Rural broadband access is a question of economics, experts say

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CALDWELL, Ohio — It is going to take a lot of money to connect rural Ohio to the internet.

Broadband providers could need $1.67 billion in subsidies to deploy and operate fiber-to-the-premise broadband to all households in just 34 Ohio counties, according to Buckeye Hills Regional Council.

Even with that money, it would take about six years to finish constructing infrastructure.

Money is being thrown at the issue left and right, from federal and state agencies, even as various groups work to identify what areas do and do not already have coverage.

Ohio is late to the game, compared to some states. It just released the Ohio Broadband Strategy in December 2019.

“The absence of a statewide broadband strategy put public and private entities at a disadvantage when trying to get federal grant dollars,” Lt. Gov. Jon Husted told Farm and Dairy. “Ohio has a problem, but we didn’t have a strategy.”

The strategy is meant partly to give Ohio a better chance of receiving funds through federal programs.

“The bottom line is that this is really … an economics question,” Husted said. “Businesses are not going to invest in the cost of this infrastructure unless they can get a return on investment.”

Ohio funding

Despite the potential $1.67 billion price tag to cover just part of the state, Brett Allphin, of Buckeye Hills Regional Council, thinks it can be done.

“There’s ways to make the number work,” Allphin told attendees at Connected Nation Ohio’s Jan. 23 regional broadband forum in Caldwell.

To view Connected Nation Ohio’s preliminary broadband maps, visit https://connectednation.org/ohio/mapping-analysis. To give feedback on the maps, visit https://connectednation.org/ohio/feedback.

Allphin noted that Federal Communications Commission programs are offering $29 billion in subsidies across the nation. The U.S. Department of Agriculture is offering $600 million in grants and loans through a second round of funding for the ReConnect program, which opened a second round of applications Jan. 31. The Appalachian Regional Commission has $25 million in grants available.

Husted is also hoping that the general assembly will support a statewide grant program as part of the strategy.

“You can’t be part of the modern health and educational system and the modern economy … if you don’t have access to high speed internet,” Husted said. “We have an obligation to help drive strategies to help more people have that access.”

Providers and costs

The challenge, Allphin said, is density. Rural areas have less households per square mile than more densely populated urban areas, so providers who deploy infrastructure for broadband have less people to serve in these areas, and get a lower return on their investments.

Federal and state organizations have encouraged providers to take on these areas anyway, through grants, loans and other subsidies. The FCC has held reverse auctions, where companies can bid on areas that need broadband service and that have federal subsidies available. In the 2018 auction, however, no one bid on areas in Appalachian Ohio that had $3.3 million in subsidies available.

“We don’t want to repeat what happened in 2018,” Allphin said. “That tells us that there’s not enough money in subsidy for a provider to make a business case to provide service.”

He said the FCC may have overestimated the amount of revenue providers could make per customer, and the number of customers providers would be able to get in the first six years after expanding when calculating how much of a subsidy to offer in Appalachia. If the FCC, however, adjusted the subsidy amount, then providers might be more willing to take on these areas.

The Ohio broadband strategy also aims to develop a statewide policy to allow limited access rights of way to broadband providers. Allphin said the council also recommends passing legislation that would allow companies to install fiber on existing utility poles without a separate easement.

These changes could make things cheaper and quicker for companies seeking to provide access in unserved or underserved areas.

Data results

Alongside the broadband strategy, Connected Nation Ohio released its initial service maps and data findings in December. The maps are based on a combination of data directly from internet service providers, data from the FCC and independent research from Connected Nation Ohio.

The surveys focused on broadband access and service for Ohio residents and businesses. Over 1,000 residents and over 100 businesses from 87 out of 88 Ohio counties responded.

About 20% of respondents did not have any home internet service subscription. Almost two-thirds of this 20% said broadband service was not available at their locations. Another 25% said it was too expensive for them.

Almost 80% of respondents had a home internet subscription of some kind. Dan Manning, of Connected Nation Ohio, said 14% of respondents used satellite internet, which is high compared to many states.

“It’s maybe not a big surprise, but it is concerning,” he said. “It’s probably the only choice they had.”

Allphin noted that while satellite broadband may be the best answer for some people, it can be limited by data caps and weather- and terrain-related challenges. Similarly, wireless and TV white space access could be effective in some locations, but are not likely to be reach 100% of a widespread, Appalachian region. Allphin said fiber is the only option for 100% coverage.

Future

Husted said InnovateOhio plans to make more announcements about projects connected to the Ohio Broadband Strategy in the coming weeks and months. Some other priorities of the strategy include expanding access to telehealth services and establishing a state office of broadband.

“We can’t just leave this to chance,” Husted said. “We have to have somebody that’s driving this change every day.”

Connected Nation Ohio is accepting feedback on its maps until Feb. 14 and plans to release the final maps in March. To view the preliminary maps, visit https://connectednation.org/ohio/mapping-analysis. To provide feedback, visit https://connectednation.org/ohio/feedback.

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