Officials estimate ‘remarkable’ $650 million for Minnesota

Minnesota could be in line for an unprecedented windfall of money to help build high-speed internet in rural areas.

Every state was promised a minimum of $100 million for broadband development from the federal Infrastructure Investment and Jobs Act passed by Congress late last year. But some states could get more, based on need.

Now, Minnesota officials have an estimate of that extra cash: $550 million. That would bring Minnesota up to $650 million for broadband from the infrastructure bill, a sum that would far eclipse any government spending in the state for developing high-speed internet in recent memory.

“This is a remarkable amount of money,” said Nathan Zacharias, a technology policy analyst for the Association of Minnesota Counties. “The good it will do — especially for rural communities — is almost indescribable.”

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Minnesota’s Department of Employment and Economic Development cautioned that the projection is just a rough estimate and could change. It also wouldn’t be enough for universal broadband access at blazing fast speeds.

But if the end result is anything close to $650 million, Minnesota’s goals for high-speed internet connection will be much closer to reality.

What was in the federal infrastructure bill

The $1.2 trillion infrastructure bill — passed with some bipartisan support under President Joe Biden — contained $65 billion for broadband across the country. Of that, $42.5 billion was earmarked for states to distribute. But so far each state has known only that they would get a minimum of $100 million.

Diane Wells, deputy director of DEED’s Office of Broadband Development, said the federal government recently gave Minnesota an estimate of how much money it could receive so the state could start planning. The cash is distributed based on need, so Kevin McKinnon, a deputy commissioner for DEED, said the relatively rural Minnesota was expecting to get more cash compared to states that are more urban and well connected to the internet.

The final amount Minnesota will get won’t be known until later, and it’s dependent on maps of areas without access to broadband that the feds need to update. Minnesota also must submit a plan for how it would use the money over a five-year period.

McKinnon said it could take roughly a year before Minnesota gets any money to spend under the infrastructure bill program, known as Broadband Equity, Access and Employment, or BEAD.

The feds have previously outlined several potential purposes for the money, including allowing states to install Wi-Fi in multi-unit residential buildings. But Wells said Minnesota’s money is expected to be spent entirely on “deployment” of internet, primarily subsidizing the development of infrastructure — traditionally, fiber-optic cable — in places where it would be too expensive for internet providers to otherwise justify.

Universal broadband access has been a goal of both political parties, especially since the COVID-19 pandemic highlighted inequities in internet access. But exactly how to use American Rescue Plan money on internet projects was a point of contention.

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Legislators this year directed the state to use $110 million from the American Rescue Plan stimulus program passed under Biden for broadband infrastructure. In 2021, the Legislature approved $70 million from the plan for broadband development. That was already a large sum compared to historic spending on broadband.

Minnesota also was in line for another $408 million from a grant program run by the Federal Communications Commission. But $311 million of that cash was awarded to one company, LTD Broadband, which was recently rejected by the FCC. Starlink, which was initially awarded $8.4 million in Minnesota, was also rejected. The money is expected to be redistributed for broadband by the FCC, though it’s not clear how much will be dedicated for Minnesota.

How far would the infrastructure money go?

Minnesota currently has two goals in law for broadband access across the state. One is for every home to have access to internet with download speeds of at least 25 megabits per second (Mbps) and upload speeds of 3 Mbps “no later than 2022.”

But the state also has a faster speed goal of 100/20 Mbps by 2026, which has been the primary focus of Minnesota broadband officials. (Netflix recommends at least 5 Mbps download speeds for high-definition streaming, though faster speeds are likely needed for more complicated tasks involved in, say, running a business.)

In October, the state estimated about 88.5 percent of Minnesotans have access to wireline internet like DSL, cable and fiber at speeds of 100/20 Mbps. And in March, before the Legislature approved $110 million for broadband, DEED officials said they would conservatively estimate the cost of meeting the 2026 goal for adequate broadband at $1.3 billion.

Daniel Lightfoot, a lobbyist for the League of Minnesota Cities, said the federal estimate was “exciting to hear” and higher than expected. But he said it doesn’t completely solve the problem of lack of broadband access. 

“If it was $650 million total, that’s about half of what we would need to meet that goal,” Lightfoot said. “So it’s a big number but also the need is huge too.”