give folks a chance to best utilize that, give them a chance to plan, and that would be my advice.

Christopher Mitchell: So wrapping up-

Matt Schmit: Not that you're asking for it.

Christopher Mitchell: I am. Wrapping up Minnesota though. You mentioned a couple of times disappointments. What would you say, a name by my favorite part of the Minnesota bill, but I think is the most fiscally responsible approach, which is this longterm. You have to invest in longterm assets. What do you think is the most important thing that really came out of this, the border to border fund.

Matt Schmit: That's exactly it. I mean, I think we can talk a lot about speed goals and we can talk a lot about areas that qualify for funding. And I think that there is a piece here about making sure that deployments are made in a way that, is efficient and makes sense from an economy of scale standpoint. And we're not just kind of carving up the map to the areas of the greatest need, but rather we're giving providers and applicants a chance to make truly ambitious investments. They are going to change communities or regions.

29:03

Matt Schmit: But outside of that, I think the point here is that we are demanding that any state investment is going to be truly scalable. And so it doesn't mean that you're precluding certain providers, but it means you got to be creative in terms of how you leverage those state dollars. And that the way you apply those state dollars to your projects has to be in a way that will serve a community, a provider, those using the internet well into the future. And so that's the takeaway. And I think if a state asks me how to do it well, well there's a lot of things that we can say.

Matt Schmit: But it's just, Hey, make sure this is an investment in infrastructure that's going to be with us for decades to come. And I've said this a lot, but short of an overzealous backhoe operator or something like that, that fiber, it's in the ground, it's going to stay there. It's going to be doing a lot of really good work on the communications front for a long, long time.

Christopher Mitchell: In 2016. Your 2016.

Matt Schmit: 2016. Oh my gosh. They're memories of 2016.

Christopher Mitchell: 2016, there were surprises nationally and locally.

Matt Schmit: That's an understatement. Yeah.

Christopher Mitchell: I want to ask you about this as we transition into Illinois. I just want find some salt and rub it around your wound. But one of the things that we saw, I mean Wisconsin for instance in the rural areas went from leaning red to deep red. You came from a district that I think was pretty much on the fence. And they would trust someone who was from the DFL, but also respected the hunting and fishing desires and the fact that they might lean a little more conservatively on environmental issues or something like that.

Christopher Mitchell: I have a concern that I feel like the Democrats have decided that they can just win in the suburbs and they don't need to reach out to rural areas. And so as someone who came from that, I don't want to miss this opportunity to say, are we missing out on opportunities that by a strategy which has just, has one political party kind of writing off a lot of rural areas?

Matt Schmit: Well, I'm, I'm not going to criticize, Democrats in the minority and looking at the-

Christopher Mitchell: How to win.

30:55

Matt Schmit: ... the electoral map and how to get to a majority. I mean, I think that is your first goal is you want a majority. You look at the situation Minnesota is in right now in the progress that can be made on a number of fronts. If the Senate were to flip again, for instance, I think that that's true. And I don't want to weigh into the politics too much here, but I think the point is I think our politics are a lot better when you've got parties competing all over the state. And what I really regret over the last few years, basically from 2016 now, but the lead time to that was longer, 2014 you saw some of the makings of this trend and in other states you've seen it long before that.

Matt Schmit: Where, the blue urban areas get bluer and the red rural areas get redder, and that's really regrettable to me and I, that's the thing that I absolutely loved about serving in the state Senate the most, not only did I have a chance to represent my hometown of Red Wing and its beautiful, swath of Southeastern Minnesota bluff country trout streams. You've got the river, you've got some rich egg land and-

Christopher Mitchell: Some great State Parks.

Matt Schmit: ... incredible State Parks Folks. I think some of the best in Minnesota are down there. And you've got these communities that you just know.

Christopher Mitchell: The best bakery in Minnesota.

Matt Schmit: With the allergies, don't get me started. But the point I'm making here is you've got these communities that, if you make smart investments in infrastructure, you open opportunities for telecommuting, that they're going to thrive. And if you can attract young families to these communities, this is shout out to Southeastern Minnesota, I'm sorry folks. It's a great place to live. And I think the-

Christopher Mitchell: Or vacation.

Matt Schmit: ... biggest challenge they have is, or vacation, come down, spend your money. It's a great place. And I think investments and infrastructure and in place making, will make those communities vibrant. And it's not only true in Southeastern, and so it's throughout rural Minnesota, and throughout rural America. But if we're not making the investments in the critical infrastructure, you need to live where you want to live and do what you want from a career perspective. There's big chunks of our country and our state that are going to be left behind.

32:53

Matt Schmit: And so that's why, I don't want to overstate the broadband calling, but it's a big deal. And I think every, and this is where we're at every decade that we take off, we are hurting rural communities. And so when you look at the approach that the federal government's taking, let's not be victims of our modest expectations. Our rural communities deserve the same level of broadband access that our urban communities have.

