ILECs and Co-ops Discuss Hurdles to Deploying Stimulus-funded Broadband

In Minnesota alone, the Recovery Act of 2009 funded 18 fiber construction projects, for a total of $229m in grants and loans. But many of those expansion projects have hit snags, either due to bad weather, slow paper work, deadline difficulties, regulatory red tape, or shortages of fiber and other supplies.

This week Minnesota Public Radio ran a story detailing some of the fiber deployment issues in the state, and a variety of companies and projects had one thing in common: the need for deadline extensions, which better reflect current timeline estimates. And the RUS is extending those deadlines. Now all projects funded by the Recovery Act will have until 2015 to be completed. According to MPR News, the RUS found that “some awardees were so concerned about the original deadlines, they considered canceling their deals.” Extensions to 2015 were always possible, the RUS representative said, and now projects won't be rushed.

One Minnesota company experiencing delays is Farmers Mutual Telephone in Bellingham—a local telco that's building out its broadband network to include 1,500 homes in Lac qui Parle County in western Minnesota. The project is being funded by $10m of stimulus funds, but for a while Farmers Mutual had trouble securing fiber optic cable. MPR reported that, “A cable drought has been caused by high demand from a crush of stimulus-induced broadband projects nationwide coupled with a Japanese earthquake a year ago that destroyed a major fiber manufacturing plant.” The cable drought has had a ripple effect nationwide, too. Just last month we heard a similar account from Quitman, Texas-based Peoples Telephone, who was determinedly moving along with its broadband build.

Farmers Mutual finally received the cable it needed last October, but with Minnesota winters, that didn't leave much time for construction. Farmers Mutual general manager Kevin Beyer said that fiber orders from bigger companies were filled first, with smaller companies having to wait months to get the supplies they needed. “The first orders filled should have been ours since we ordered ahead of others,” Beyer said, “but the game got changed a bit. There was a reshuffling of who mattered.”

For the companies and cooperatives who didn't have trouble getting fiber, the cost of fiber optic lines and other supplies were often more expensive, due to demand. Doug Dawson, who owns a broadband project consulting company, said that in some cases, the fiber shortage has driven prices up 15-20%.

Dawson and his company, CCG, have managed the roll out of fiber projects around the world and in nearly every U.S. state. As for his planned project in Minnesota, Dawson wants to deploy fiber in Sibley and Renville Counties in the western part of the state, and he's had to be crafty to secure adequate amounts of fiber. Dawson told MPR: “We'll find the fiber somewhere for Sibley and Renville... but if somebody bigger and richer than us wants it, it's gone.” In other instances, Dawson said he's had to “go to other people who have built and have a half a mile on the shelf. People are getting chummy,” often swapping or trading supplies that are in hard to find.

At Winnebago Telephone Cooperative—based in Lake Milles, Iowa, but with a network that expands into southern Minnesota—the delay involved environmental permits. To get all the necessary paper work completed and permits granted, Terry Wegener said it took his company a few extra months to start construction. “We wanted to start in April,” Wegener said, “but we didn't get to start until August because of the environmental permitting.”

Other fiber projects like those planned by the Arrowhead Electric Cooperative and Lake County, say that staffing issues at the RUS are delaying paper work and permits. “We look at it this way,” said Lake County Commissioner Paul Bergman, “they [the RUS] got 300 approved applications and the great leaders in Congress didn't give them more people. There has been a strain on them but it's not really their fault. It's like a mob scene going into a concert and there is only one security person.”

But there have been some federally-funded networks completed in Minnesota, too. Halstad Telephone has been one of the most talked-about success stories, at times receiving national attention for its quick progress. When the RUS sent out letters to awardees last October, hoping to speed the process of deployment along, the agency only listed six completed projects in the country—and two of them were built by Halstad Telephone. One of the reasons for the small telco's progress was that the company chose not to wait for stimulus dollars and went ahead with its planned network expansion in portions of Norman and Polk Counties, and areas across the border into North Dakota. To date, the North Dakota networks are completed, and the one in Minnesota (which will reach 1k households and farms) is slated to be finished this fall.

Halstad ceo Tim Maroney said the company was fortunate to be selected for RUS funds early, and the company was able to procure fiber before the big rush. “We just jumped on it. We didn't wait for the money to come. We started the engineering and negotiations. We took a chance,” Maroney said.

As for those still waiting to break ground, this year's early spring is nothing short of ironic. “It's unfortunate that out of all the years, when we have all this construction to do, we have this weather. Come on. What horrible luck,” said Joe Buttweiler, Arrowhead Electric's director of broadband projects. “On the flip side, extra time to plan and make sure you're organized is not a bad thing either.”