Loading...
HomeMy WebLinkAboutWho should build the next generation of high-speed networksWho should build the next generation of high - speed networks? by Jennifer Vogel , Minnesota Public Radio March 24, 2011 Windom, Minn. — Dan Olsen, who runs th e municipal broadband service in Windom, was just about to leave work for the night when he got a call. The muckety - mucks at Fortune Transportation, a trucking company on the outskirts of town, were considering shuttering their office and leaving the area. "They said, Dan, you need to get your butt out here now," Olsen recalls. "I got there and they said, 'You need to build fiber out here. What would it take for you to do it?'" Fortune, which employs 47 people in the town of 4,600, two and a half hours so uthwest of the Twin Cities, relies on plenty of high - tech gadgetry. Broadband Internet access figures into how the company bids for jobs, communicates with road - bound truckers, controls the temperatures in its refrigerated trucks and remotely views its off ice in Roswell, New Mexico. Fortune even uses the Internet to monitor where and to what extent drivers fill their gas tanks in order to save money. Yet, when it was time to upgrade company systems three years ago, Fortune's private provider couldn't offer sufficient speeds. That's where Windomnet came in. Though Fortune was a mile outside the municipal provider's service area, "We jumped through the hoops and made it happen," recalls Olsen. "The council said, "Do it and we'll figure out how to pay for it. ' We got a plow and a local crew. We had it built in 30 days." Across rural Minnesota, cities, counties, cooperatives and companies are planning or building broadband internet networks. The goal is to provide even those who live in the remotest parts of t he state with high - speed internet in order to foster job growth, better health care and increased educational opportunities. The most optimistic observers think telecommuting and other internet - based endeavors could help stabilize the populations of rural areas. The big question is, who should build these networks -- public entities or private companies? The debate has been playing out all over the state, exposing the seemingly innocuous topic of internet access to the vagaries of knock - down, drag - out ideolo gical brinksmanship. There have been fights, disinformation strategies, derogatory letter and email campaigns, and even lawsuits. In this sense, the broadband debate is a microcosm of the national public - versus - private debate, pertaining to everything fro m health insurance to the delivery of the mail. For his part, Dale Rothstein, who runs the IT systems at Fortune in Windom, says, "I get three calls per month from people trying to get me to convert. I say 'no.' Dan and Windomnet took care of us. I'm not going anywhere. It's a great relationship. When there is a problem, I call and it's taken care of. It's great to have a local company to deal with." When it comes to building outstate high - speed networks, models abound. Sometimes the big, national compani es step up. Often, small, local companies or co - ops take the lead, finding practical gain in bringing better service to a limited customer base. In other cases, often as a last resort, municipalities finance the installation of high - speed and run it like a utility. Eighteen state projects are set to receive more than $228 million in federal stimulus dollars, infusing public money into many private systems and ushering in the heyday of the public/private hybrid. One project, in western Minnesota's Lac qui Parle County, serves as a good example both of a public - private partnership and of a big private provider taking a pass. Pam Lehmann, executive director of the county's economic development authority, wanted to bring fiber to every home in the county. She likens fiber to electricity or the telephone, explaining, "People who reside here have as much value as people anywhere in the whole world." Lac qui Parle was willing to throw in for a feasibility study and even planned to apply for federal stimulus dolla rs. First, Lehmann went to Connecticut - based Frontier Communications, which provides telephone and internet service to roughly half the county. "The local folks at Frontier had a great interest in pursuing something like this," she says. "We had two meeti ngs with some of the upper management. They said they didn't have the funds available for a project like this. When they are looking at the big picture, a small county in west - central Minnesota was not their priority at that time." Frontier's area general manager for Minnesota, Scott Behn, confirmed the exchange via email. "Frontier currently provides widely - available broadband service in the portions of the county that we do currently serve," he wrote. "But, given all the facts at the time, we were not in a position to attempt to expand our service territory to the entire county." Behn added that Frontier "believes there is a place for public/private partnerships in the telecommunications marketplace." However, "Simply pouring public money into projects t hat overbuild and compete with networks built by