Christopher Mitchell: Yeah, well I think and I don't want to spend too much time on this because-

Matt Schmit: Well, you're getting me going here Christopher, this is the issue I'm passionate about.

Christopher Mitchell: No. And I agree with you and I think you're making a point that I really want to emphasize, because this is my concern of why I want to talk politics ever so briefly.

Matt Schmit: We're opening a door here.

Christopher Mitchell: Which is, you have an administration right now in power, which rural America put into power and they are delivering poor policy for rural America, in my opinion, on broadband, which I'm pretty qualified to judge. And I would say similarly, I live in a city that is going to vote blue. We're going to have a Blue City Council. We're going to have a blue mayor. I live next to another city that's like that. And one party towns are not well-governed towns generally.

Christopher Mitchell: I mean there's merits to who's in and what not, but fundamentally, like you said, we want some competition there.And so that's why I want to bring it up. I know that people listen to this show, a variety of politics. Fundamentally, I would think that even if we can disagree on everything else, we should agree that people should be fighting for your vote and actually be afraid they might lose their seat.

Matt Schmit: I knew that you were going to bring up the idea of competition. I didn't understand that's where it was going to lead us today. But, I think there's a great point there and maybe fodder for a future, a podcast or a podcast series. But I think, again, you look at the challenges our country is facing, the disconnect between culture and geography and in our politics. And, this is one of those issues that folks on both sides of the aisle could rally around. Despite, the noise that was surrounding, the policymaking. And it's true, it should be true in every state around the country and at the federal level too.

34:51

Matt Schmit: And so I hope that we're able to dismiss pressures from different corners and focus on sound policy that... This is going to sound naive. It does bring us together that makes sound investments for the future and positions communities around the state, whether it's Minnesota or Illinois or anywhere in between or surrounding to compete in the 21st century. And so that's what's been inspiring about this work. I didn't go into it thinking I'm going to spend a decade of my life on broadband. I'm more of a transportation guy to be honest. And this goes back to my humper school days.

Matt Schmit: I've spent way more time on transportation projects consulting over the years than I have on broadband. But, this is one of those areas that you realize, well, first there's an intersect. When you look at the movement towards smart cities and telecommuting, and congestion management, intelligent transportation systems, but also it's a great example of smart infrastructure. We invest in it the right way. It's going to serve us well into the future.

Christopher Mitchell: Well, that brings us to Illinois, where, I mean, you're talking about good policy and in my opinion, at least not everyone likes to see raising taxes, but bold leadership to say we need better infrastructure both for transportation and for broadband. We're going to raise the gas tax, we're going to raise all of this money and we're going to spend it. It's fascinating to me and I, and it's worth I think for people to know. So the legislature moved forward and they put this on a referendum and then the people of Illinois validated that, right?

36:15

Matt Schmit: I look at what happened in Illinois in 2019, and I'm just AUSTRAC. They approached the session with an overarching value of equity and trying to produce equitable outcomes in various aspects of state government. And so that really appeals to me. I think in this point in our economy and in our political lives. And so I think it's a really important emphasis to put on it, but the investment infrastructural on $45 billion, it sets a tone that they're serious about making investments in the future.

Matt Schmit: And I look at what Illinois accomplished in one short session and as a proud Minnesotan this pains me because I love my Vikings, I love my twins. I will always be a proud Minnesotan, but I think they accomplish in many cases, what we've been fighting for for a decade in Minnesota on a number of fronts. And so it's great to see that level of effort and in my hope is that we get it right on the broadband front and other aspects of our infrastructure and investment and elsewhere. And so the challenge is on, you've got this great opportunity to demonstrate, in this case, how state broadband investment can be done, right? How smart policy can result in good outcomes.

Matt Schmit: And so we're kind of at the cusp right now of getting this right. And so you don't have to wish us well.

Christopher Mitchell: So another bridge to Minnesota, which is, quite the double entendre, is that... When you are doing this and when you're working on this bill in Minnesota, I felt like one of the pieces of resistance we felt from Minnesota's smaller family, independent telcos, was that they felt like it was an insult that we were saying DSL wasn't good enough. And I think that that's changed. This is one of the things that I think is really, gives me a lot of hope for Minnesota, is that we see almost all those independent telcos now recognizing that the need to be investing in these higher quality, higher throughput networks. And your conversations in Illinois, I'm sure everyone's beating down your door to talk to you and to give you a sense of what's important. I'm hoping that you're hearing from people that they're all agreed that we need these very high capacity networks.

