How much will the state help broadband?

Maybe in 2013 we'll see what the Legislature really wants to commit to when it comes to extending high-speed Internet access to all Minnesotans.

The state has been formally studying how to extend high-speed Internet access to all residents at least since 2008, when lawmakers created a task force. Information has been gathered, goals have been set, technology has been measured.

Not much state money has been spent.

This December, the current 15-member task force will issue a set of recommendations to Gov. Mark Dayton and the Legislature, and this week it provided a preview of what options it thinks should be on the table.

"There's not a silver bullet, but there's a lot of silver buckshot," said Margaret Anderson Kelliher, who is head of the Minnesota High Technology Council and who chairs the state task force.

So what it might get down to is how much buckshot the state wants to pay for.

Possibilities this preliminary report tosses out include money for libraries and schools so students without computers at home can get access, scholarships toward the same end, letting existing education tax credits expand to include broadband purchases, incentives for rural areas to collaborate on health care applications and discounts for poor kids to get computers.

While there are no big-ticket items, the task force does say the state should consider tax breaks for providers to encourage fiber optic projects, and it suggests looking at models in Wisconsin, Idaho and elsewhere, Mississippi even.

Dick Sjoberg, who runs Sjoberg's Cable, a cable TV and Internet provider in Thief River Falls, and who sits on the task force, said the state can't come close to providing enough money to extend broadband service to remaining rural areas that don't have good access. No one is dreaming of loans and grants of the magnitude of the hundreds of millions of dollars the federal stimulus program is supplying to Minnesota.

But a sales tax exemption totaling, say, $7 million for equipment could be leveraged to result in maybe $100 million of additional investment, Sjoberg said.

"The real crux of the problem is that the last 8 percent probably will cost more to build than the first 30 percent," he said. When rural households cost an average of $6,000 each for fiber optic cable, the economics are such that even a small subsidy lets a provider extend its network that much farther into the countryside, Sjoberg said. And that's true for both small telephone and cable operations like his as well as the Frontiers and CenturyLinks of the telecommunications world, he said.

That implies, of course, that accomplishing the state's stated goal of border-to-border broadband access will be an evolutionary process. Sjoberg thinks the growth of satellite and cellular wireless services will satisfy some demand in rural areas but ultimately lead the way to creating more demand and making the economics of fiber work better.

"The gold standard is fiber, but I see this as an evolutionary thing," he said.

The task force put some bare-bones ideas out now in hopes that legislators or the governor's office can start to prepare fuller proposals around ideas they like. The question will be how much silver buckshot it takes to put the gold standard within sight.

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