Minnesota may test the Utopia model

A group of small towns in northeastern Minnesota is considering a multi-municipal fiber project similar to Utah's Utopia project. If pursued, the effort could be an early test of the repeatability of the Utopia model.

Dynamic City, the same consulting firm that helped create Utah's 11-city public wholesale fiber-to-the-premises network, is conducting a feasibility study for a group of about 15 towns in Minnesota's so-called “Iron Range,” a seven-county territory in the state's northeast corner that was historically home to a now-faded mining industry.

Dynamic City won't talk about the project besides saying that it shares several characteristics with Utopia, including its model, desired bandwidth and prices. In its preliminary report, the consultancy estimated the project's cost at about $67 million, or $47 million if participants use their existing municipal fiber. The cost might be covered by municipal bonds, but the Iron Range towns are mulling an attempt to split the cost among Iron Range Resources (a group controlling funds contributed by the mining firms that once thrived in the area), the Blandin Group (an economic development group) and the state, whose governor has made rural broadband a priority.

Like Utopia, the Iron Range network would bring wholesale fiber to most homes and businesses in its member cities and let service providers compete over the network. Dynamic City has suggested the network would pay for itself if it achieved a 50% take rate. But whereas Utopia promised service providers a potential market eventually approaching 500,000 customers (that scale being a big contributor to Utopia's progress), the Iron Range project would only reach tens of thousands. Its three largest cities, Hibbing, Virginia and Ely, have a combined population of about 30,000.

“[The Utopia model] is not a choice available to most communities,” said Jim Baller, partner in the Baller Herbst Law Group. “It's difficult to get a city council to agree on anything, let alone a multi-city consortium. That [Utopia's leaders] were able to forge consensus is a tribute to those great people.”