When utilities, including broadband providers, need to cross railroad rights-of-way to serve customers, some railroad operators have been known to press their advantage. Several states have addressed utility complaints by establishing standardized rates and setting up processes to create a more reasonable and predictable system. Eliminating this obstacle to deployment is another step in bringing broadband to the communities that need it the most.

Party Concerns

Often railroads obtained title to real property during 19th century acquisitions as the infrastructure was being built. They want to preserve as much of their authority and title rights as possible and to ensure that they can receive the maximum value for their interest in the land.

For utilities, cost of deployment is a primary concern. When railroads demand unreasonable fees at crossings or drag out negotiations as a delay tactic, they also impinge on a utility’s ability to meet operational deadlines. Safety and engineering integrity can be negatively impacted by difficult negotiations, unreasonable demands, or exorbitant costs.

Different States, Different Stories

Few states have addressed the problem with statutes establishing standard utility fees for railroad right-of-way crossings. David L. Thomas, Managing Member of the strategic utility planning firm Eagle 1 Resources (E1R) has worked with telecommunications companies and other utilities to negotiate railroad crossing arrangements. He's seen that standard crossing fees set down in statute benefit deployment by ending delay and reducing costs and would like to see the trend pass to every state.

The lakes and forests of Aitkin County in northern Minnesota make it an ideal location for a vacation home, but poor connectivity has historically limited days spent at the cabin to weekends and holidays. However, a new partnership between Mille Lacs Energy Cooperative (MLEC) and Consolidated Telecommunications Company (CTC) is making it possible for families to extend their trips up north by connecting lakeside cabins with high-speed Internet access.

The two co-ops are working together to build a Fiber-to-the-Home (FTTH) network, XStream Fiber, that will bring fast, reliable broadband access to homes and businesses in MLEC's service territory. MLEC hopes that the improved connectivity will benefit the local economy by encouraging seasonal residents, who make up more than 40 percent of the cooperative's membership, to stay in the region for longer.

Partnership Lands State Grant

According to Stacy Cluff, Technology and Energy Services Manager at MLEC, the electric cooperative had been exploring its options for offering high-speed broadband access for a decade. But it wasn’t until 2016 when MLEC began working with CTC, which had previously partnered with Arrowhead Electric Cooperative on a broadband project, that the XStream Fiber network became a reality.

CTC’s role in the partnership is to provide network connectivity, Internet backhaul, and backend support while MLEC manages billing, marketing, and other subscriber services. The cooperatives coordinate technical support calls, with MLEC handling basic issues itself and pushing higher level problems to CTC. The electric co-op owns all of the fiber infrastructure within its service territory.

The Office of Broadband Development (OBD) at the Minnesota Department of Employment and Economic Development (DEED) recently released a call for Border to Border Broadband grant applications. The deadline to submit your application is September 13, 2019. 

This year, the State Legislature has appropriated $20 million in funding for projects located in unserved or underserved communities. As a reminder, Minnesota has established the thresholds as:

Unserved area: households or businesses lack access to wire-line broadband service at speeds of  25 Megabits per second (Mbps) download and 3 Mbps upload.  

Underserved area: households or businesses do receive service at or above 25 Mbps / 3 Mbps, but lack access to wire-line broadband service at speeds of 100 Mbps download and 20 Mbps upload.

The OBD has posted a map of the state which allows users to to input addresses and quickly determine if their location qualifies for grant funding. Check it out here. 

Who Can Apply?

As other states have shaped their broadband grant programs, they’ve looked to Minnesota for guidance. One of the shining characteristics of the Border to Border Broadband Broadband Development program has been the diverse field of eligible applicants. In some states, grants can only go to private sector companies, but Minnesota takes an “all hands on deck” approach. Eligible applicants include:

• Incorporated businesses or partnerships
• Political subdivisions
• Indian tribes
• Minnesota nonprofit organizations organized under chapter 317A
• Minnesota cooperative associations organized under chapter 308A or 308B
• Minnesota limited liability corporations organized under chapter 322B for the purpose of expanding broadband access

Eligible Program Costs and Matching Funds

Applicants can only receive grant funding if they provide matching funds, which can come from any public or private source. The project infrastructure must be able to support minimum symmetrical speeds of 100 Mbps.

Last November, we reported on a change to the tax code that is deterring rural telephone and electric cooperatives from leveraging government funding to expand broadband access. We were alerted to the issue by the office of Senator Tina Smith (D-MN), who sent a letter to Treasury Secretary Steven Mnuchin and IRS Commissioner Charles Rettig requesting that they remedy the issue and announcing her intention to introduce corrective legislation.

Federal elected officials have introduced such a measure, called the Revitalizing Underdeveloped Rural Areas and Lands (RURAL) Act. Senator Smith together with Senator Rob Portman (R-OH) introduced the Senate version of the bill, S. 1032, in early April, followed by Representatives Terri Sewell (D-AL) and Adrian Smith (R-NE), who introduced a companion bill, H.R. 2147, in the House a few days later. The RURAL Act would ensure that co-ops, which are many rural communities’ only hope for better connectivity, could take full advantage of federal and state funding for broadband networks.

