Stanford Social Innovation Review looks at why broadband has not reached some rural areas…
Broadband deserts exist largely because traditional finance and big-name ISPs do not build for communities too rural or too poor to hit their profit targets. Successive governments have responded with programs to attract providers to underserved communities, with mixed success. One hundred billion dollars in federal funding between 2010-2020 closed the digital divide by less than 1 percent. Why has so much money had so little impact?
First, these grants have too often funded technology that is obsolete by the time it is built. Take the Connect America Fund II (CAF II), a $10 billion Federal Communications Commission (FCC) program to connect rural areas with download speeds of 10 Mbps. By the time the program took effect in 2015, the broadband standard had been updated from 4 Mbps download/1 Mbps upload to 25/10 Mbps, leaving communities with outdated and inadequate infrastructure. Penn State Professor Christopher Ali calls this pursuit of short-term fixes “the politics of good enough,” repeatedly leaving rural and low-income communities behind. Instead of bursts of investment every five to 10 years, funding future-proof connectivity would offer far better use of tax dollars.
Second, program design has often led to poor results or outright failure. The Rural Digital Opportunity Fund (RDOF), a $20 billion program to fund high-speed rural internet, is a prime example. The FCC used a “reverse auction” structure, awarding funds to the lowest bidder rather than the most feasible proposals, creating a race-to-the-bottom. Combined with a lack of due diligence to ensure winners could deliver, the result has been a series of ongoing defaults, with ISPs dropping out and handing back funds. Of $9.2 billion awarded, defaults have so far reached $3.3 billion. That’s almost two million rural homes and businesses that will not receive service. In most cases, these areas were excluded from other funding opportunities and so will now likely get no help at all.
Third, public investments have too often been geared to benefit the large incumbent providers over the local, regional, and community-centric ISPs best placed to serve hard-to-connect communities (more on these later). Program rules and requirements, which may be speed bumps for large ISPs, can be roadblocks for smaller competitors that lack vast capital reserves and back offices. The effect is reinforcing a status quo where a few name-brand providers dominate an uncompetitive sector.
This is not to say public investment isn’t part of the solution (it’s vital). And that programs can’t be better designed to address the root problem (some have been). The $42 billion Broadband Equity Access and Deployment (BEAD) program passed by the Biden administration was designed to sidestep some of these pitfalls, including 1) a clear preference for fiber as a resilient, long-term technology, 2) investing in state capacity to administer awards and ensure winners can deliver, and 3) provisions to make sure small providers are given a fair shake. Now, under the Trump administration, BEAD is headed for significant changes and a likely shift toward satellite providers like Elon Musk’s Starlink. While we remain hopeful that BEAD will make a real difference, it alone won’t solve the problem, even if administered perfectly.
Community broadband are offered as a solution, starting with reframing broadband as a utility…
Connecting communities left out by the market requires new approaches. Many goods—transportation, education, low-income housing—don’t work on a pure profit-maximizing basis. Broadband is no different. If we start from the position that connectivity is essential, we can align mission-driven capital to community-centric models that will deliver it, just as has been demonstrated in the sectors noted above.
Community broadband models are emerging to fill the gaps.
They offer some help…
But the answer isn’t simply replicating and rolling out what was done in Tennessee and Utah. Communities have a range of needs and realities that call for various models and different blends of financing. Organizations like ILSR and the American Association for Public Broadband are working to help communities find solutions that work for them. The missing piece is a dedicated capital market that can make these models work.