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January 31, 2011 3:24 AM

Rural America Needs Sustainable Broadband Not Profitable

It pains me to say this, but our government's 100% wrong when it comes to how it's trying to solve the rural broadband dilemma.

The reasoning behind this statement is that our government leaders don't just talk about how to get connectivity to these communities, instead they talk in terms of how do they make the environment more conducive to private investment to fill these gaps.

Now, this attitude does make some sense in more densely populated areas, where private-led investment has proven reasonably effective. But when that population density drops, the profit of deploying broadband infrastructure disappears rapidly.

Where this leads us to is that government investments end up focused on subsidizing profits, which leads to a less efficient transference of public dollars into increased deployment.

When you really think about it, this mindset doesn't make any logical sense. If it's going to cost some huge sum to get rural America online, why are we focusing our limited resources on subsidizing profits for private companies? Why aren't we more seriously investing in non-profit solutions to rural broadband?

Yet this is exactly what our government's doing. Just look at this post from MuniNetworks.org about RUS favoring private, for-profit entities in its stimulus awardees by a two-to-one margin.

It's worth noting that they did this in spite of Congress's initial guidance that the broadband stimulus should be focused primarily on non-profit projects.

I look at this in simple terms. If it's expensive to wire rural America, then I want to be as cost effective as possible in getting the job done. The cost of putting fiber in the ground is pretty straightforward whether you're a public or private entity, the only difference is in how much profit's built-in to the business model.

Now, some will argue that it's better to have private sector entities lead this deployment as they're more likely to be innovative and cost effective because of their profit motives.

But the truth we can't ignore is that private companies tend to only innovate and invest in expanding network capacity in the face of free market competition. While I don't blame them for this as they have fiduciary duties to their shareholders to maximize profits, we also must acknowledge that the demographics of rural markets can't support facilities-based competition. There's a reason they don't have adequate connectivity in the first place!

So what this brings me to is that if we're going to subsidize private profit-making solutions to rural broadband, then we have to put in place safeguards to insure those networks don't abuse their monopoly position and continue to invest in improving the service they deliver.

But you know what? We're not really doing that. RUS just gave two thirds of its money to private entities that are in large part profit-maximizing with no real safeguards to insure service improves over time despite the lack of competition.

What we need our leaders in DC and in state governments across the nation to realize is that rural America needs sustainable broadband networks, not necessarily profitable ones. If we focus all our attention on making rural areas profitable to deploy to it means we're effectively subsidizing those profits without any guarantees that rural America will get the service they need over the long-term.

While I think there are legitimate debates still to be had about what the best paradigm is for all of America's long-term broadband future as the private sector has done an adequate job of connecting most Americans, we need to accept that rural America needs different solutions, ones that prioritize getting people connected rather than maximizing the profits driven off of each connection.

This doesn't mean the private sector can't play a role, but rather that the paradigm of private sector broadband delivery must be different for rural America. So long as we continue to prioritize profits over people, we won't be able to truly solve our country's rural broadband shortcomings.

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