Mapping Broadband in Western North Carolina

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The Rural Broadband Crisis:
How Bad Is It? How Do We Solve It?

The Broadband Policy Disconnect

When commercial electric utilities failed to wire rural America in the early 20th century, Congress acted by passing the 1936 Rural Electrification Act. The law provided subsidies for rural “self-help” networks owned and operated by the communities they served.

The REA drew on a business model well-known in rural America: the nonprofit cooperative. By 1935, according to one estimate, more than 10,000 buying and selling cooperatives existed in rural America.

While for-profit businesses were eligible for REA subsidies, most rural areas opted for the nonprofit model. By 1940, 86 percent of rural electric networks were nonprofits; 9 percent were municipal; 5 percent were commercial.

In the 1940s, Congress expanded REA to speed the deployment of telephony in rural America. The primary vehicle? Local “self-help” networks.

Fast-forward to 2009. That's when Congress ordered the FCC to create a National Broadband Plan to speed deployment in rural America. Given REA's success, one would think that nonprofit co-ops would be prominent in the Plan. One would be wrong.

In fact, the National Broadband Plan cites only two options for wiring rural America: For-profit companies or municipal networks.

National Broadband Plan, or Big Telecom Scam?

The Plan makes one “community broadband” recommendation: “Congress should make clear that state, regional and local governments can build broadband networks.”

The Plan then loads the dice against municipal networks with this conclusion: “Municipal broadband has risks. Municipally financed service may discourage investment by private companies.”

  • Why does the National Broadband Plan ignore the successful history of rural electric and telephone networks?
  • Why does the Plan assume that municipal networks are the only “community broadband” option for rural America?
  • Why does the Plan ignore the obvious fact that most underserved rural Americans live in unincorporated areas beyond the reach of municipal networks?

Follow the Money

The National Broadband Plan, to its credit, calls for spending $4.5 billion a year through 2020 on rural broadband deployment. (Money for this new Connect America Fund comes from the $1-$2 universal service fee each of us pays with our monthly phone bill.)

But there's a catch: only incumbent carriers are eligible for Connect America Fund support.

By omitting nonprofit networks while exaggerating the “risks” of municipal networks, the Plan eliminates any competition the incumbents might have for the annual $4.5 billion subsidy. (If there's one thing that unites cable and telephone companies, it's the threat of competition. That's why cable and phone companies joined forces to pass legislation in 19 states, including North Carolina, restricting or prohibiting municipal broadband networks.)

But cracks in the Connect America Fund have appeared. AT&T and Verizon control more than 60 percent of the US broadband market in 33 states and the District of Columbia. But in 2012, AT&T and Verizon rejected CAF funding while pushing for deregulation – state-by-state – to eliminate “carrier of last resort” obligations to maintain wireline networks in rural America. If this were a newspaper headline, it would read: “Big Telecom to Rural America: Drop Dead.”


Additional Reading

Rural broadband access still lags cities,” Daily Yonder, June 9, 2013.

"How ‘white spaces’ could change the world," Tech Central, May 19, 2013.

"Utilities want piece of FCC's $4.5 billion rural broadband push." Greentech Media, May 29, 2013.

California gets first commercial 'white space' high-speed Internet,” C-Net, April 22, 20 13.

Obama's new FCC pick could determine the future of the Internet,” by David Corn, Mother Jones, March 26, 2013.

Broadband 101: Guide to the Basics of Broadband Terminology,” Institute for Local Self-Reliance, March 2013.

FCC to probe rural phone problems,” The Hill, Feb. 7, 2013.

Moving from broadband scarcity to broadband abundance,” Christopher Mitchell, Seattle Times, March 11, 2013.

Expand wireless Wi-Fi access to public airwaves,” Sacramento Bee editorial, Feb. 16, 2013.

The Broadband Factor: How connectivity expands economic and community development” by Kristin Peterson, Huffington Post, February 4, 2013.

The broadband-deprived study at McDonald's” by Anton Troianovski, Wall Street Journal, Jan. 30, 2013.

NC at the bottom of the broadband barrel” by Christopher Mitchell and Todd O'Boyle, Raleigh News & Observer, Jan. 28, 2013.

How to get high-speed Internet to all Americans” by Susan Crawford, New York Times, Jan. 24, 2013.

Co-ops make rural broadband possible,” Electric Co-op Today, Dec. 17, 2012.

Book talk by by Susan Crawford, author of “Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age,” at Harvard University's Berkman Center for Internet & Society, Dec. 12, 2012.

Break Up the Telecom Cartels,” New York Times op-ed by David Cay Johnston, Nov. 27, 2012.

Many rural AT&T customers still lack high-speed Internet access despite merger promise,” by Gerry Smith, Huffington Post, Nov. 12, 2012.

Like paying for a car that's sittin' on blocks,” radio story on rural broadband in Appalachia from community radio WMMT, Whitesburg, KY, Nov. 8, 2012.

Broadband for Rural America: Economic Impacts & Economic Opportunities
Hudson Institute policy study by Hanns Kuttner, October 2012.

Rural broadband in serious trouble,” DSL Reports, Oct. 16, 2012.

C-SPAN panel on “Rural Telecommunications” featuring Hanns Kuttner, Oct. 15, 2012.

FCC Report: Thousands in WNC lack broadband access,” MAIN, Sept. 12, 2012.

White space broadband as a white knight for rural America,” GigaOM, July 15, 2012.

Rural broadband via nonprofit networks,” by Wally Bowen, Raleigh News & Observer, Feb. 6, 2012.

Score! for two rural broadband teams,” by Craig Settles, The Daily Yonder, Jan. 26, 2012.

National Broadband Plan

Broadband access