Broadband Infrastructure: Should Rural Investment Be a Priority?
By Howard Baldwin, Contributing Columnist
Sometimes those promoting extensive infrastructure projects — broadband or otherwise — exhibit a Field of Dreams mentality: “If you build it, they will come.” My own state of California is currently wrestling with such a project, a $68 billion high-speed rail line that opponents claim is too expensive and will never pay for itself. My attitude: come the day we have to evacuate San Francisco or Los Angeles after a major earthquake, people are going to be grateful it was built.
As we recently discussed in Broadband Backlash: Where It Comes From and How to Fix It, broadband deployments also have their detractors. Currently, one of the biggest areas of contention swirls around the value of rural broadband. There are really two sides of the story.
On the one hand, proponents of rural broadband argue that basic broadband provides the foundation for creating jobs and improving education in rural areas. On the other hand, opponents argue that without a “digital business ecosystem” — that is, the labor and customer base that fuels such growth — government funds could be more fruitfully directed at providing superior broadband in major cities. Their tech clusters are already established and the digital business ecosystem is vibrant.
British Member of Parliament Graham Jones, who represents a rural constituency, is – surprisingly – in the latter camp. He wrote in his May 29th blog post:
It is difficult to see how it will create jobs. I look around the Ribble Valley and parts of Wyre and see a large population of retirees and wealthy escapees. People whom it has to be said have made a choice to live away from urban areas, away from advantages of an urban area. There is no escaping the fact that these areas have vast numbers of wealthy people who will benefit enormously and who could afford to pay for SFRB [super fast rural broadband] themselves.
He cited the county council’s own bid proposal, which estimated that the effort would only create 25 new jobs and 20 new apprenticeships. “Even accepting the County Council’s own projections, it is difficult to see an economic case,” Jones wrote.
Further complicating the scenario: the frequent government demand that telecommunications carriers cannot take demographics into account when determining where to improve broadband. A densely populated area may benefit from fast broadband today, while a rural area may not benefit from fast broadband until many years in the future — yet they are given equal weight when it comes to determining current investment.
Not everyone shares Jones’ viewpoint. In a UK Telegraph article following up on Jones’ post, technology editor Matt Warman quoted Sarah Lee, Head of Policy for the Countryside Alliance, as saying, “Graham Jones has criminally missed the point of these plans. In a digital age the need for fast and reliable broadband is just as important as the need for gas, electricity and water.”
Similarly, in other countries with regions even more rural, proponents argue for the value of broadband. Colin Harkness is chair of a group called Broadband for the Tropics, in Townsville, Queensland, Australia.
In a video promoting that country’s National Broadband Network, he said, “We’re a regional area which is somewhat separated or isolated from most of Australia.
… It’s our job to encourage people to see the benefits and to understand the benefits, in advance of [italics added] when they’re actually going to be able to embrace them.”
The Infrastructure Investment Dichotomy
So who’s right? To adjudicate, we turned to Blair Levin, a Fellow at the Washington, D.C.-based think tank Aspen Institute – and up until April of 2010, director of the FCC’s National Broadband Plan (NBP). The problem, he said wisely, is that “one side is focusing on the benefits, and the other is focusing on the costs. If you only focus on one side of equation, that’s all you see.”
Even Levin agrees that when you only look at the cost of rural broadband, the figures are staggering. When he put together the NBP in late 2009, the cost of widely deploying broadband in the U.S. was $33 billion. Estimated revenues: $9 billion. The government subsidy: $24 billion. “Of that $24 billion, $14 billion were to serve 250,000 users, out of 7 million,” he says. That’s right: 3 percent of the homes represented more than 55 percent of the cost.
But he’s still bullish on the idea that government has to find a way to give as many people possible broadband access. “That’s part of what we need to do as a country. If we want our citizens to be productive in terms of social capital and economically, they have to be on the network. It doesn’t have to be 100 percent, but it has to be in the high 90s.”
So what’s the solution? For Levin, it’s establishing a strategy that accommodates shifting tactics. “Technology keeps moving,” he says. “You have to keep looking at the problem from the perspective of the technology. Instead of funding yesterday’s technology and yesterday’s business model, you want to get ahead of the curve.”
His recommendation: keep looking at how to solve the rural problem in ways that won’t cost as much and still delivers much faster speed, perhaps by combining fiber with wireless spectrum and new white-space technology. “We’ll never solve 100 percent of the problem. We should aspire to solving 80 percent of the problem with 10 percent of the resources. Then you look at the next 20 percent. If you don’t do anything unless you can solve 100 percent of the problem, that’s a recipe for a stalemate.”
Interestingly, attacking the issue in the incremental fashion Levin suggests may also be the key for solving deployment concerns in urban and suburban areas as well.