Myth: It’s too expensive to bring high speed broadband to rural areas.
Reality: Providers are bringing high speed broadband to rural areas!
At the right is a map of broadband in Minnesota. You can see that there are communities in rural Minnesota with good broadband (colored in blue). There are a handful of providers who offer that service. Some have been kind enough to agree to talk to me about how they are able to deploy, expand and upgrade broadband networks in rural Minnesota. First to step up is Hiawatha Broadband Communications (HBC)– I spoke with Dan Pecarina about how they were able to support broadband in rural areas notes on that conversation.
HBC is a private company. Rural is their mission. Education, economic development and healthcare is important to their community so it is important to them. As their website states, they put people before profits – but that doesn’t mean they are a nonprofit. They are a business and they need a business case that is solvent.
What is the business case that makes sense for them?
They have done the numbers and have found that they are able to go into an area if the cost per passing is $1500 in a rural area or $1000 in a town. In a rural area, there is little competition so they have found that the are able to get 90-95 percent take rate, as opposed to 70 percent in town.
The real costs often surpass $1500/$1000. Rural areas can be tough for deployment. Some areas are built on stone, some are in valleys. The terrain can be more challenging than the distance. So they need a partner to help offset that cost. The partner could be the community or a grant like the Border to Border grant or a combination of both.
How do they decide where to go next?
- Expansion to neighboring towns makes sense because they can more easily tie their existing infrastructure to the new community’s infrastructure.
- Opportunities to work directly with the County help. For example HBC has worked with Dakota County to support smart-grid system. They can work together to offset setup costs.
- A community with a drive to promote better broadband locally is also a good area for HBC. They aren’t interested in going into an area simply to provide cheaper broadband; that’s not compelling to them. But if the school, hospital, local government or even an anchor businesses is invested in making it happen that makes the area a good partner.
What is the role of wireless?
Wireless is a stop gap measure to get to areas that are not economically viable for fiber. It is a lifeline for communities where the business cane for fiber is too difficult but building wireless means building fiber middle mile to the location. It gets them closer and building a cadre of wireless customers helping build capital and future customers for fiber.
This is such a good article. It is fun to read about these success stories and a provider’s clear rationale for expansion. It lets the community know what they need to do to be an HBC partner with clear financial targets. I’ll bet that HBC is pretty open about its costs of construction in any given area too which satisfies a community’s need for due diligence for public participation in this critical economic development project!
And we’re going to hear from Paul Bunyan tomorrow. They both seem to have what my dad called the get rich slow plan – which doesn’t necessarily mean getting rich but it means looking at the long terms goals and a long term customer is pretty valuable. In a rural area part of that is making sure your customers succeed.