The Status of Rural Broadband
by Matthew Ernst
Look at Oklahoma on the FCC Broadband Map (broadbandmap.fcc.gov), and you see a digital divide: a concentration of broadband internet clustered around urban areas and sparse coverage in rural areas. Beyond Tulsa, Oklahoma City, Stillwater and cities in neighboring states, much of the rest of Oklahoma lacks high-speed, fixed internet access—with an exception.
The FCC map also shows a dark blue circle in the rural northeastern corner of Oklahoma, which indicates broadband availability. That is largely the result of BOLT Fiber Optic Services, a division of Northeast Oklahoma Electric Cooperative.
“They have fiber running to a lot of rural households and have seen businesses saying, ‘now that broadband is available, we’re going to expand,’” said Brian Whitacre, an Oklahoma State University economist who studies rural broadband impacts and policies.
Bringing broadband to rural areas can be a tough business case for internet service providers, including electric co-ops, who often tap federal and state programs to justify establishing high-speed networks in areas of lower population density. But broadband is increasingly an essential tool for rural businesses.
Here is a look at the state of rural broadband, including recent policy changes, anticipated benefits and potential impacts from expanded rural broadband service.
The State of Rural Broadband
Rural broadband was a big winner in the 2018 farm bill. Funding through the main USDA program for rural broadband networks rose to $350 million, which is 14 times the funding amount in the 2014 farm bill.
“The Agriculture Department’s latest effort to boost broadband services in rural America could not come at a better time,” said American Farm Bureau president Zippy Duvall after the farm bill passed. “We are confident companies and cooperatives that apply for these grants and loans will find an overwhelming demand for broadband connectivity.”
Government support for rural broadband goes beyond USDA. The FCC, also in December, expanded access to its Connect America fund for rural broadband providers. That fund is an even bigger pot for broadband infrastructure development, and more funds for rural areas are now available for providers meeting the present FCC definition of broadband: access to 25 Megabytes per second (Mps) download speed (about enough speed to stream two Netflix videos) and 3 Mps upload speed.
Fixed broadband that meets the FCC definition usually comes through hard-wired lines, like fiber optic-fed DSL or cable modems. Wireless cellular connections are not yet a possibility for widespread fixed broadband, especially in rural service areas. But fixed broadband also includes satellite connections and the emerging fixed-wireless category, where a broadband provider sets up a tower and shoots a signal to a customer through a wireless internet service provider (WISP). These fixed wireless connections deliver the FCC definition of broadband and can provide possible solutions for rural manufacturers, farms and agribusinesses seeking broadband connections.
Rural electric cooperatives getting into the broadband business are helping fuel rural broadband expansion.
“Over the past two years, we’ve seen just an explosion in two categories of (rural broadband) providers,” said Whitacre. “There’s a lot of smaller companies seeing the need in these rural areas and setting up towers for fixed wireless broadband. The second category is a lot more rural electric cooperatives providing broadband internet access.”
Federal programs, along with some state initiatives, are helping bring more service to rural areas. Plans are in the works to formalize a federal rural broadband office, although there is some debate inside the Beltway on whether that office will be housed at FCC or USDA.
Broadband is often touted as an economic development tool, which undergirds the case for government subsidies and programs designed to build such networks.
In fact, the USDA released a report at the end of April saying broadband availability in rural areas would boost the U.S. economy, generating an additional $45 billion to $65 billion a year. Agriculture Secretary Sonny Perdue said achieving that availability also would “take a lot of money.”
The USDA report shows nationwide broadband would allow more farmers to adopt precision ag technology that would expand production and income.
“When we talk about infrastructure,” Perdue said, “this has to be one of the top infrastructure needs of America.”
While the precise cost and benefit of greater high-speed internet access is unclear, there is broad agreement that potential exists. For farm equipment manufacturers, there are two primary benefits of expanding rural broadband: It serves as an invitation for business investment, and it supports increasingly connected farmers.
Researchers at Iowa State University linked greater broadband service to new businesses in rural areas of Iowa and North Carolina, but it did not establish a clear cause and effect. Researchers also noted that broadband has more apparent impacts in rural areas with higher population densities, such as rural regions closer to cities. That is because of agglomeration economies, or “the economic advantage firms can obtain by being located in bigger towns,” said Younjun Kim, who authored the study with Iowa State economist Peter Orazem.
“For example, firms in bigger towns might be closer to input providers, like lower transportation costs, which can be a big benefit for the firm,” explained Kim, now an assistant professor of economics at Southern Connecticut State University.
State and local governments are buying into the narrative that broadband is good for business. In Indiana, for example, the state’s Next Level Broadband program will provide grants of up to $5 million to broadband providers establishing high-speed service in rural, underserved areas.
“The internet is just as essential to Indiana’s prosperity today as highways were a century ago. By expanding access to affordable broadband, we’ll ensure more Hoosiers can use this business and personal necessity,” said Governor Eric Holcomb, in his program announcement.
Manufacturers in rural Indiana are important when developing rural broadband, says Roberto Gallardo of Purdue University, who co-authored a rural broadband report for Indiana’s electric cooperatives. He thinks broadband helps foster machine-to-machine interaction, and machine-to-human interaction, that could change the face of manufacturing. Online learning, input from product specialists—both on- and off-site—and other benefits for manufacturers could be tied to broadband.
“It also provides a venue to solve problems from the bottom up by entrepreneurs, do-it-yourselfers, artisans and tinkerers,” Gallardo wrote.
But shortline manufacturers know better than anyone that rural areas have long fostered entrepreneurs, do-it-yourselfers and tinkerers. They also know that providing availability to broadband is a first step. The next: productive use of it. One such productive use for manufacturers is online diagnostics, which helps businesses troubleshoot machine problems and often prevent them through early detection.
Less certain is broadband’s impact on the farms and agribusinesses that farm equipment manufacturers serve. Broadband certainly improves precision agriculture applications, for example, but as investment among row crop producers has slowed in precision technologies, the on-farm impact is less clear.
Still, mainline equipment companies, crop input companies and precision agriculture firms are some of rural broadband’s most vocal advocates. The USDA and the Agricultural Retailers Association recently placed rural broadband deployment alongside transportation infrastructure as a policy priority, and most other farm groups also prioritize broadband.
“The majority of rural Missourians lack access to affordable, reliable, high-speed internet,” noted B.J. Tanksley of Missouri Farm Bureau. “Broadband access isn’t just about entertainment for rural Missourians; it is a link to the best education and healthcare available.”
It could be perceived, in fact, as a link to prosperity.
Matthew Ernst is an agricultural writer based near St. Louis. He grew up on a commercial crop-and-livestock farm on the East Coast. His writing focuses on farm business management, marketing, and policy.