Duluth continues to explore broadband options, with up to $9 million fiber pilot project
The city may pursue a parallel path to Superior's as it seeks to improve service and make it more affordable.
DULUTH — If there's one thing the COVID-19 pandemic drove home, it's the importance of access to reliable, high-speed internet service that people can afford.
Steven Robertson, a senior planner for the city of Duluth, said people have long been interested in bringing better and cheaper broadband to the local scene, initially with the thought that it could juice economic development. But the pandemic revealed the broader importance of high-speed internet for education, work opportunities, social connectivity, commerce and obtaining access to services.
Duluth reports that just 6% of it residents have direct access to a high-speed fiber optic network at present. In her "State of the City" address earlier this year, Mayor Emily Larson said Duluthians struggle with "unreasonably high prices, unreliable service or no viable access altogether.
"This is unacceptable and holding us back as a community," she said.
In April, the Duluth Economic Development Authority approved up to $65,000 in funding to hire Entrypoint LLC to examine the prospects of building out a city-owned fiber optic network. The same firm, based in Salt Lake City, Utah, has also advised the city of Superior as it developed plans for a $31 million open-access network, that would be municipally owned and equally available for multiple internet service providers to use.
The thought is that additional competition will drive down costs, as it has in other communities that have followed a similar path.
On Monday night, the Duluth City Council received an update on that analysis and received its first glimpse of a proposed Digital Access Master Plan.
The document proposes Duluth launch a pilot project in Lincoln Park next year at an anticipated cost of $7 million to $9 million. This would involve building out a primarily underground fiber optic network to serve about 1,900 customers next year.
After a full year of operating that network, Duluth would then decide whether to continue building out a city-wide network at an anticipated total cost of $76 million to $79 million.
If the the Lincoln Park pilot project plan gains council backing, Chris Fleege, director of Duluth's planning and economic development division, said up to $4 million could be drawn from levy-neutral one-time economic development funding sources within the city's general fund.
The plan also proposes to draw $5 million from Duluth's Community Investment Trust Fund, with hopes that those local funds would be matched with state funds.
Minnesota has set aside $95 million to help bring broadband services to underserved markets, with a maximum $5 million award to any individual community, said Fleege. While the grants are competitive, Fleege predicts Duluth could make a persuasive pitch.
At large Duluth City Councilor Terese Tomanek asked what is the current balance in the CIT Fund.
Larson said that with declining markets, the balance had slipped to just below $30 million but had been as high as $37 million earlier this year. She noted that, if granted, the $5 million request would be for a one-time expenditure from a fund that wouldn't affect the tax levy.
"It's really important to keep in mind that this first ask, it is not a taxpayer ask. We have the financing worked out to try this model and see if it works, and to try it in a neighborhood that really needs it," she said.
Any expenditure from the CIT Fund would require a super-majority vote of the Duluth City Council, meaning no fewer than seven of the body's nine members would need to support the request.
Fleege said that the city would expect restore $2.5 million to the CIT Fund over the first 10 years of operating the Lincoln Park broadband system, from user fees.
Larson said the fiber optic network promises to result in real savings and dramatically improved service for residents.
"We are already, as a community, paying a significant amount to ensure that there is connectivity," she said, pointing out that the city collectively pays about $29.5 million annually for service to 36,000 households, with customers paying an average of about $68 per month.
"With this plan, we know and have the data that ... the total monthly cost to residents would be between $30 and $55. That is a significant savings," she said.
The city conducted city-wide analysis this year, including a survey that more than 1,700 people participated in, and economic developer Emily Nygren said, "Folks felt the reliability of their internet was really shaky. They rated it poor to fair at best."
She also said people also considered the service unaffordable, well above the $40- to $50-per-month range most considered reasonable.
The city also conducted nearly 700,000 speed tests across Duluth, that documented download and upload rates consistently well below the "up to" speeds marketed by local internet service providers, she said.