Minnesota unions won new labor rules for broadband. Will it slow $652 million for rural access?

CLEARWATER, Minn. – A field training manager for TelCom Construction guided a rotating horizontal drill underground Thursday, eventually poking the equipment through a hole in the wet earth underneath an exposed red utility pipe.

It was only a demonstration for the major contractor, part of training workers on machinery needed to install fiber-optic cable for high-speed internet in rural Minnesota. But drilling of this kind near utility lines was at the heart of a volatile policy fight at the Minnesota Legislature this year over whether government should institute new labor-backed safety standards for construction of broadband infrastructure — and require more worker benefits.

The industry is under a microscope now, and the rift between unions and telecom providers came with high stakes.

Minnesota is in line for an unprecedented $652 million windfall from the federal government's 2021 infrastructure bill to subsidize a broadband boom. Those telecom groups loudly warned that the state would lose the funding if DFL lawmakers approved the new standards, tanking a priority of President Joe Biden in the process.

"It's not a question of whether it will cause damage, it's how much damage is it going to cause," said Brent Christensen, CEO of the Minnesota Telecom Alliance, an industry group that represents many rural providers.

Labor's safety, wage changes

The influx of public spending is what prompted the Laborers' International Union of North America (LIUNA) to look closer at the industry and push legislation meant to improve safety and increase wages and benefits.

LIUNA pointed to an analysis by the labor-aligned think tank North Star Policy Action, which concluded underground telecom installation work is a leading cause of potentially dangerous damage to buried utility infrastructure. The most extreme example of this came in 1998, when a broadband cable crew hit a gas line in downtown St. Cloud, leading to an explosion that killed four people.

LIUNA also surveyed Minnesota workers at 12 nonunion contractors and found wages between roughly $17 to $35 an hour and benefits that trail other heavy construction jobs and that predominantly Latino workforces were often compensated less than predominantly white workforces.

"During my career I've never seen a workforce reporting such low levels of training, high job dissatisfaction, concern for their safety and high turnover rates," said Adam Hutchens, a LIUNA marketing representative, during a March hearing in the state Senate.

The initial legislation — sponsored by Sen. Jen McEwen, DFL-Duluth, and Rep. Kaela Berg, DFL-Burnsville, and endorsed by some other unions — would have reserved most grant money for applicants that either pay prevailing wage rates or offer 80 hours of skills training a year and meet other workplace benchmarks.

Applicants for state broadband grants and federal ones under the infrastructure law aren't subject to prevailing wage rules like many other industries that use government subsidies.

The legislation also would have to prioritize federal grant applicants who have "robust training programs," directly employ a local workforce and align with the wage and training standards. The bill included a certification program for workers who install broadband near underground utility infrastructure.

Telecom industry pushes back

Internet providers don't build without government aid in some sparsely populated areas because they say it's too expensive to run broadband infrastructure — often in difficult terrain — for so few customers.

The Minnesota Cable Communications Association, which represents Comcast among its companies, said costs from extra wage and training requirements would shrink how many homes the $652 million can cover.

The trade groups then took it a step further, saying it could tip the cost-benefit calculus enough that internet providers would choose not to use federal subsidies at all in rural areas.

Christensen, meanwhile, said the industry takes safety seriously and has a strong track record on employee injury. MTA has run a safety program for more than 40 years, for instance. Several trade groups also accused LIUNA and its supporters of overstating the industry's impact on utility infrastructure.

Sen. Aric Putnam, a St. Cloud DFLer who chairs a committee with broadband oversight, also said some provisions risked conflict with federal program rules. Jeopardizing that money was a nonstarter for him and Gov. Tim Walz's administration, he said. At the same time, Walz and the DFL are sympathetic to unions and the desire for higher labor standards. That created tension.

After complicated negotiations, and input from the U.S. Department of Commerce, the Legislature cut much of the original bill.

Internet providers that offer prevailing wage or other benefits to construction workers will be prioritized in any future state funding, but those rules won't apply to federal grant applicants.

The new law requires bigger providers to report pay and benefits data on grant-funded projects, along with information about underrepresented workers.

The state will also create a 40-hour safety certification program required for broadband construction workers that drill underground near utility infrastructure or find and expose that infrastructure. The training program applies to privately funded work as well.

LIUNA did not want to block federal funding, said Kevin Pranis, the union's Minnesota marketing manager. He said the legislation will put the industry on an upward trajectory and result in, at worst, minor costs while the sector faces other tougher financial challenges.

"Installers with the right training and experience are more efficient and less likely to make a costly mistake," Pranis said. "No one suggests we could replace more lead lines by getting rid of pipe layer certifications."

MCCA Executive Director Melissa Wolf said her members are concerned and still trying to understand the full effect of the legislation. Christensen said it will dissuade at least some from applying for grants in rural areas. The training requirement is excessive and out of touch with reality of how the industry operates, said TelCom President Mark Muller.

A windfall in waiting

Minnesota's $652 million is part of a federal initiative meant to provide universal access to high-speed internet across the country.

Whether it actually will do that in Minnesota is a matter of interpretation. The state would need hundreds of millions more to hit its own goals.

Bree Maki, who runs Walz's Office of Broadband Development, said internet providers will likely not start building with federal money until early 2026.

Nevertheless, $652 million tops the already considerable amount of state and federal broadband subsidies spent in recent years.

Putnam said the broadband compromise "should be workable" but could be tweaked next year. Maki said strings attached by the feds might be tougher than what the state imposed. But she said it all compounds. "Ultimately, all of our programs are voluntary," she said. "A lot of our providers, if it was easy to do this, would have already done it."