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Geoff Daily

App-Rising.com covers the development and adoption of broadband applications, the deployment of and need for broadband networks, and the demands placed on policy to adapt to the revolutionary opportunities made possible by the Internet.

App-Rising.com is written by Geoff Daily, a DC-based technology journalist, broadband activist, marketing consultant, and Internet entrepreneur.

App-Rising.com is supported in part by AT&T;, however all views and opinions expressed herein are solely my own.

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October 14, 2008 11:56 AM

Why We Need A Rural Fiber Fund

When talking about a Full Fiber Nation one counterpoint often made is how expensive rural areas are to wire and therefore how unattractive they are to private deployers.

Yet a few weeks ago at the FTTH Conference I met three different fiber operators who all expressed a desire to wire rural America, either to fulfill their sense of civic duty or because they're able to realize high enough takerates to overcome the limited number of customers to make their business model work.

Unfortunately, they all cited the same roadblock to their ambitions to wire rural America: the lack of capital available to do so.

Now, many of you may be wondering, "But what about the USDA's RUS loan program? Wasn't that designed specifically to help get broadband to rural areas?"

On the surface the answer is yes, but once you get into the details you quickly realize when it comes to wiring rural America with fiber, we need a new solution.

Here are some examples of how RUS is not supporting the needs of those people ready, willing, and able to deploy fiber into rural America. Please excuse the lack of specifics but I want to make sure that the people who spoke with me don't suffer any backlash for their frankness.

- After a small municipal utility successfully deployed a full fiber network to its community it wanted to extend its network into surrounding rural areas. To make the model work they needed a low interest RUS loan, only there was a problem: a few homes in the zip codes they wanted to serve already had DSL so therefore those areas couldn't qualify for RUS funding despite the fact that the vast majority of the zip code had no broadband options. So for the time being the utility has had to forego wiring its neighbors.

- A private operator that openly expressed his preference to deploy in rural areas because of the high takerates he's able to realize was lucky enough to get awarded a large chunk of RUS money. But before he was able to cash the check, some trouble arose with the part of the funding he was required to front. He was able to work it out to still have all the money he needed, the only problem was he could only get it in segments rather than one big chunk. He tried getting RUS to split up their money, but they were unable to be flexible and as a result he no longer has access to it and fiber isn't getting deployed.

- Another private operator has done everything he can imagine doing to get the money, crossing all his T's and dotting all his I's, yet despite spending upwards of $1 million through the course of his application he not only has not been awarded any money, he has not received any clear guidance on what he can be doing better or differently in order to qualify. So yet again, the desire and ability to deploy fiber is there, but the system isn't supporting them.

I don't bring up these examples to lambast RUS, though. In large part I think they're doing the best they can with the rules they've been given.

Instead I wanted to point out that we seem to need a new strategy for supporting those entities that want to deploy fiber into rural areas because the current system isn't working. Asked point blank, all three fiber operators agreed that if they had a source of low interest loans from the government that that would allow them to be deploying more fiber right now.

And making sure capital is available is an issue that's becoming ever more important given the state of our overall credit markets, where even municipal bonds are starting to be hard to come by.

But these deployers aren't looking for handouts. They're more than happy to enter into a competitive bidding process with other qualified entities. While no one will deny their profit motive, I also found that we all shared the common desire to make America great by ensuring its rural communities aren't left behind in the global digital economy.

One final major point to raise in support of a rural fiber fund is that RUS is technology-agnostic. Now, this isn't necessarily a bad thing, and I can most definitely appreciate the value of a wireless project that can reach ten times the same number of unserved customers for the same cost as a fiber project, but we're doing ourselves a disservice if we allow this to become an either/or situation.

Instead what's needed is common agreement on the ultimate goal being a full fiber nation that's supported by specific policies tailored to help achieve that goal.

For me it all boils down to this: our rural communities need help to survive, there are entities that want and are able to provide that help, so we should be doing everything we can to support their needs as there are few things I can see that are more significant to maintaining America's greatness in the world than in proving our commitment to the future viability of our rural communities.

For these reasons and more, we need a rural fiber fund.

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