These are exciting times for the entrepreneurial dairy-farm family that runs Redhead Creamery, an artisanal cheese producer a few miles north of Brooten in central Minnesota.
A little over a year ago, Redhead introduced its own line of spirits made from whey, a byproduct of cheese-making. That makes Redhead one of perhaps a dozen whey distilleries in the world. It began by producing an araga or “milk vodka.” This past summer, it released a bourbon and a gin. “It’s full circle, going from crops to cows to cheese to cocktails,” jokes Redhead Creamery co-owner and cheesemaker Alise Sjostrom.
Almost as exciting for her company are fiber-optic lines that, once lit, will deliver to Sjostrom’s farm a much faster and more reliable internet connection. Supplying that fiber-powered broadband will be Runestone Telecom Association, a Hoffman-based provider of telephone, cable TV, and internet services.
For more than a decade, the state of Minnesota has been actively pursuing expansion of high-speed broadband access throughout greater Minnesota as well as in the Twin Cities metro. And there have been some significant success stories. But as Sjostrom’s experience demonstrates, there are still plenty of areas where internet speeds are still sluggish.
On Aug. 28, the state’s Office of Broadband Development announced that it would be making plans to disburse an estimated $392 million to parts of the state needing faster internet connections. That funding will certainly help bring greater Minnesota up to speed. With their general lack of urban density, rural areas still face the challenge of making broadband investments financially viable.
The statewide connection
Better broadband “would benefit us in a huge way,” Sjostrom says. Her company has relied on satellite connectivity for many years, and while it generally performs satisfactorily, it’s vulnerable to atmospheric conditions. During a thunderstorm this past spring, “half of our building didn’t have internet for half the day,” she says. This summer, “the smoky haze we’ve had because of the Canadian wildfires really impacted our internet performance.”
Alise Sjostrom, co-owner, Redhead Creamery
This not only makes it difficult to work with customers and vendors. The family farm installed robotic milking equipment a couple of years ago. The robots are “heavily connected with the internet,” Sjostrom says. “We’re able to manage them somewhat through our phones. But if the internet goes down, the robots go down, which would be a really bad thing for our cows.”
Broadband access and the urban-rural digital divide have been widely discussed topics throughout this century. The pandemic intensified reliance on the internet to conduct business, work from home, and make purchases. Consequently, it made high-speed internet access an even more urgent need.
“Since Covid, we have seen such a dramatic rise in network traffic,” says Jill Hornbacher, senior director of external communications for Comcast’s Minnesota, Wisconsin, Kansas, and Missouri markets. One driver for that: “The average home has 36 devices connected to their Wi-Fi,” including smartphones, tablets, watches, appliances, gaming consoles, and doorbells. In addition, “entertainment is responsible for 70% of traffic that travels over our network, and nothing is driving demand higher than live sports,” Hornbacher adds.
The state of Minnesota began addressing the need for higher-speed internet in 2013, when it established the Office of Broadband Development within the Department of Employment and Economic Development. The office was tasked with helping fund “border-to-border” high-speed internet access for all state residents and businesses. The following year, it launched a grant program through the state’s general fund to support communities’ efforts to attract broadband development.
Since 2014, the general fund money, along with some broadband-dedicated capital project funds, has totaled more than $400 million. There have been 10 rounds of border-to-border state grants to internet service providers (ISPs) to expand broadband in “unserved and underserved” locations. Those terms are defined by connection speed as measured in megabits per second (Mbps). “Underserved” connectivity has upload speed of lower than 100 Mbps and download speed of lower than 20 Mbps. “Unserved” is lower than 25 up and lower than 3 down. To earn a state broadband grant, a project must have speeds of at least 100/25 with the capability to scale up over time to 100/100.
Each border-to-border grant has covered up to 50% of an expansion project’s costs. There also have been three grant rounds from a smaller funding bucket called the Low-Population Density Program, which covers 75% of costs. According to Bree Maki, the Office of Broadband Development’s executive director, that program “recognizes the most expensive and difficult places to serve,” with the goal of “making the business case” to ISPs to expand in those areas. These grants “come with a lot of local match [dollars],” she adds.
