February 2, 2009 11:35 AM
If Wall St. Doesn't Want Carriers To Go Rural, Why Should We?
A few weeks ago I attended a New America Foundation event focused on the broadband portion of the economic stimulus bill. While many interesting things were said there was one point in particular that's stuck with me.
It came from Wally Bowen, executive director at the Mountain Area Information Network, which delivers connectivity to rural North Carolina.
During his presentation he said simply (though I paraphrase here), "Why are we trying to figure out how to get the carriers to deploy next-generation broadband to rural America when Wall St. doesn't want them there?"
I'd never heard this sentiment expressed in this way but it makes perfect sense. Wall St. still doesn't think upgrading broadband networks anywhere makes much financial sense (look how they reacted to Verizon's decision to deploy FiOS), and if carriers are going to invest in capacity anywhere then it certainly shouldn't be in rural America. In their eyes those dollars are better spent in metro areas even if there's greater competition simply because there's a higher density of people. And for better or worse, big corporations must listen to the desires of their shareholders.
Yet, the vast majority of the discussion about how to wire rural America seems to revolve around how do you get the big guys to extend their networks into areas they don't want to be. Not surprisingly we're finding that to accomplish this requires a heavy lift, something on the order of government paying for the networks entirely and giving them to private enterprise, or government giving tax credits that may reward even those who aren't deploying their best networks to rural America.
If we only look at this rural broadband problem through the eyes of the incumbents then it does look like a huge challenge that's going to require an equally huge government investment.
But if we take a step back for a moment and consider the broader array of deployers who have already been wiring rural America we'll see that there could be a better way.
Take for example the members of my Rural Fiber Fund Working Group. We've got $3-4 billion in shovel-ready projects to bring full fiber networks to rural America. And while none of these deployers would turn down the opportunity to get government loans or grants (which in particular can be helpful bringing fiber to every last shack), all they need to deploy far and wide is for the credit markets to unfreeze so they can access the capital they need to spread out their networks.
In fact at the beginning of this process I had some specifically tell me they didn't want or need government handouts. They just require a little help leveraging government dollars to get capital flowing again, like in the form of fast-track partial loan guarantees we've been advocating for these past few weeks.
So let's review:
On the one hand we have big carriers with shareholders that don't want them wasting money in rural areas and will require massive government handouts to spur deployment.
On the other we have a tapestry of non-traditional deployers many of which have already been bringing next-generation broadband to rural America that only need a relatively small amount of government help to continue doing what they're doing.
In no way am I saying that we shouldn't be trying to get the carriers to deploy far and wide in rural America. Instead my point is that if they don't want to go there, perhaps it's time we start seeing if there are any other options available to us, which I can confirm that there are.
We can't allow ourselves to assume that the only entities capable of solving the rural broadband problem are those that can afford to hire full-time DC lobbying teams. If we want to find a real solution we need to consider all of our options, and recognize that we're better off supporting those that do want to be investing in rural America than trying to convince those that don't to fundamentally alter their perception of the financial viability of offering service in rural America.
Comments (6)
I agree with you 100%, Geoff. Too many people in D.C. and elsewhere have been hypnotized into the belief that incumbents hold all our answers. This is another example of the government failing to do the necessary extensive needs analysis to determine not only what will benefit communities the most, but also what resources, potential partners, etc. communities already have. If you look at the broadband solutions developed in rural places such as Greene County and NC, Pulaski, TN (see http://successful.com/msp/snapshot-1-09.pdf), you see many viable solutions that don't involve incumbents.
Unless and until the White House drives a broadband needs analysis effort via change.gov similar to the one that stimulated over 8500 meetings across America to discuss healthcare reform, there is much to fear from the direction some in Congress is taking.
Posted by Craig Settles on February 3, 2009 12:08 PM
Local meetings to discuss and chart local community telecom infrastructure policy is essential. It would not only be great but finally it will be essential for every community to grasp its lead responsibility for infrastructure planning.
We're advocating "Fiber to the Library" as a spearhead project of a national buildout strategy. Next gen connectivity for all 16,548 public libraries at an estimated cost of $20k per (FTTH & ALA).
Such a project would deliver high performance apps to within a "mile" of every premise and since libraries are uniquely open to all, those apps would effectively be even closer. Let users sample and experiment with things like multiple, synchronous high def streams for conferencing, training, gaming, etc., to drive up demand while delivering real services to the greatest number of people soonest.
Provide a place where new civic engagement around local (global) policy issues can find a home. A place to touch new tech from telecom to green and learn what it can and maybe cannot do.
Let the near universal deployment of live, accessible nodes to 16,000 libraries accelerate buildout most equitably and most inexpensively.
Libraries become Community Tech Hubs(green tech as well) & play new related roles as:
-Early adopter. Not as place of last resort for digitallt divided but place for the latest hottest tech (to be shared) to stimulate demand.
-Face of e-gov. Personal help navigating all the proliferating, non-standard online public apps from local state and fed agencies who are (inadvertently) increasing the divide.
-First responder. As a hardened comm facility for disaster readiness and recovery. Also as an anchor node for an autonomous emergency local civic voice and data network.
I confess to a local library-centric view of the rebuilding of the nation, community by community. Call it the 10,000 community strategy. It works more issues than any other approach.
Posted by Don Means on February 3, 2009 12:37 PM
Wholesale bandwidth costs in large cities is typically in the range of $4 - $15 / Mbps.
In rural America, wholesale bandwidth costs of $100 - $400 / Mbps are not uncommon.
What rural America needs is a policy change which promotes fair pricing for bandwidth for those communities on intercity fiber routes.
Posted by Larry Vaden on February 3, 2009 2:21 PM
Like all politics,the best place to seek and build networks,including broadband,is locally.We could better make use of the funding than Verizon or Suddenlink,whom,if they had wanted to provide this service to the un and under-served,would have by now.
Posted by Lonnie Ward on February 3, 2009 3:25 PM
You may find many communities willing to solve their own problems. I have no issues with a telco/cableco not serving my area because of financial constraints. But at the same time, don't spend money fighting local efforts to take care of the connectivity.
Invest or get out of the way.
Posted by Pete Collins on February 3, 2009 6:08 PM
Pete Collins wrote "I have no issues with a telco/cableco not serving my area because of financial constraints."
This doesn't take into account the USF which can pay incumbent LECs (telcos) $100/month or more to provide POTS.
Posted by Larry Vaden on February 3, 2009 7:08 PM