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Why Rural Broadband Access Matters

November 7, 2011 - 8 Comments

By Howard Baldwin, Contributing Columnist

Countries blessed and cursed with wide-open spaces continue to wrestle with the question of how to serve rural areas with broadband infrastructure. In Australia, naysayers question the viability of its National Broadband Network.

In the United States, the stimulus package included some $3.5 billion for rural development, but based on progress reports from officials at the Department of Agriculture, the broadband deployment only addressed a small portion of the demand.

Indeed, Connected Nation conducted a survey of 27,086 residents across the United States to see if they have access to broadband, and if so, how they are using it. Based on this data, CN estimates that approximately 80.9 million adults nationwide do not have home broadband service, and adoption varies significantly across socioeconomic lines.

Not surprisingly, low income and rural homes are the least served.

The Return on Investment Dichotomy

Naysayers argue that serving rural areas means investing in infrastructure that, by definition, fewer people will use. But you can look at the issue from a question of benefit. Where I live in suburban Silicon Valley, I can choose from at least three different broadband methods – cable, DSL, and wireless broadband. That doesn’t include walking the two blocks to the closest Starbucks for Wi-Fi access.

But according to a recent survey by consultant Craig Settles on behalf of the Kauffman Foundation, only 54 percent of the rural population currently has broadband; the percentages fall based on socioeconomic factors. While citizens in urban and suburban areas have choices, those in rural areas still lack them.

We’ve written before on how broadband can reshape rural development. The U.S. government, based on its billion-dollar commitment, concurs. The October 2011 meeting of the Broadband Breakfast Club in Washington, D.C., a group sponsored by the National Cable and Telecommunications Association, Comcast, ICF International, Intel, Google, the Telecommunications Industry Association, and US Telecom, among others, was devoted to the topic of rural access.

Exploring the Business Case for Rural Broadband

One might question why you’d want to devote taxpayer dollars to providing broadband in areas where there may be homes, but not businesses. The answer is simple: in rural areas, farmers need reliable, rapid access to market and weather reports to improve output and plan crops.

Home access is important not only for home-based businesses but also for telecommuting, digital literacy and education, government interaction, and even online job-seeking.

How can we provide these services? At the meeting in Washington, Undersecretary for Rural Development of the United States Department of Agriculture, Dallas Tonsager argued for a 21st century counterpart to the Rural Electrification Administration (REA), which brought electricity to rural America.

The REA made long-term loans to state and local governments, to farmers’ cooperatives, and to nonprofit organizations. Its success was palpable: by the time it was abolished in 1994, more than 98% of all farms in the United States had electrical service.

The creativity that sparked the REA in turn sparked creativity regarding the development of rural electrical systems in the U.S., and the effort continues around the world. It stands to reason that if we re-apply that kind of creativity toward broadband, we can watch history repeat itself.

What are the roadblocks to broadband deployment in rural areas? Is it predominantly a return on investment issue? As always, we welcome your comments and local community observations.

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  1. That is a remarkable amount of investments which we put in for saving rural potentials in less developed countries, and also developed states In centres we can't discover the ways and means by with these investments will go back. This is question of Return of Investments (ROI). But the local farmers and entreptreneurs have more knowledge about local resourses and implementation complexities. Local people have this knowledge. It is important to empower their networks for development through cooperative knowledge sharing and e-education.

    • @Tõnu Otsason, thanks for sharing that perspective. Agreed, informed local insight will be invaluable in these situations.

  2. MiFarms primary mission is to combine space age technology with traditional and modern farming technologies to promote a techno agrarian environment accessible to all. It's primary goal to create profitable farms capable of supporting a family comfortably on just 2 - 6 Ha. It's secondary and tertiary missions to stimulate village and market town communities by stimulating their respective economies at a local level from the ground up, severing the connections between them and the instabilities of the stock market. Britain's rural econmony has greater significance to Britains growth than most people realise, in fact it is its taproot. A root so important that without it that we would have lost the last war. If we dont feed the roots, than the flower will surely wilt or die...

    • @Jonathan, thanks for sharing that point of view. Moreover, people in large metro areas can easily forget why rural economic development should matter to them as well.

  3. I know I'm a little late in my reply, but I believe the "risk assessment" by access providers might have a large component in it called "Government funding risk." Quite simply, the risk-free nature of the federal dollar isn't what it used to be. Funding comes and goes with every new Congress. Now combine that with the boatload of strings that will (undoubtedly) come attached, and it's easy to see why it's easier for providers to build out in an estabished, but understood market than take a risk on a government partnership, especially one where socio-economic factors work against your business model. The politics of who gets the awards for rural services also has to be considered. The smaller companies are more risk-tolerant, but might not be able to compete in the halls of Congress or the FCC for favorable rights vs. larger companies. They just don't have the lobbying resources to get a seat at the table. Just my two cents...

    • @Mark, thank you for adding your perspective to this debate. Understood, regarding the investment required to lobby government (including state an local entities) in the U.S. marketplace. To put this into perspective, for our readers in other countries, it's reported that the large incumbent telecom service providers in America each spend about $3 million per quarter on vaious Federal lobbying efforts.

  4. I would have to say it is largely a ROI issue. The problem trying to reach Rural America is getting the money to do so. Fortunately, right now I work for a company that is doing just that. We are pushing our fiber further and further into areas that nobody is going, trying to get broadband into the rural areas in upstate NY. I fully agree we need to service the rural parts, but at the same time, it has to make business sense for businesses to pursue it. So what can we do to incentivize business to pursue those markets?

    • @CJ, thank you for sharing your experience. The incentive question is likely best answered after a comprehensive assessment of the local environment. What I’ve learned, by monitoring the U.S. competitive access provider market over the last decade, is that alternative telecom service providers don’t assess risk in a predictable way. Clearly, government policymakers have been puzzled by this phenomenon. A case in point: most alternative fiber facilities-based service providers have proven that they would gladly invest in being the third or fourth provider in the business district of an already over-served major metro area, rather than venture into an under-served rural market. They don’t fear carrier competition; they’re more concerned about the apparent demand for service and the potential for paying customers (or the lack thereof).