Both ISPs and communities have contributed to buildout projects. Since 2014, nearly 120,000 locations have received state grant dollars. There are currently four grant rounds in progress, all of which will close by year’s end.
Bree Maki, executive director, Office of Broadband Development
In 2022, the Office of Broadband Development also introduced a line extension program intended to pick up “missed areas” where fiber passes “very close” to a residence or business “but didn’t make the connection,” Maki says. The program has provided funds to help ISPs hook up individual property owners to that fiber. Maki describes this program as “successful” while noting that money for the program has been nearly depleted.
After the current grant rounds close, dollars for broadband expansion will no longer be available from the state’s general fund. One of the chief reasons for this, Maki says, is that “we wanted to see how far BEAD went.”
BEAD stands for Broadband Equity, Access, and Deployment, a $42.45 billion federal program launched in 2021 with the goal of expanding high-speed internet access. In June 2023, the federal government announced that Minnesota would receive around $652 million in BEAD money.
With the re-election of Donald Trump, the BEAD program was thrown into flux. After a summer of uncertainty and policy changes, the Office of Broadband Development released the state’s final draft proposal for using BEAD funds on Aug. 28. The amount that Minnesota was awarded for broadband deployment was $392 million—about 40% less than the state’s BEAD allocation award announced two years earlier.
Minnesota was not alone with that reduced allocation. Many other states submitted plans using less than their full allotment on broadband infrastructure because at the time, the Trump administration required states to use lower-cost technology such as satellite or fixed wireless, instead of fiber, which is Minnesota’s preference. As a result, Minnesota hopes to be approved to use the rest of its allocation on broadband infrastructure, which could include towers and emergency services.
Once Minnesota activates its BEAD funding, the state would be able to extend 100/20 broadband access to more than 75,000 homes and businesses in unserved and underserved locations that federal officials deemed to be eligible for BEAD. The state will grant the funds to ISPs that submitted the lowest bids for each location. In many cases, the awardee will be installing fiber, though non-fiber providers did win bids for some projects. Work on BEAD-funded installations could begin by the middle of 2026.
Locations with remaining needs
According to the state, the number of Minnesotans with connectivity speeds of at least 100/20 is estimated to be 5.5 million (out of a total population of nearly 5.8 million). Nearly 76,000 homes and businesses could get what state officials consider satisfactorily high-speed broadband access through an infusion of state grants fueled by federal funding.
Some greater Minnesota counties have achieved better broadband access. Every year, Ann Treacy, a consultant and blogger who posts regularly on the “Blandin on Broadband” blog under the auspices of the Grand Rapids-based Blandin Foundation, puts together a broadband profile that examines how close each Minnesota county is to reaching the state’s two broadband speed goals: first, access to broadband speeds of 25/3, then the 2026 goal of access to 100/20.
Over a 20-year period, Blandin provided $22 million in grants for rural broadband development until 2023, when it transitioned out of broadband funding with the increase in available federal and state money.
“For many years, I think 25/3 felt ‘good enough’ to a lot of people,” Treacy says. “You can do email and watch Netflix at those speeds, especially if you don’t have kids online at the same time. That really changed during Covid.”
Based on her December 2024 profiles, Treacy says that “there are a number of counties that are doing well, and some of those counties are in rural areas.” Beltrami County, for instance, has enjoyed high-speed broadband thanks to fiber installed by Bemidji-based Paul Bunyan Communications.
“While some rural areas are well served, that puts the ones that aren’t well served further and further behind,” Treacy says. “Schools, businesses, health care organizations all assume a certain level of technology now. And if you don’t have it, you’re sunk.”
With the help of state grants, several providers have stepped up. One is Braham-based electric cooperative East Central Energy (ECE), which operates in a 4,500-square-mile area in central Minnesota. (It also covers a small part of Wisconsin south of Duluth.) ECE began pursuing broadband in 2021, when the cooperative first got wind of the BEAD program. “That was what triggered us,” says ECE vice president and CIO Ty Houglum. The ECE board approved supplying broadband connectivity in November 2022. It now has about 5,500 members connected to its fiber network; it expects to have 25,000 to 30,000 when it completes construction over the next few years.