Matt Schmit: Yeah. You know, so nobody has been beating down my door like this podcast from St Paul, Minnesota has been. But I mean that's the point here. You want to get it right and you want to balance interests and you want everyone to feel as though they've got a stake in this and they can be better off for it. And so that's been a deliberate approach that we've taken in Illinois. And I don't want to say that we've been perfect with it, but if there's a public hearing or if there's a meeting or if there's an opportunity to talk about the vision for connect Illinois and in ways to make it work.

38:52

Matt Schmit: I want to lean into that. I want to be part of that conversation. And so that's kinda how we've framed this investment. We have $50 million a grant window that opened up recently here in early February. It extends through April 3rd. And so we've got about eight weeks for applicants to put forward their best ideas on how to leverage this first $50 million.

Christopher Mitchell: Let's just-

Matt Schmit: That's what's great. The first $50 million.

Christopher Mitchell: The first $50 million over a period of about two months. Minnesota has spent since you pushed, that bill through has spent on the order of 70, 80 million, I want to say.

Matt Schmit: No. It's over a hundred million dollars the states. And I think that they've-

Christopher Mitchell: It shows what I know.

Matt Schmit: Well, the years go by I think, and so, prior to the last legislative session, your number was true. And so-

Christopher Mitchell: But Illinois is catching up fast.

Matt Schmit: Well, yeah, Illinois by the end of the year we may have outdone Minnesota. And so that's a challenge to my friends and family and folks in Minnesota. We're coming after you, up your ante here. But I think the point is Minnesota is done so much well on the broadband front that we're replicating a lot of our effort towards that. And so we want to borrow from what has worked in Minnesota. We're certainly putting more funding on the table at the outset.

Matt Schmit: We're giving communities and providers and partnerships a chance to plan, which is critically important. But as we mentioned, the scalability piece, the expectations, the partnerships that we're trying to promote. I think the commitment, as you'd mentioned, the Minnesota offset broadband token in being a resource for all folks who are interested in broadband and being a constructive voice. That's something that we want to replicate. And so it's a lot easier said than done.

40:28

Matt Schmit: But my goal is that in addition to proving how a state can do this best, that we also leave a lot of the stakeholders who are involved in broadband feeling really good about the process. That their voice is heard. And to the extent that we're able to evolve our approach to this competitive matching grant program from one funding round to the next, and get better along the way. That iterative process is something that I take really seriously. And so I think what we'll be talking about or, in a year or two might be very different than what we're talking about right now.

Matt Schmit: But the point is, come back to this. We really believe that competitive matching grant funds work at the state level, that adding value to federal investment is the only way to guarantee that those federal investments are going to stand the test of time. So we want to be able to do that. I could go on and on here, but I think that, that's the tack that we're taking and we feel really good about where we're at right now. But it's something that we're going to have to be very intentional about every step of the way.

Christopher Mitchell: For people who weren't paying attention. What you just said is actually fairly controversial in Washington D.C. about being able to add on to federal funds. So right now this is big, I would say pile of confusion at the Federal Communications Commission regarding the world digital opportunity fund. Which is the new Connect America Fund Program. Which was the old Universal Service Fund. Every administration has to change the name to put their stamp on and pretend is brand new investment. But the point is just that in the rules all of a sudden without it being properly noticed and commented, I would say.

Christopher Mitchell: We saw this idea that Oh and LJ areas within states that are getting state funds are not eligible and retroactively could not be eligible for these high-cost funds from the FCC. And so just let's just, let's ease into it now. What is your reaction to this concern from the FCC and this proposal that they basically not allow you to subsidize an area that they've decided to subsidize?

42:29

Matt Schmit: Well, first of all, I want to approach this conversation constructively. I think there's a lot-

Christopher Mitchell: By the time this runs, it could be different.

Matt Schmit: I'm going to... Yeah. And so this is a very live conversation right now. And, I just recently spent some time talking to folks at FCC and I think we're trying to get a handle on what exactly is proposed and what's next and the point is, Hey, this is an election year and it looks like the October 22nd, date they have for the action isn't a coincidence. And so that's the context we're operating in here. And that's shouldn't surprise anybody. But I think from my perspective, we want to make sure that these investments are smart because from the state level, we absolutely need federal funding to meet our goals. There's just not enough funding in any state that has significant need on the broadband access front to do it alone. And so, you've got to have that state federal partnership. You absolutely do.

Christopher Mitchell: And I would just say that, I would like to note you're saying that from a state that's putting an incredible amount of money aside and a state that doesn't have as much need as some other areas. And I don't want to minimize the fact that there's a lot of people in Illinois that don't have access, but you have more than average local ISPs that have made really good investments. There are other states that are much worse off than you are. So you really do need that federal partnership.

