Minnesota regulators to investigate embattled LTD Broadband

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LTD Broadband, a troubled telecom company, has been prevented from building subsidised high-speed internet infrastructures in many states. LTD Broadband may be facing trouble in Minnesota.

The Minnesota Public Utilities Commission ordered Thursday an investigation into LTD in order to determine whether they should stop the small company using $311 million of federal money to build broadband in Minnesota’s rural areas. This comes amid intense criticism that LTD is unable deliver fiber internet as promised.

“We don’t want to see them claim they can build out, and they go out there and it turns out they can’t do it. – scrambling to find more assets, and then it all just falls apart,” Commissioner John Tuma (a Republican) said following the hearing.

The PUC voted in favor of asking an administrative judge to determine if this is possible. This is a reverse decision by the PUC which approved LTD as an “eligible telecommuting carrier” in June 2021.

Commissioner John Tuma

This designation allows the company to receive federal broadband subsidies through a Federal Communications Commission grant programme. Governor Tim Walz’s administration, Attorney General Keith Ellison’s Office stated that LTD met the basic requirements.

The FCC said it would inspect the company

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However, a few states have refused to allow LTD to use federal money. South Dakota was one of them. There, regulators stated that expert testimony had convinced them that LTD was not prepared and that it was promising to build at unreasonably low costs.

FCC’s grant program offered $9.2 Billion in 2020 to rural areas to access high-speed Internet. LTD Broadband, a Nevada-based company, received $1.32 billion in grants from the government to help serve more than 528,000 locations in 15 states. This money represented more than three quarters of the $408 millions awarded in Minnesota and was the largest national share for any single provider.

FCC selected grant recipients based on “reverse auction,” in which providers competed to build infrastructure in areas that received the least federal subsidy.

After the auction, LTD quickly attracted attention. It had approximately 100 employees and operated in six states. LTD had no experience in building fiber-optic cables required by FCC to provide blazing fast speeds. LTD has a long history of building fixed-wireless internet. This is internet service that is provided by a signal located high up on a structure such as a water tower.

Two trade groups representing rural electric cooperatives and telecom companies petitioned the PUC in May to reconsider their approval of LTD. They claimed that the company would waste taxpayer money and time in its attempt to reach more than 102,000 locations throughout Minnesota. These critics claim that LTD failure, or even success, would also prevent local governments from building government-subsidized fiber for years.

LTD was also raised by Chippewa County, as well as non-profits such the Institute for Local Self-Reliance.

MinnPost’s CEO, Corey Hauer, stated that the company can grow quickly and has just figured out how to install fiber-optic cables faster, cheaper, and more efficiently than its aggrieved counterparts. Hauer described the regulatory filing as a nuisance.

Corey Hauer

Andrew Carlson, LTD’s attorney, informed the PUC that the company is currently in good standing in Minnesota. Reopening its state credentials could set a dangerous precedent, allowing critics and forces investigations whenever any other competitor has concerns or complaints against a eligible telecom provider. He said it could also threaten the FCC funding for Minnesota.

Katie Sieben (a Democrat) chairs the PUC and expressed concern that if LTD is rejected by the commission, the $311million would be rolled into another FCC grant program, and not necessarily awarded again in Minnesota.

Kristin Berkland is an assistant attorney general and said that there are important questions that require further investigation. Berkland stated that she doesn’t want Minnesotans to believe they will receive $311.8 million in benefits, and then not see it.

The PUC ruled in favor of LTD and ordered a contested hearing before an administrative judge to examine the company’s capabilities. Although LTD Broadband was not canceled by the commission, it did consider whether to do so and sought more information. This decision was made following recommendations from the AG, the Minnesota Department of Commerce, and a state taskforce on broadband policy.

Sieben stated, “It is in the public interest at least to begin to consider and start a proceeding regarding whether or not LTD Broadband should revoke its expanded ETC (Eligible Telecommunications Carrier).”

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