“There are a lot of electric co-ops across the nation that are doing broadband,” Houglum says. “We’d been asked many times by local entities to help solve the urban-rural digital divide. But ultimately, the funding was what put us over the top.” ECE has secured about $38 million in funding so far; its entire broadband installation work is expected to tap out at around $300 million.
ECE is currently offering broadband packages ranging from 100/100 Mbps up to a very high speed of 2/2 gigabits (Gbps). “We have some people who might be half a mile to a mile off of a county road,” Houglum says. “We’re not charging for that connection to the house.” For each of these customers, ECE absorbs about $15,000 in installation costs.
It’s not only cooperatives that are building out higher-speed broadband access. Perham-based telecom Arvig provides internet service in about half the counties in Minnesota, though its main market is the West Central region. According to Dave Schornack, Arvig’s director of business development and sales, most of his company’s rural broadband expansion has extended out of Perham into communities including Walker and Melrose.
“We’ve been very active in the border-to-border grant program to provide service in the past several years,” Schornack says. “We do a lot with line extension work.” In addition, “we’ve been very aggressive in our buildout in the past 10 to 15 years. And our plans are to continue to do that.”
Metro-area broadband growing, too
Since 2010, Arvig also has been providing fiber connectivity in parts of the Twin Cities region. The metro area is not technically underserved, but here too there is increased demand for higher speeds and fiber installation. That is attracting projects—and competition. According to state government data, Hennepin County alone had 22 broadband providers as of October 2023. And at least one new company has entered the market since then.
“The broadband industry has always been very competitive,” Comcast’s Hornbacher says. “It has been growing significantly over the last several years.” Despite Comcast’s reputation as a cable company, “99% of data traffic is over fiber on our network.” In recent years, Comcast has completed 100% fiber installations in nearly 10 metro-area cities. This fall, it will wrap up construction in Chanhassen, where it will offer connectivity to nearly 11,000 homes and businesses. It also has plans for network expansion in Savage, Waconia, and Prior Lake.
Comcast is the largest of the metro-area broadband providers, which vary in number from community to community. Talk to people throughout the metro, and it’s not hard to find people who are discontented with their broadband options or unhappy with the service their ISP provides. The region’s high density and the demand for fiber continues to draw new competition. “In some of the areas where we’re expanding, there are other broadband providers,” Hornbacher notes.
These include not only fiber companies but also fixed-wireless providers like Verizon and T-Mobile. (Some ISPs offer internet-only services, eschewing other forms of telecom connectivity.) One of the newer fiber players is Missouri-based Gateway Fiber, which entered the metro market in September 2023 with projects in Blaine and Coon Rapids. It has fiber construction finished or underway in nine metro-area cities, with its most recently completed installation in Shoreview.
Another sign that the metro remains a growing market for broadband providers: On Sept. 2, Indiana-based Metronet announced it acquired US Internet, a Minnetonka-based fiber company offering residential and commercial internet services throughout the Twin Cities and surrounding counties. Metronet itself was purchased in July by a joint venture between T-Mobile and New York-based private equity firm KKR.
The metro’s density means that ISPs don’t often tap state grants. When Comcast began building out in Corcoran, “we partnered with Hennepin County and the Minnesota Office of Broadband Development, and we were awarded some funding through these partnerships,” Hornbacher says. Comcast’s other metro-area fiber-optic installations “have been 100% our own capital.” In the past three years, Hornbacher says, her company has “invested more than $525 million just in Minnesota to expand the network and enhance the existing network,” adding that Comcast would participate in broadband funding programs “where it makes sense for our business.”
The business case has always been a powerful driver for broadband expansion in all parts of the state. “This is a very nonpartisan issue that everyone seems to recognize,” the Office of Broadband Expansion’s Maki says. “It’s important for our ag community, for education, for access to government benefits.” In addition, “most businesses know the advantage to economic development when you have access to broadband.”
Cheesemaker Alise Sjostrom’s bovine business partners would most likely agree.