private investment discourages private investment and does not help reach those highest cost households. Duplication of the network is no guarantee of success, and is often simply a waste of both public and private resources." Undeterred, Lehmann turned to the other provider in the county, a local cooperative called Farmers Mutual, which had already installed fiber to the majority of its customers. Farmers said yes. Dale Rothstein Now, with the help of nearly $10 million in federal stimulus dollars, every Lac qui Parle resident is scheduled to have high - sp eed fiber to the door by 2014. Public assistance was necessary to move ahead, says Lehmann. "Would this have been possible without grant dollars? Never." Lac qui Parle's experience is typical, says Jack Geller, director of the EDA Center at the U of M, Cr ookston. A big telecom, he says, "asks, 'How are we going to deploy our capital?' They're going to deploy it where it's going to have greatest return on investment. In Minneapolis and Seattle and Denver and Albuquerque. Over time, they deploy that capital farther and farther out. But Lac qui Parle will wait in anybody's timeline." "If you look at the history of the deployment of broadband," continues Geller, "when it first was being rolled out in the early part of the 2000s, it was not uncommon to see the smaller rural companies and cooperative telephone companies deploying this technology first. It was simple to see why. They have small service areas. Where else are they going to invest?" Two sites that have emerged in recent months as broadband battlegro unds are Sibley County in south central Minnesota and Lake County on the North Shore. City and county officials in Sibley County and neighboring Renville County have formed a joint board to plan what would be a publicly owned fiber optic project to deliver high speed Internet service to thousands of homes, farms and busine sses. They have run into opposition from Frontier. Lake County was the recipient of the largest federal stimulus award in the state, $66 million in loans and grants, but its planning has sputtered. Cable company competitor Mediacom has objected loudly and the coun ty had to change consultants when the first one it chose was tainted by association with a troubled project in Vermont. One of the more contentious examples in the state's broadband history unfolded a few years ago in Monticello, a commuter city about 40 minutes northwest of the Twin Cities, where now there are two competing fiber networks. One is owned by TDS, a private provider based in Chicago. The other, FiberNet, is owned by the city. Back in 2007, perceiving that available internet speeds were too s low and priced too high, 74 percent of the citizens of Monticello voted to build a municipal fiber - to - the - door system. The city was in the process of selling the bonds necessary for the project when it was slapped with a lawsuit by TDS, which claimed the f inancing scheme was illegal because broadband shouldn't be considered a utility. The courts eventually sided with Monticello, but not before TDS began laying its own fiber network throughout the city. Fast forward to today, a city with two fiber networks. Andrew Petersen, director of external affairs for TDS, acknowledges "the importance of broadband to stimulate economic development in urban and rural communities" and says his company would have built a fiber network eventually, without prodding from the city. He believes the network may be somewhat ahead of its time, though. TDS offers 100 megabits per second connections, Petersen says, yet, "the vast majority of our customers have speeds between 1.5 and 3. That's both perfectly adequate for telecommutin g and downloading video. And it's also affordable." Monticello's city administrator, Jeff O'Neill, says the city doesn't rue building the year - and - a - half - old FiberNet, although it got a later than planned start on drawing subscribers because of the lawsui t. "We're getting good take rates," O'Neill says, largely because of the city's focus on attentive customer service. "We're marching toward a successful business plan." Standing in FiberNet's "head end" building, full of the spotless, quiet equipment that makes the network run, O'Neill explains, "We built this to have freedom, to have choice. The community, liberals and conservatives, found a common goal here, to have the freedom to get the service you need to preserve your economic security. Some say gove rnment shouldn't get into this, but private companies shouldn't be entitled to a monopoly." "How do you get the incumbent to build a fiber network?" asks O'Neill. "You build one of your own." Even the Monticello citizens who aren't signed up for FiberNet are benefitting, O'Neill adds, because TDS has lowered its rates. (TDS's Peterson denies a correlation, stating, "I think we set the price in the marketplace. We think competition is always good..") In the end, O'Neill says, "You can't measure success sol ely by the bottom line, but by how it affects the community." Municipal systems draw less fire in the far - flung parts of the state, where bigger telecoms have less at stake. Places