The USDA has announced plans for a pilot program to bring broadband internet to all of rural America.
The plan, which Secretary of Agriculture Sonny Perdue calls a “proof of concept,” will provide $600 million in grants and loans to internet service providers to bring connection to parts of the country that are too remote, underpopulated or expensive to serve.
“I absolutely, unequivocally believe broadband connectivity is part of rural prosperity,” said Perdue in a press conference on Dec. 13. “We don’t want an urban rural divide in this country. We can’t afford that.”
As the agency was finalizing rules for the pilot program, it was also funding other programs for rural broadband expansion. But the pilot program includes language that requires providers to connect everyone.
“Every farm, every household, every facility, every hospital that is located inside the service area of that project will receive a speed of 25/3 mbps,” said Chad Parker, assistant administrator for telecommunications policy at USDA.
Parker said projects bringing faster speeds to rural America will be given higher priority.
Projects funded through this program will be awarded sometime this summer, and likely won’t begin construction until late 2019. Some broadband expansions take as long as five years to complete, meaning rural internet is still a long way off for some remote Americans.
But adding up awards and the USDA’s $600 million pilot program still just scratches the surface of what is needed to connect all of rural America. These funds represent 1 percent of what’s needed to connect the entire nation.
The Federal Communications Commission estimates it will take $40 billion to bring broadband internet to 98 percent of Americans. To connect that final 2 percent of Americans, it will cost an additional $40 billion.
The USDA’s programs are open to state and local governments, federally-recognized tribes, nonprofit organizations and for-profit corporations. Of the 27 companies that received money in 2018, 23 were electric coops and telephone companies. The USDA says the awards were selected based on the strength of the applications, not on the type of provider or technology.
Of the 36 project proposals, 26 mention fiber optic technology. Fiber is currently the most reliable method of bringing internet to rural Americans at download speeds at or above 25 mbps and 3 mbps up, the Federal Communications Commission’s definition of “broadband.” But it’s also more costly to build than other technologies.
Some internet service providers say federal subsidies might actually be making it harder to connect rural America.
Tristan Johnson, owner of Wireless Data Net LLC, a wireless internet service provider serving just under 1,000 customers around Saybrook, Illinois, said companies like his can provide internet to rural America more efficiently than traditional internet service providers. But he doesn’t apply for government funding.
“There is a lot of red tape. You almost have to hire a lawyer to fill out your application,” said Johnson. “We just don’t have the means, funds, personnel or the time to handle that kind of workload.”
Brian Whitacre, economist at Oklahoma State University, speaking at a Nov. 27 agricultural conference at the Chicago Federal Reserve Bank, said private companies have led broadband expansion.
“There’s been a significant amount of private investment,” Whitacre said, noting private internet service providers have spent $1.6 trillion on broadband over the last 20 years. But he said that money was mostly invested in cities. Brinkman said there’s a reason cooperatives like Garden Valley are leading the way in high speed broadband via fiber.
“We’re here to serve our members, who are our owners. Therefore we reinvest our earnings into more infrastructure,” he said.
Subsidies play an important role in keeping costs down for consumers.
“We wouldn’t be able to do it without access to those loan funds,” Brinkman said.