Cooperatives Could Solve Rural Broadband Gap, Report Says
Phone and electric cooperatives may be best equipped to spread fiber broadband across rural America, but are often overlooked, the Institute for Local Self-Reliance reported Tuesday. USTelecom said deploying broadband in rural areas is a priority for its big ISP members and the Information Technology and Innovation Foundation said it’s best to support incumbent ISPs except in the most unserved areas. The Phoenix Center supported cooperatives deploying broadband so long as they don’t partner with municipal networks.
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Local infrastructure cooperatives invest significantly in fiber "and are an under-appreciated tool for expanding access rapidly in a fiscally responsible manner across rural America,” ILSR said. FCC Form 477 data shows 87 cooperatives sold residential gigabit service as of December, the report said. ILSR estimated there are about 260 phone co-ops and 900 electric co-ops in rural America.
Co-ops could serve “the vast majority of rural America,” but many state and federal policymakers think they must help big companies to get broadband, said ILSR Director-Community Broadband Networks Initiative Christopher Mitchell, in an interview. Rural electric co-ops serve about 50 percent of U.S. landmass, he said. That’s about 14 percent of the population, he said. “They’re people that to date have largely been left behind by the advances in telecommunications.” Some are completely unserved, while others have slow or spotty DSL connections, he said. Small independent telcos and wireless ISPs are investing in some rural areas, but many areas are stuck with big ILECs “that have little incentive or capacity to invest” in upgrades unless the government cuts them a check, he said.
Large broadband providers “are aggressively working to connect Americans,” responded a USTelecom spokeswoman. “Closing the digital divide is not an easy feat.” Last week, USTelecom complained to the FCC that electric utilities charge high pole-attachment rates to its members, exceeding what ILECs charge CLEC and cable competitors (see 1711220012). The filing in docket 17-84 noted a Tennessee Valley Authority action to increase pole attachment rates charged by electric co-ops.
NTCA CEO Shirley Bloomfield said the report shows “it ultimately takes a unique combination of such community commitment, entrepreneurial spirit, private capital, right-sized regulations and effective state and federal programs to enable such accomplishment." A National Rural Electric Cooperative Association spokesman said: “Electric cooperatives across the country are exploring a variety of approaches to close the digital divide and bolster rural economies by expanding high-speed internet access.” Utilities Technology Council CEO Joy Ditto said “this is more evidence that utilities are enablers of broadband deployment.”
Co-op member owners should call their general manager and demand more fiber investment, Mitchell said. Phone co-ops may see fiber broadband as risky, since like other phone companies they are seeing large losses in traditional phone line customers, he said. Electric co-ops didn’t want to get involved, but increasingly are because they see it as an “existential issue,” he said: “If they don’t do it, their communities are going to continue to decline.”
Government could spur co-ops by funding them and removing legal barriers -- such as a 1999 North Carolina law limiting state electric cooperatives' access to capital for internet access projects, Mitchell said. It should be bipartisan, but today’s political climate is complicated, he said. Progress can be made by motivating co-ops to explore broadband services and partnerships with municipalities, he said. “You can get started without money from the federal government or from a grant if you’re sufficiently motivated.”
Co-ops should provide broadband as a last resort in rural areas that private ISPs can’t serve, said ITIF Telecom Policy Senior Analyst Doug Brake in an interview. He disagreed a co-op serving broadband is a “model that can scale much more broadly” or would be a “panacea.” Like municipal broadband, co-ops can make sense in areas that companies have no interest in serving due to poor economics, but private ISPs should lead the charge, he said.
"Cooperatives are a sensible model for deploying broadband in rural areas,” said Phoenix Center Chief Economist George Ford. “They are private, nonprofit companies that secure private and public funding for network infrastructure and then stand on their own. Cooperatives are not the same as government-owned networks, which are heavily subsidized and anti-competitive in nature.” Ford warned cooperatives: “Avoid anything but arms-length financial relationships with municipal broadband networks.” He said wireless networks are advancing fast and may save money compared with fiber.
Focus should be on the truly unserved, Brake said. An area with two providers should be “off the table,” he said. One ISP can be OK if it meets a minimum speed, and that threshold can be “pretty low,” he said. “You can do an awfully lot with relatively low speed tier.”
Going from no service to a reliable 5 or 10 Mbps is “a bigger deal” than 10 Mbps to 100 Mbps, agreed Mitchell. “But most of these people aren’t on a 5 or 10 Megabit connection that works well."