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Hiawatha Broadband Communications Inc.

Consumers in rural Minnesota communities could be early beneficiaries of the federal government's much-publicized broadband stimulus program, especially if Hiawatha Broadband Communications, Inc. can obtain some of the $7.2 billion in grant and loan money that will be distributed over the next year.

Hiawatha -- an ACA member located in Winona, southeast of the Twin Cities -- has applied for $5.7 million in funding under separate federal programs run by the National Telecommunications and Information Administration and the Rural Utilities Service. The first projects picked for funding are scheduled to be announced in November.

If approved for funding, Hiawatha plans to use the money to roll out state-of-the-art broadband facilities in three communities still in the dial-up Internet age: Minneiska, Miesville, and New Trier. Eventually, customers in these communities would enjoy Internet access speeds of up to 50 megabits per second (Mbps) in both directions.

Hiawatha would also use federal funding to upgrade broadband facilities in two communities -- Red Wing and Lake City -- that are considered "underserved" under broadband service definitions crafted by federal officials.

"In all of the areas, this would be new infrastructure construction that would be connected to customers for the purposes of offering broadband coverage," Hiawatha's president and CEO Gary Evans said.

Evans, in his 11th year as Hiawatha's top official, asserted that the federal definitions of "unserved" and "underserved" were too narrow, meaning that too many communities that should be eligible for broadband stimulus funding have been excluded.

"That, to me, represents the government missing a golden opportunity to make something very good happen and to improve our standing in the world marketplace," Evans said.

Hiawatha began as a company in 1997. Today, the company serves 6,000 cable, 6,000 broadband and 5,500 digital or traditional phone customers. Prior to joining Hiawatha, Evans spent 30 years in the newspaper business and 11 years in higher education administration at Winona State University.

Running Hiawatha "is the most interesting and the most challenging work I have ever done," Evans said.

The Obama Administration is focused on making sure that every American has affordable broadband access within a reasonable period of time. The NTIA and RUS programs are designed to help the U.S. catch up with countries that developed national broadband strategies many years ago.

At the same time the NTIA and RUS programs are funding broadband construction projects, the Federal Communications Commission is preparing a national broadband plan for Congress due Feb. 17, 2010. In August, Evans visited FCC headquarters to participate in a broadband workshop run by FCC staff members who are helping to draft the national plan.

In support of his broadband funding application, Evans has paid visits to Capitol Hill, reaching out to Minnesota's Senators and the two House members whose districts include Hiawatha customers.

"I've been in D.C. on a couple of occasions to talk to Minnesota legislators about our project," Evans said. "All of them have written letters of support."

More than 83 ACA members applied for $1.3 billion in NTIA/RUS funding, covering nearly 130 projects. The turnout from small, independent cable companies would have been stronger had NTIA and RUS not adopted several program-specific restrictions.

For example, the federal government insisted on holding the first lien, which would have violated terms and conditions of bank loan agreements signed by some ACA members. The first-lien rule made it impossible for some ACA members to apply. The rules also included a 10-year prohibition on the sale of federally funded projects.

Evans said he was troubled by some of the rules, but the 10-year holding requirement was not one of them.

"The fact of the matter is that the no-sale-in-ten-years is not at all troubling to us. We have no intention of selling the company," Evans said.

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