Connecting America
Broadband Policy Issues and Options for State Legislatures
Pre-Conference Invitational Seminar
NCSL Annual Meeting
Boston, Massachusetts
August 4-5, 2007
Session Date: August 5, 2007
Session Summary: Bringing Broadband to Rural Communities
By Michelle Larson-Krieg, Intern, Legislative Information Services, NCSL
This summary is provided for information purposes only. NCSL does not endorse any views it contains.
Thomas Dorr, the Under Secretary for Rural Development with the U.S. Department of Agriculture (USDA) indicated that the USDA. recognizes that “broadband is a requirement” and that rural communities without broadband are essentially “redlined.” In recognition of the need to ensure that rural communities have access to this key economic development tool, USDA has committed $1.2 billion to provide 129 grants to support broadband deployment in rural areas.
One way that USDA is supporting broadband is through new regulations that are designed to simplify and streamline the grant application process, better target the dollars available, and provide new credit incentives. Dorr said that the final rule will be submitted soon.
The new farm bill provides incentive to incumbent providers to expedite their deployment of broadband infrastructure in rural areas. Dorr invited incumbent providers to work with USDA and new market entrants to get rural broadband services in place.
Broadband infrastructure is important to rural communities not only for communication and access to information, but also to enable citizens living in rural communities to take advantage of educational opportunities such as distance learning that can have a significant impact on their economic potential.
Dorr concluded his remarks by stating, “We’ll get it done, but opportunities are passing us by if we wait too long.”
Dr. Robert Atkinson, President of the Information Technology and Innovation Foundation (ITIF), said that recent data regarding the deployment of both business and residential broadband indicates that the upper plains states are still relatively unserved or underserved. While there is still a gap as measured by geographic density, the gap is closing fairly rapidly.
It is a fact that the newest and best broadband technology is typically deployed in areas with higher population density first. However, we are rapidly approaching the time when speed is important in rural areas too, and it isn’t enough to have access to a dial-up connection. A relatively reliable speed test site available on the internet indicates that rural areas do have slower broadband connections.
For example, Alaska’s per capita adaptation of broadband services is the highest in the country, but the speeds provided are among the slowest. Other states experiencing “slow” service are South Dakota, Iowa, and Wyoming.
While the percentage of subscribers in rural areas is rising, rural take-up rates lag two to three years behind urban and suburban areas. According to a recent Pew study on broadband usage, rural growth rates are now higher than those in urban and suburban areas. This makes sense since rural areas started with a lower subscriber rate. Interestingly, the group experiencing the fastest rate of growth is African-Americans.
The Pew study showed that the percentage of people using the internet in rural areas is less than that in other areas, and they use the internet less at both work and home. People in rural areas are also more likely to use a dial-up connection.
Dr. Atkinson identified the lack of accurate and up-to-date inventories of broadband availability as a problem and indicated that the development of reliable inventories would be a good place for policymakers to start. A good inventory can provide a sense of how likely areas are to be served, help target the areas where policies to encourage deployment are needed, and help policymakers set more reasonable goals.
Virtually everyone has access to satellite broadband service, but some people may just be too hard to serve because of their remote location. Despite this, there may be areas where low income vouchers might make sense to ensure that broadband access remains affordable.
Business access to broadband is critical because businesses without broadband lose too many opportunities. Encouraging public private partnerships by engaging private service providers and creating demand aggregation along the lines of the Berkshire Connect model may be the best role for governments. Most rural communities can’t afford to build their own networks and should do it only as a last resort solution.
Policymakers should keep in mind that deployment can take awhile. The situation should be much better in five years.
Jack Geller, President of the Center for Rural Policy and Development, Minnesota State University, urged the audience to consider the demand side of broadband service. From a demand-side perspective, rural communities are the biggest broadband challenge. Some of the barriers are easy to address, some are hard.
The first issue is the lower rate of technology adoption in rural communities. The diffusion of computers in rural homes is fairly modest. If people haven’t adopted by now, it is likely that they will never adopt. The rate of technology adoption defines the ceiling for broadband adoption.
The low rates of computer adoption in rural areas is not just about refusing new technology. For example, many older people are very comfortable with mobile telephones and other new gadgets. Computers are difficult and intimidating, and that’s how we interface with the web. We’ve tried different interfaces, such as television, but haven’t yet solved this particular problem.
There are three main internet uses that are driving broadband adoption: 1) business and commerce; 2) personal entertainment; and 3) government services. All levels of government continue to push more and more services onto the internet, which is becoming the primary delivery method. Geller asked if this push by government to deliver more and more services via the web also carries some level of responsibility to ensure that citizens are able to access these internet-based services.
There is some movement of internet users switching from dial-up to broadband, but if we stopped deploying additional services now, half of rural America wouldn’t adopt broadband even in the areas where it is available.
The aging population of many rural communities is another ceiling to broadband adoption. Income is another predictor, with those with lower incomes much less likely to adopt broadband. Geller asked audience members to consider what a reasonable broadband deployment goal would be given these barriers.
The fact that computer literacy is something that stays with you has the potential to gradually raise the ceiling on broadband adoption over time. Once a person has adopted computer usage, he or she probably won’t easily give up using it. Children, especially those that are school-age, have a major impact on adoption rates.
When people are asked why they still have dial-up, they generally respond that broadband is too expensive. This answer has become more and more entrenched even as the price of broadband services has dropped.
Geller concluded that adoption rates will increase over time, but demographic and socioeconomic factors are key. There is a potential for new applications – such as home health care for the elderly – to have a positive impact on adoption rates.
Q & A
Q: We’re convinced that broadband is good, how do we deploy it?
Atkinson: There are different ways to go. Options include loans, grants, universal service funds, and various initiatives. One question you want to ask is whether we should be using these funds for broadband deployment.
Specific initiatives that might serve as models include e-NC in North Carolina, Connect Kentucky, and Berkshire Connect. In Canada, Alberta spent government money to deploy fiber throughout the province. Michigan’s approach includes ensuring that providers have the right-of-way access that they need. An ITIF report entitled “Innovative Models in the States,” showcases additional initiatives.
You can also reframe the question and ask, “What is the proper role of government?” There is an ongoing debate surrounding municipal broadband. Some states encourage government involvement at this level, other states prohibit government ownership of broadband networks. There is no consensus on which approach is correct. For unserved rural areas, the immediate solution is wireless broadband.
Government involvement may lead some providers to feel that competitors are being subsidized. This is a philosophical problem that policymakers must address, perhaps subsidies to rural residences is one solution.
Dorr: The real issue is breaking out the entity providing the broadband infrastructure from the entity providing broadband services. In Iowa, the government built a fiber network, and wouldn’t allow private providers to provide services using the network. In contrast, the UTOPIA program in Utah built a fiber network and owns the infrastructure, but several other providers provide services using the network.
Kelley: The perspective on whether or not the broadband problem has been solved depends on how we define broadband. Speeds in rural American are still too slow.
Dorr: New USDA regulations don’t define speed. 200 kb is not fast enough.
Geller: 200 kb is ridiculous, yet it endures as the definition of “broadband.” Vermont has defined broadband as 3 mb. States have to define broadband according to the standards appropriate to their population.
Atkinson: There are two different measures – 200 kb and “robust” broadband. Which you choose is a question of how much you want to spend. To get faster, fiber has to go deeper and deeper. Other technologies besides fiber are slower the further you get from the central office. Somebody has to pay for this. Government should be skeptical of subsidizing multiple broadband pipes. The fact of how broadband speed works creates the need to have definite broadband goals.
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