Addressing Legal Ambiguity

Maine’s Department of Economic and Community Development is currently seeking a Director of their Broadband Office. The closing date to apply for the position is February 22, 2019.

Learn more about the position at the State of Maine’s online posting. 

According to the announcement on the search, the position will: 

[P]rovide leadership and guidance for Statewide broadband deployment in Maine. This position provides direction to the ConnectME Authority Board, manages staff, provides oversight and coordination of grant funding programs, interacts with public and private sector leaders and management, engineers, attorneys, accountants, construction and financial experts, and the public relating to the mission and implementation of ConnectME initiatives.

Some of the Director’s tasks will be:

• Monitor emerging technologies on national and industry initiatives and trends in broadband; prepare recommendations and position papers; conduct research and analysis to identify best practices toward broadband adoption and improvements.
• Research new and existing technologies to ensure that all areas of the State have access to optimum service.
• Through dedicated website and social media channels, explore all opportunities to engage service providers and existing and potential subscribers on the benefits of broadband.
• Provide guidance and direction to the Office of Broadband Staff and ConnectME Authority Board.

Read more about the role of the Director of Broadband Office and the qualifications for the position on the state posting.

Work in Minnesota

The Dakota Broadband Board is also seeking to fill a leadership role as they look for an Executive Director. The Board asks that interested individuals submit their application materials by 4 p.m. CST on February 28th.

Read the job announcement.

As part of their position:

Ever since the term “5G” came on the scene, the big ISPs have dedicated themselves to expanding hype about what the technology will accomplish, especially in rural areas. In a recent NBC News Signal segment, Dasha Burns took a look at rural and urban connectivity, the digital divide, and considered the demands and limitations of 5G.

She provides a simple explanation for why 5G can only have a limited impact in rural areas. She also touches on some of the issues that create parallels between the situation for people in urban areas who might not have access to 5G when it finally arrives. To address the urban component of digital equity, Burns went to Newark, New Jersey, and met with students who, due to economic limitations, rely on public access to the Internet.

Burns visits rural Minnesota to check out RS Fiber and talks with one of the many local people in the agriculture industry, a crop consultant, that needs high-quality connectivity from the broadband co-op. We get a peek inside the RS Fiber headquarters. For more on the rural Minnesota cooperative, download our 2016 report, RS Fiber: Fertile Fields for New Rural Internet Cooperative.

Check out the 5:25 minute video:

Even if a local government isn’t ready or able to build its own broadband network, there are still ways they can help bring the benefits of better connectivity to their community. Over the past few years, several counties in Minnesota have partnered with local electric and telephone cooperatives to expand high-quality Internet access as an economic development strategy. In many instances, county governments have offered financial support to the local co-ops, in the form of grants and loans, to connect their rural residents with high-quality fiber networks, often supplementing federal subsidies or statewide Minnesota Border-to-Border Broadband Development grants.

Projects Across the State

Minnesota counties have taken a variety of approaches when it comes to helping cooperatives finance broadband deployment projects.

Some, such as Cook County in the far northeastern corner of the state, provided grants to local co-ops. Cook County began its partnership with Arrowhead Electric Cooperative back in 2008 when both entities contributed to a broadband feasibility study. At the time, the county suffered from the worst connectivity in the state, and many people still relied on dial-up. In 2010, Arrowhead was awarded a $16.1 million combined grant and loan from the stimulus-funded Broadband Initiatives Program (BIP) to build a fiber network in Cook County. The county government offered Arrowhead a $4 million grant for the project, funded by the voters’ reauthorization of a 1 percent sales tax that was due to expire. In return, Arrowhead agreed to provide services such as Internet access to county buildings at no cost.

For many rural Americans, the local electric or telephone cooperative is their best hope for finally obtaining modern-day connectivity. With the support of government funding, rural cooperatives have brought electricity, telephone service, and more recently broadband access to some of the most rugged and sparsely populated places in the country.

However, recent tax code changes might prevent co-ops from connecting more rural communities. Cooperatives could potentially lose their tax exempt status if they accept government grants for broadband expansion and disaster recovery — an unintended yet foreseeable consequence of the Republican “Tax Cuts and Jobs Act” passed late last year. In a press release, Senator Tina Smith called attention to the oversight, noting, “This uncertainty has caused cooperatives significant concern and frozen some of their grant applications.”

Who’s Ready for Some Tax Policy?

As nonprofit membership corporations, rural electric and telephone cooperatives are exempted from paying taxes under section 501(c)(12) of the Internal Revenue Code (IRC). To maintain this tax exempt status, cooperatives must derive at least 85 percent of their income from members (e.g., from selling electricity). This is sometimes referred to as the the member income test or the income source test.