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Minnesota Municipal Network Up For Sale

June 21, 2017

According to the Lake County News-Chronicle, last Tuesday, the Lake County, Minn. Board of Commissioners vote unanimously to sell its municipal broadband network. The board began considering a sale just last month.

The system, called Lake Connections, operated for seven years.

Lake County will now pursue buyers. The process means current subscribers face an uncertain future. According to the News-Chronicle, “The county will try to get the best bid possible to continue quality service to Lake Connections customers.” Officials hope, but did not promise, that subscribers will not “see a change in service or pricing.”

County Administrator Matt Huddleston suggested public officials simply didn’t have the money, or the knowledge, to keep managing the network. In a statement, he said, “We now have the opportunity to seek an owner that can provide the expertise in managing the network” and can “make the necessary investments for the work that still needs to be completed.” Telecompetitor’s Bernie Arnason draws the same conclusion. He said the Lake Connections sale “reveals the financial commitments building and operating broadband networks requires, and the risk associated with it.” Arnason also noted, “The leadership of Lake County seems to think the private sector is better suited to finish and operate the network, probably due in large part to the financial obligations it requires.”

Lake Connections was financed in part by the U.S. Department of Agriculture’s Rural Utilities Service. In addition to $10 million directly from the RUS, the county got a $56 million RUS loan, received $3.5 million from the Federal Communications Commission, and pledged an additional “$15 million of its own money” to fund home connections, the News-Chronicle explained.

Even after seven years and that enormous sum of money, the network still is not finished. The county hopes private company will complete the project. County Commissioner Rick Goutermont explained, “[T]here still needs to be some more funds put into it and with the roadblocks we’ve got in front of us for gathering more funds to put into it, I think this is the best way to make that happen …”

According to the News-Chronicle, future financing wasn’t the only problem Lake Connections encountered. The newspaper noted that “the county recently settled a lawsuit resulting from the construction of the network with Compass Consultants and another is still pending with Rohl Networks LP.” Additionally, “After the main construction was completed in 2015 and even before, some residents faced long waits to have their homes connected to the network.”

Lake Connections currently has 700 subscribers. The county still owes $48.5 million on its loan, or about $6,900 per subscriber.