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State promises ‘transparent’ process for dispensing broadband funds

Grants could exceed $500 million, eventually
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Posted at 5:15 PM, Feb 23, 2022
and last updated 2022-02-23 20:15:02-05

This is the second of a two-part series on the launching of an historic, multimillion-dollar investment in Montana’s high-speed Internet infrastructure.

As the state determines who and where will benefit from $500 million-plus of investment to expand high-speed Internet in Montana, a handful of people will be making the decisions – and they’ll be doing it very soon.

“It’s a small office with a big task,” says Chad Rupe, the state broadband program manager overseeing the first $266 million round of grants, which will be decided by June.

Rupe’s office has three people reviewing the grant applications, assisted by a private engineering contractor with expertise in broadband deployment. Once they rank the grants, an advisory commission composed of state lawmakers and Gianforte administration officials will review them in public and make recommendations.

Chad Rupe, broadband program manager for the state of Montana.

The Gianforte administration makes the final call -- but a majority of the commission is lawmakers, and overriding its recommendations requires a detailed rationale from the administration.

“Everybody will be able to see the project, where it’s going, where the funds are, matching percentages, what company is receiving the funds, where it’s being served,” says Sen. Jason Ellsworth, R-Hamilton, a member of the Broadband-Connect Montana and Communications Advisory Commission. “It’s what I would call the most transparent process you could get.”

Jesse DuPont, general manager of Gallatin Wireless Internet, which is applying for a grant, says he’s been impressed so far by the state approach.

“Having been involved in other government-funded programs, I think what Montana has done has been overly transparent and more communicative,” he told MTN News this week. “They’ve done a good job to make sure everyone understands it.”

State officials know they’re under the microscope on the broadband funding, which some are calling a “once-in-a-lifetime” investment to expand access to high-speed Internet in rural and suburban Montana.

Telecom officials estimate than anywhere from one-third to one-half of the state’s population is without access to high-speed Internet – perhaps the highest rates of any state.

The 2021 Legislature allocated $275 million of federal American Rescue Plan Act (ARPA) funds for “communications projects,” which is defined as broadband infrastructure and cell towers – the components of networks that deliver high-speed Internet. As much as another $120 million in ARPA funds could go toward broadband in Montana, as well.

The federal infrastructure bill passed by Congress last summer also has another $100 million for broadband build-out, and quite likely a lot more. The feds haven’t completed the rules to define how additional broadband funds in the bill will be allocated among the states.

Geoff Feiss, general manager, Montana Telecommunications Association.

“It’s unprecedented,” says Geoff Feiss of the Montana Telecommunications Association, which represents smaller telecom providers in the state. “It’s often called once-in-a-generation, maybe once-in-a-lifetime.”

Yet there’s plenty of angst over how the state will divvy up the money, including concerns about whether local providers may get bypassed for larger corporations, and whether the projects will provide networks that last well into the future, able to handle increasing demands for higher Internet speeds.

Rupe says he expects the projects to have a mix of fiber-optic cable, which delivers the highest speeds but is more expensive to install, and wireless Internet, which is less expensive but has speed limitations.

“What we really hope to be able to do with this money is make sure that people have sustainable broadband service five-to-10 years from now,” he told MTN News. “What we don’t want to see is money going out the door, and service never gets completed, or the business model fails after two years. That’s not serving anyone.”

The public money will finance capital construction costs of broadband networks. The private companies that get the grants – sometimes in partnership with local governments -- must pay to maintain the network, with revenue from customers. They also must provide at least a 20 percent match of their own funds for this first round of grants.

Applications are due April 8, after which Rupe’s crew will rank the applicants based on a point system. Applicants get points for offering higher speeds to more customers, jobs they create, getting the project done faster, and making the service available to low- and moderate-income households.

But the process does not include a preference for local providers. Any company that can show the needed experience is eligible.

Local telecom providers say they hope the Gianforte administration and the advisory commission will recognize the benefits offered by going with the locals.

Jason Moothart, general manager, InterBel Telephone Co-op, Eureka.

“If you think about the local providers, certainly in the state of Montana, you’re talking about providing property taxes, jobs, all of those things that directly impact the community, beyond just providing broadband,” says Jason Moothart, general manager of InterBel Telephone Co-Op in Eureka.

Rupe says while the grant process doesn’t favor one type of company over the other, larger companies usually expect a faster return on their investment, which could limit their interest in expanding into rural areas – even if they get public money to do it.

“If it doesn’t fit with their business model and there’s not an incentive there, we’ll find those folks naturally weed themselves out,” he says.

The selection process also has a “challenge” contingent, in which bidders can challenge competitors’ projects as building in areas that are already served.

The nine-member advisory commission – three Gianforte cabinet members and six state lawmakers – will get the final, ranked proposals after the challenge process, examine them and recommend which should get grants.

Sen. Janet Ellis, D-Helena, a member of the commission, says the state also needs to follow up on the grants, with some type of accountability process.

State Sen. Janet Ellis, D-Helena.

“It’s just going to be really critical to make sure we’re delivering on what promises we make to Montanans,” she says.

Companies that get the grants will be reimbursed for construction after it occurs, Rupe says, and the state plans to monitor and review their networks and who they serve over a five-year period.

“We want to ensure that when people have service built out to their locations and these service providers are stating that they’re going to do something, that we track and monitor that they actually do it,” he says, “We’ll have a review system in place, that can audit what they’re offering over the term of the agreements.”