Rural broadband is an $80 billion problem

Legislators are responding to rural broadband advocates with one message: we know. But that doesn’t mean the problem is solved.

Federal and state agencies are throwing funding at broadband expansion, but building infrastructure is expensive and takes time. And some economists say it’s still hard to know how effective the subsidies are, given the limited studies on the impact of funding programs for rural broadband. In the meantime, millions still lack access.

“The case is really clear … broadband is a necessary utility for rural communities,” said Alex Marre, regional economist with the Federal Reserve Bank, in a webinar for the Council on Food, Agricultural and Resource Economics.

In the area Marre covers, which includes West Virginia, he has talked to people about economics, health, education, workforce development and other issues.

“Broadband was the one thread linking all of those pieces together,” Marre said.

Studies show broadband access can bring higher wages, lower unemployment, more population growth and higher home values, Marre said. One study found that every dollar spent on broadband infrastructure meant $3-4 in economic growth.

Low population density, longer distances to existing infrastructure, lower adoption rates and poor coverage maps are some of the reasons rural areas struggle with access.

The Federal Communications Commission estimates that getting fiber to all unserved homes in the country would cost about $80 billion, Marre said.

So, how do you solve an $80 billion problem?

Anna Read, research officer for Pew Charitable Trust’s broadband research initiative, said in the webinar that conversations with those involved with the issue show there is no silver bullet — “there is just buckshot.”

Funding

Many turn to state and federal subsidies to help cover the costs.

Though there are several subsidy programs, “we don’t know that much about the impacts of those efforts,” said John Pender, senior economist for the U.S. Department of Agriculture’s Economic Research Service’s rural economy branch, in the webinar.

But federal agencies including the USDA and the FCC are continuing to send out money for broadband infrastructure. Broadband providers in rural Pennsylvania and West Virginia both recently got funds from the USDA’s ReConnect program to bring broadband service to unserved or underserved areas.

In Pennsylvania, Youngsville Television Corporation received a $750,000 loan to build infrastructure, in Crawford County. In West Virginia, Citynet, LLC, got a $7.6 million grant to build infrastructure, in Barbour, Randolph, Webster and Doddridge counties.

There have only been a few published studies on the impacts of a few programs, Pender said, and most of them have only analyzed the time period before 2010.

Those studies showed that some USDA rural broadband subsidy programs had positive impacts on broadband availability and use, employment, pay for workers and farm sales and expenditures, some outcomes were better in more urban areas, while others were better in rural areas.

More research is needed on the results of some of the larger federal subsidy programs, and on the more recent programs, Pender said.

So far, between state funding, FCC funding and USDA funding, there is about $29 billion available for broadband expansion, Marre said. But not all of those funds have been deployed yet.

“If you look at how much money is currently on the ground for this problem … it’s less than $9 billion,” he said.

Lowering costs

There are ways to lower the overall cost, Marre said. Using electric cooperatives could cut the cost down by $5-10 billion, since cooperatives have some advantages for building infrastructure.

There are more than 800 electric cooperatives across the country, according to the U.S. Energy Information Administration. If all electric cooperatives installed fiber, that would cover about 60% of the people who currently don’t have access, Marre said.

Using alternative technologies, like satellite and wireless internet, in some places could cut the cost by $8-15 billion, Marr said. Those technologies bring their own challenges — for example, fixed wireless might be more expensive to maintain than fiber, and both can be slower than fiber. But those two changes could bring the cost down to about $55-67 billion.

Cooperatives

Mike Malandro is the president and chief executive officer for Choptank Electric Cooperative, which recently launched its own broadband deployment effort. The cooperative, based in Maryland, serves about 54,000 metered accounts. In the webinar, Malandro said most electric cooperatives across the country are either considering broadband or have already started projects.

Choptank is expecting to take around 10 years for its own broadband network, though subsidies the cooperative is seeking could speed that process up.

“That’s the problem — everybody wants it yesterday,” Malandro said.

The cooperative’s existing assets and staff will help it in this new endeavor, Malandro said. It will focus mainly on fiber, but may use some wireless to fill in gaps.

Short-term vs. long-term

In addition to cooperatives, states are looking at multiple ways to address the issue. Some, like Ohio, recently launched state broadband plans and offices. Bringing together communities to identify local needs has helped, Read said.

With more people working and learning from home, the pandemic has placed more importance on short-term solutions, like wifi hotspots and public internet access. Some CARES Act funding has gone towards grants for hotspots and internet-enabled devices for students in Ohio.

More than 40 companies and organizations, including several rural or agricultural groups, signed on to comments from Connect Americans Now to the FCC in support of updating rules on TV white space technology, which could help with broadband expansion. The letter said the pandemic has exacerbated broadband access challenges and made finding solutions more urgent.

But, Read said, this is an infrastructure challenge that needs ongoing investment to create a long-term solution.

“The long-term benefits of rural broadband have been there for a long time,” Marre said.