like Windom, which is cited as a resounding success or a miserable failure , depending on whom you ask. Critics point out that Windomnet has lost money five years in a row. Dan Olsen retorts that Windomnet was never designed to make money; one of the benefits of a municipal system is that nobody takes profits out of it. He says the plan was to break even by year five, which arrived in 2010, and it looks like they'll come within $50,000 of doing so. "We don't charge enough to make money," says Olsen, noting that Windomnet serves the vast majority of the town's 2,000 homes with in ternet, phone, cable or all three. They also provide free service to city buildings and the library. "The point is not to make money, but to break even," Olsen says. "The number one goal of the system is to provide broadband to the residents of Windom." N ow, because of almost $13 million in stimulus dollars, Windomnet is expanding to include eight surrounding towns: Jackson, Lakefield, Round Lake, Bingham Lake, Brewster, Wilder, Heron Lake and Okabena, where many citizens still have dial - up. The stimulus m oney will go to the eight cities and they, in turn, will pay fees to Windomnet, acting as the network's hub. There are many ways to measure a broadband network's success, says the U of M's Geller. "You can measure it by, yes, the public voted for it and t hey have a system. You can measure it financially, which is more tricky. You can measure it by, are people getting good service for a good price?" He describes the situation in Monticello as a major grudge match. But, Geller says, "Look at the infrastruct ure now. It's great. Maybe you measure that as success." Telecommuting levels the field for some rural Minnesotans by Jennifer Vogel , Minnesota Public Radio March 24, 2011 St. Paul, Minn. — Rose Buer commutes to her job as a software engineer in Bloomington every morning. But she doesn't drive from Minneapolis or St. Paul or another suburb. She makes the short trek from her 10 - acre farm to a small office i n Dawson, next to a hair salon and the Dawson Sentinel, the newspaper that serves the town of 1,300 people in western Minnesota. From there, thanks to a DSL Internet connection, she telecommutes to her job at PPT Vision, a company that designs electronic monitoring systems for assembly lines. Buer and her husband, Brett, moved to their country 1912 foursquare house from the Twin Cities seven years ago. Both were raised in rural Minnesota and longed to return. They've planted a garden and are planning a fr uit orchard. "It's the best of both worlds," says Buer, who rents her Dawson office for $100 per month. "From 8 to 4, my head is in technical stuff. I can use my abilities as an engineer. After hours, I have the country farm life." At first, Buer's employ er was skeptical; it cut Buer's hours to three days per week. But after two months, she was back to full time, with full benefits and full city salary. "I don't know where else I'd have an engineering job out here," Buer says. If she chose to live on the farm but didn't have telecommuting as an option, "I don't know if I'd be working at a dime store or what." All over Minnesota — from Cook County in the northeast to Sibley County in the south — public and private entities are contemplating or building hig h - speed Internet networks. Rural communities, dying for success stories like Buer's, are hoping that better connectivity will make it feasible for more people to live and work farther from the city. They hope it'll stave off a pattern of out - migration tha t's been draining young people from their towns and farms for a century. Eighteen state broadband projects have received more than $228 million in federal stimulus dollars. Other communities are pushing ahead on their own in an effort to make Internet acc ess faster and more universal than the private marketplace has so far. For example, Buer at first considered working her job from the farm, but a sluggish connection made that impossible. "This is the only thing that's going to help stem the decline in ru ral areas," says Mark Erickson, the city administrator in Winthrop who is championing a publicly - owned, non - stimulus - funded broadband project in Sibley County. He says Sibley is ripe for telecommuting because it's only an hour and a half from the Twin Citi es. "Broadband has the ability to grow this state," he says. It's hard to measure the extent to which better Internet service will change the rural economic landscape. Certainly there's more at stake than telecommuting — farms and other businesses can use the web to access markets; faster connections can improve rural healthcare through telemedicine and education through interactive video classes. But communities have reason to think broadband could level the playing field, especially with the growing num ber of workers not tethered to a desk. A recent study by ConnectMinnesota and the Minnesota Broadband Task Force found that 37 percent of Minnesotans work from home at least occasionally; twenty percent telework on a regular basis. What's more, the report says, "Three out of ten Minnesota adults who are not currently in the workforce say they