Matt Schmit: Well, it's a big state. We have 246 locations eligible for our funding and we have a lot of great providers doing really good work. But you know the challenges with broadband ubiquity and it's a lot of, challenges with putting business plans together. The return on the investment population sparsity. So without getting into that, the challenge is there in Illinois, we've got a lot of great partners. We've got a lot of great opportunity with leveraging federal funding, but we put $400 million on the table and that's not going to solve the problem overnight. We've got to go. We want to at least double that.

44:18

Matt Schmit: And in fact, to solve our challenges, I mean we were going to be looking at a leveraged investment of $1 billion plus. Well how do you do that? Well, you can get some matching funds from local communities. You can get some matching funds from the providers who apply for your grant funding. You can get investment that's made outside of any grant fund, which happens every day, which we really, really appreciate. But you also have to look at the billions of dollars that Washington is and will continue to invest in broadband. And how do you get the most out of that?And at a minimum, states should be able to work with federal funding recipients and add value to those projects.

Matt Schmit: So that 25 by three becomes a hundred by 20 or gig scalable. And that's the point that we would need to make. We shouldn't be limiting any of our communities around the state of Illinois or Minnesota or anywhere around the country in terms of what they can get longterm from a public investment. It's just so foolish to set our expectations that low. And so I really hope that, here we are in February of 2020, but there's a conversation that ensues about how to get this right. That we've got a new era of state, federal partnership over broadband funding because there's a lot of work to do.

Matt Schmit: And from a state perspective, we absolutely need the federal investment, but we want to be more active partners in this investment. And, I think there's a long ways to go in fully leveraging, I think a state commitment with a federal commitment to optimum benefit. And so I think it's a start of that new conversation. So stay tuned.

Christopher Mitchell: So the last question is, and I don't want to put you on the spot too much here, but we had a governor Dayton, who I felt really wanted to bend over backwards and make sure he didn't upset Comcast. Governor Walz has disappointed me a little bit in terms of the focus on rural broadband. What's it like working with the governor of Illinois?

Matt Schmit: I have to tell you, I have great respect for governor Dayton and governor Walz and-

Christopher Mitchell: I do too. I just have a disagreement with them on pro Barb and priority, I guess.

Matt Schmit: ... that being said, I'm really impressed with the governor in Illinois, and not only did he lead on the infrastructure investment that we talked about, the historic $45 billion that was put forward to capital investment in 2019. 420 million of which is going towards broadband. But he's engaged, on a week to week basis and so we've had a chance to sit down and talk broadband more weeks than not since I've been there. It's on the calendar every week. And something might come up on his end or my end. But we're talking broadband with his team and our office. And in that level of engagement's inspiring because, this is somebody who wants to see this done, right?

46:53

Matt Schmit: And who's going to be proud of this investment, what it means to Illinois and notice that every corner of Illinois ought to compete in the 21st century. In order to do that, you've got to make smart investment in 21st century infrastructure like broadband. And so it's been truly inspiring and that's the thing that makes the job really rewarding every day is knowing that you've got a lot of folks throughout state agency in leadership communities around the state, and hopefully a great cross section of our provider community. They're excited about this effort, that feel like we can all come out as winners if we do it right. And so that's kind of worth the Don of this investment, And it's really neat place to be at.

Matt Schmit: And I hope, and if we talk a year from now or whatever it may be that we feel equally inspired. But it's a lot of work ahead, but we're looking forward to it.

Christopher Mitchell: Good. And I think it's worth just noting that I, the things that governor Dayton achieved in Minnesota leading us to this path of billion dollar surpluses is notable. And so we can have disappointments and disagreements with them while recognizing someone's record much like, I think every vote that you took was terrible except for those on broadband. No, I was kidding.

Matt Schmit: So many think that to Illinois.

Christopher Mitchell: Oh, I'm sure some do. But Matt, I've wanted to have this conversation for a long time. I really appreciate you coming in to share those lessons learned and man, I'm excited to see what Illinois does.

Matt Schmit: Yeah, stay tuned. It's a fun time and thanks a lot for having me over today.

48:20

Lisa Gonzalez: That was Christopher talking with his friend, fellow broadband advocate and former Minnesota state Senator Matt Schmit. We have transcripts for this and other podcasts available @muninetworks.org/broadbandbits. Email us at podcast@muninetworks.org with your ideas for the show. Follow Chris on Twitter. His handle is @communitynets. Follow muninetworks.org stories on Twitter. The handle is @muninetworks. Subscribe to this podcast and the other podcasts from ILSR Building Local Power and The Local Energy Rules podcast.

Lisa Gonzalez: You can access them anywhere you get your podcasts. You can catch the latest important research from all of our initiatives. If you subscribe to our monthly newsletter at www.ilsr.org. While you're there, please take a moment to donate. Your support in any amount help keep us going. Thank you to Arne Huseby for the song Warm Duck Shuffle, licensed through creative commons, and thank you for listening. This was episode 395 of the Community Broadband Bits Podcast.

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