Broadband 7 update: Fiber hard to find and bids high but construction starts

In the year since the federal government started awarding broadband stimulus money to local governments and telecommunications firms in Minnesota, construction bids have come in high and glass fiber is in short supply.

That means people planning high speed Internet projects around the state have scrambled both to shore up their financial models and to find enough fiber to lay to fulfill their promises to bring faster and perhaps cheaper service to underserved parts of Minnesota.

But crews nonetheless are expecting to start construction work next week near Lakefield in southwestern Minnesota and near Lutsen in the far northeast, both areas where connections to the Internet lag behind the rest of the state. On other projects, local officials are still jumping through hoops with the federal government and conducting preliminary engineering. And a number of projects are nearing the crucial point of signing up customers. In the end, that will make or break the various revenue models.

The federal stimulus program awarded about $7 billion to increase broadband access around the country, and some $250 million of that was designated for 17 construction projects in Minnesota. Some of those projects and the program as a whole have been criticized as wasteful and as subsidizing entities that compete with private Internet service providers.

At the same time, many communities are trying without federal stimulus money to address demands from residents for better Internet service. At Ground Level we addressed the issue with a package of special reports several months ago and then picked a handful of communities -- our Broadband 7 -- that we promised to track regularly.

With money flowing, people meeting and workers digging holes, this is a good time for an update. I'll deal today with the four places that were awarded stimulus money.

Cook County. Ready to start digging.

Crews plan to start laying underground fiber optic cable July 25 near Lutsen, marking a huge milestone in a years-long effort to improve Internet access in the far northeastern corner of Minnesota. Less than half the county's residents have access to broadband today.

The first work will be along the Caribou Trail (Cook County HIghway 4) and then after Labor Day will shift to a stretch along Highway 61 and the North Shore. What actually will make the service live will be a connection with the Northeast Service Cooperative coming from the west, and that probably won't happen until next year. Construction up the Gunflint Trail is scheduled for 2012.

Meantime, Arrowhead Electric Cooperative, the county's electrical utility and the network builder, has received nearly 1,000 "pre-registrations" from potential customers. That's about 20 percent of the total possible in the county. Precise pricing hasn't been nailed down and the pre-registrations aren't a full commitment by customers.

But Arrowhead's Joe Buttweiler is hoping it's a good indication that those residents, cabin owners and businesses will eventually take (and pay for) the service.

Speaking of money, Arrowhead has a general contractor heading up the work--MasTec--but hasn't pinned down the exact deal. Asked whether the construction bids would match the $16 million federal stimulus award, Buttweiler said he'll know for sure in early August.

Lake County. Bigger and slower

Things aren't proceeding at that pace down the North Shore in Lake County.

A contingent of Lake County officials is heading to Washington, D.C., Wednesday (July 13) for a face-to-face conversation with officials from the USDA 's Rural Utilities Service (RUS). The RUS is the agency that awarded Lake County $66 million to serve all its residents and some of St. Louis County's residents with fiber.

RUS still hasn't signed off on the somewhat troubled project, said county commissioner Paul Bergman, so the money spigot has yet to turn on. RUS confirmed the meeting but said it doesn't comment on specific questions it may have for project planners.

In the meantime, a new company, Lake Communications, has been formed to operate the service, which the county would own. That firm replaces the consulting firm National Public Broadband, which had helped the county develop its plan. The county and NPB split earlier this year over the role one of the firm's officials played in a troubled Vermont broadband project.

Bergman said the county hopes to get the project out for bids soon and choose a general contractor by the end of September. The government's three-year clock for completion is ticking.

The Lake County project continues to be a target of Mediacom, which has a cable operation in the county, and the cable industry generally. These critics have said the size of Lake County's award and the difficult start the project has had make it a prime example of how much of the federal broadband stimulus is being misspent and winds up competing with private enterprise.

Lac qui Parle. Have shovel. Need fiber.

Construction bids came in higher than originally predicted, but not as high as later feared. So the small telephone cooperative involved is kicking in another $1 million and is ready to go with its project to lay fiber to reach rural Lac qui Parle County residents in western Minnesota.

There have been two delays for the public-private project, which is the result of an agreement between Lac qui Parle County and Farmers Mutual, a telephone cooperative that has long served the area.

Executive director Kevin Beyer said, first of all, that Rural Utilities Services, which awarded $9.6 million for the project, got it mixed up with one in Iowa so it still hasn't given the go ahead to spend federal stimulus money. (RUS officials were checking into the allegation.) And a world fiber shortage related to factory damage in tsunami-torn Japan has made it harder to get materials, he said. (Corning, a leading supplier of fiber all over the world, says demand is rising in China, Europe, Latin America and the United States. It doesn't manufacture in Japan but competitors do and their operations were disrupted.)

Those factors will push the Lac qui Parle construction start into September, Beyer said.

Because the telephone cooperative, which already has a fiber network to part of the county, has agreed to pay an extra $1 million to offset higher bids, what had been a 50 percent grant is turning into a 40 percent grant, he said.

Even so, given involvement by the county and the availability of stimulus money, the Farmers Mutual board felt "this was the best opportunity we'd get for Lac qui Parle County," Beyer said.

Windom. Bid high, but groundbreaking set.

This was supposed to be a $12.7 million project to extend the fiber optic service that Windomnet has been providing to Windom to eight other towns in southwestern Minnesota. But construction bids were driven $1.6 million higher than anticipated by labor and material costs, said director Dan Olsen, prompting planners to fine tune things.

The project, to be owned separately from Windomnet by the entity Southwest Minnesota Broadband Services, is making up $500,000 of the difference by getting payment up front from Jackson County for $1 million worth of future service, Olsen said. But the eight member cities have not been asked to kick in more than originally anticipated.

Instead, planners are cutting back on their assumptions for how many "drops" they will actually have to build to homes and businesses and hoping to trim other construction costs by working with another telecommunications company, Olsen said.

Olsen, too, has been dealing with the fiber shortage, but says he has his hands on enough material to handle construction in the near term. Workers plan to start next week in Lakefield and then move on to Heron Lake and parts of Jackson. He's aiming for Oct. 1 to flip the switch and turn on service to the first new customers.

The price structure for customers is being nailed down this week, he said.

I'll provide an update in the coming days for the rest of the Broadband 7 -- Sibley, Redwood and Todd counties.

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