Minnesota ISPs warn new legislation may stall $651M BEAD plan

  • Minnesota ISPs are protesting new legislation that includes labor provisions about prevailing wages and certification programs

  • ISPs warned that the legislation could stall broadband expansion efforts through the BEAD program 

  • The battle in Minnesota is yet another example of how state authority can influence the broadband sector

The Minnesota broadband scene is heating up as service providers rally against new legislation they say will stifle the state’s Broadband Equity, Access and Deployment (BEAD) plan.

Minnesota was awarded over $651 million as part of the federal BEAD program. The state’s initial BEAD plan was submitted last year and is still awaiting approval from the National Telecommunications and Information Administration (NTIA). Once approved, the Minnesota Office of Broadband Development can start choosing which providers will get BEAD money to build broadband infrastructure in unserved and underserved areas across the state.

But providers are saying a new State House Bill could throw a wrench into all of that.

Specifically, they are calling on legislators to remove Article 10 from the larger House Labor Omnibus bill (HF 5242), which includes new labor-related rules, including prevailing wage requirements.

Earlier this month, the Minnesota Cable Communications Association, Minnesota Telecom Alliance and WISPA sent a letter to Governor Walz claiming the regulations currently included in the bill will result in Minnesota not meeting the federal mandate established by the BEAD program.

They said Article 10 contains provisions that would increase the cost of BEAD projects and impose burdensome regulations on the broadband sector. ​Among them, the bill would require BEAD funded projects to be prevailing wage projects, which the groups said "would further increase the cost of these projects and limit the reach of the broadband investment."

If passed, the bill would also create a new broadband installer certification program based on a report by North Star Policy Action (NSPA). The letter claimed that NSPA has in the past "been criticized for its flawed findings and lack of expertise in underground construction or broadband."

Melissa Wolf, executive director of the Minnesota Cable Communications Association, warned in a statement the new rules might mean providers "simply choose not to participate" in BEAD. "It will make Minnesota less competitive and halt efforts to reach underserved populations who are still waiting for access to fast, reliable internet," added Wolf.

The House Labor Omnibus was passed on May 1. The Senate passed its version, SF 5284, on May 6. However, with the bills containing differing provisions, a conference committee had to be formed to reconcile those differences before the legislation has a chance of passing through both chambers.

State broadband battles

The conflict unfolding in Minnesota serves as another example of the significant influence states wield in shaping the broadband landscape, both at the local and federal levels.

A similar fight is going on in the Colorado legislature, where state lawmakers introduced a bill that would mandate prevailing wages for certain projects using state or federal money.

Local union workers said the legislation would help avoid "shoddy work and upset customers," while the Colorado Broadband Office argued it would deter broadband providers from participating in grant programs like BEAD.

That bill in Colorado is still bouncing around between stakeholders as they hash out possible amendments before an official vote.

In another state-level broadband battle in New York last month, ISP efforts were thwarted when a Second Circuit court panel ruled in favor of a law that requires them to offer low-cost services for low-income customers.

Initially, a district court sided with ISPs against the requirement, but the Second Circuit ruling overturned that decision, ultimately supporting the state law. Barbara van Schewick, professor of law at Stanford and Director of the Center for Internet and Society, said the New York outcome demonstrated that "states have wide authority to act."

Meanwhile, ISP advocates said they were "disappointed by the court’s decision and New York state’s move for rate regulation in competitive industries."