would work if empowered to do so through teleworking. This includes 17% of retirees, nearly three out of five unemployed adults, and almost one - third of homemakers." A 2009 report by Forrester Research predicts those numbers will grow: "Fueled by broadband adoption, better collaboration tools, and growing management experience," by 2016, 43 percent of American workers will work from home at least one day per week. It' s unclear what portion of those telecommuters will pick up stakes and move to the country. Ben Winchester, a University of Minnesota sociologist who studies rural areas, thinks good Internet service isn't so much a pull as its lack is a deterrent. "Broadba nd is not necessarily a draw," says Winchester. Rather, he says, "If it doesn't exist, it's a push factor. It pushes people away." At least for some, however, broadband and all its attending technologies — video conferencing, virtual private networks (VPN s), instant messaging — is making rural life possible. Tom Wirt Mike Bubany works as a financial analyst from his 21 - acre property in Spring Valley, south of the Twin Cities, for David Drown Associates in Minneapolis. "The commute is hellacious," says Bubany. "I have to walk down the stairs and kick the toys out of the way. I put on the coffee." He adds, "I am wearing a sweatshirt and jeans right now and not because it's casual Friday." He goes to the Minneapolis office just a few times a year. Tom Wirt and Betsy Price run Clay Coyote, a successful pottery shop outside Hutc hinson, west of the Twin Cities, featuring hand - glazed tagines and other cookware. The couple moved from the Chicago area, where Tom worked in marketing for Bakers Square, to their 55 - acre farm 16 years ago. Since then, they have honed their pottery skills . Their big break came thanks to the Internet. "An editor at Food & Wine magazine had ordered one of our colanders online," recalls Wirt. That editor recommended Clay Coyote to Paula Wolfert, a well - known cookbook author. "She was writing a book about coo king in southwest France and we made a cassole for her." From there, Wirt and Price became consultants on Wolfert's book about Mediterranean clay pot cooking. "It blew the top off our business," says Wirt. He and his wife have become stars of the foodie w orld, racking up their best sales ever last year. More than half their orders came through Coyote's website; they shipped pots to Israel, Germany, Australia and England. "Without high - speed Internet, none of this would exist," says Wirt. "It's absolutely c ritical. Without it, we would be potters doing art shows." Be tsy Price In 2009, the state Department of Transportation and the U of M launched a campaign called eWorkPlace to encourage employers to allow more staff to work remotely. The idea was that fewer commuters would mean less highway congestion during rush ho urs. Since its debut, the program has found that telecommuting leads to increased productivity, fewer sick days and decreased overhead costs. One of the companies that participated in the eWorkPlace project is MMIC, an Edina - based provider of medical IT s ervices and liability insurance. MMIC has been pushing its employees to work from home since 2009, according to Steven DuBois, a senior risk management consultant. He says 40 percent of the company's workforce telecommutes at least one day a week — and som e telecommute full time — saving over $1 million in office rent alone. "We closed an office in Plymouth," he says. "We moved to a smaller office facility." MMIC offers what are known as "hotel cubes" to its workers when they're in the city, which may be a s infrequently as twice a month. DuBois himself telecommutes full time from Appleton, Wisconsin, thanks to a cable Internet connection. "One of the requirements," he says, "is that employees have access to broadband or cable. We do have one person who is working on a satellite hookup," he says. "But it's inconsistent. It's not as reliable as a hard connection at this point. I'm not aware that any of our folks have a wireless system where they are." MMIC represents the future, according to Adeel Lari, a re search fellow at the Humphrey School of Public Affairs who directs the eWorkPlace program. He believes that more and more workers — no longer bound to the city for jobs — will move to the country. "Most of the jobs in the United States are becoming knowle dge - based," he says. "The percentage will go up and up. Can you imagine the implication for where people live?" Those underwater on their mortgages may be stuck in place for the short term, Lari says, but eventually, "I think the suburbs and exurbs will h ave a serious problem. People who want to move out of the city can move way out." Instead of stopping in, say, Eden Prairie, they may go all the way to Grand Marais. "At the present time, they may be tethered to the center city, but that will break away." There used to be a stigma to working from home, Lari adds. "I think that stigma is lifting. Everything is done electronically. People ask for your email address, not your physical address anymore. I believe we are at the tipping point," he says. "We're on the cusp."