Nathan Holmes didn’t have reliable internet access on his farm for years, since he started working with his dad as a kid. The little radio signal he had at his shop was lost during every windstorm or rainstorm, a common occurrence in the Midwest. Instead, he spent around $300 a month to use his phone as a hotspot anytime he needed to access the Internet.
But two years ago, workers from SEMO Electric Cooperative came by and told Holmes they were hanging fiber broadband along their telephone poles nearby. He would finally have reliable internet access — at least in his shop.
The access helped him create an app, PumpTrakr, to provide a management system for tracking irrigation. He was tired of waking up in the middle of the night worried he left a pump running, and he couldn’t find any product to help him manage the system. While his 2,700-acre farm is in Oran, Missouri, about 20 miles out of Cape Girardeau, more than 30 customers all over the Midwest pay $500 a year, plus $25 for each well, after Holmes and his dad officially launched it last year.
Now 40 years old, Holmes is still paying about the same for Internet access as he was before, “but we actually have Internet now,” he said. Holmes’ broadband access is limited to his farm’s shop — to access the Internet across his crops of corn, rice and soybeans, he uses two phones that have separate cell phone providers, a Verizon hotspot and an Apple watch. Without the fiber broadband to his shop bringing strong, reliable access, he doesn’t think it would be possible to run his new business.
“It was really bad,” Holmes said. “There would be no way I could do the file transfers that are needed on Slack to keep the business going.”
It’s one example of the hard-to-quantify economic boost that could come from the planned expansion of broadband access to rural areas. Holmes was one of more than 17 million Americans without access to fixed fiber broadband by the end of 2018. That’s 5.6% of the country’s population. In rural areas, the number rises to 22.3% of the population.
The CARES Act brought another surge of funding, more than $825 million, to the effort, on top of increases in the past few years. The U.S. Department of Agriculture launched its ReConnect Program in 2018, through which it has awarded over $1.04 billion in grants. Earlier this year, the FCC established the Rural Digital Opportunity Fund that would direct $20.4 billion to the deployment of rural, high-speed broadband networks over the next 10 years.
A recent Deloitte Consulting analysis estimated the United States requires between $130 and $150 billion over the next five to seven years, to adequately support rural coverage and 5G, according to the USDA. The FCC estimated in 2017 that it would cost $80 billion to deliver broadband to most people who don’t have it.
The USDA found if the agriculture industry took full advantage of digital technology, the U.S. economy would be boosted by $47 to $65 billion annually, arguing that, as with rural electrification a century ago that brought fresh produce to tables around the globe , the downstream benefits are hard to foresee. Countless other studies show that an increase in rural broadband leads to higher incomes and higher employment.
“Broadband has always been an extremely important part of rural entrepreneurship,” said Tina Metzer, co-founder of the National Center for Resource Development. “But now, with COVID, a lot of small businesses that we noticed, they didn’t have the ability to go online. They couldn’t move their restaurant’s menu online, they couldn’t move all of their information online. They didn’t have that ability.”
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Holmes’ fiber connection came from SEMO Electric, a tiny telecommunications company based in nearby Sikeston. SEMO recently received $142,000 to lay more fiber in southeast Missouri, amounting to a fraction of the state’s $20 million Emergency Broadband Investment initiative, which was created with funds from the CARES Act.
Signed into law at the end of March, the $2.2 trillion CARES Act was made to address issues caused by the pandemic. States and territories received $150 billion to put toward public and private issues that were not originally budgeted for. Of that, 21 states allocated at least $825 million directly to expanding broadband access, mostly in rural areas. Some of those that didn’t devote CARES Act funds strictly for laying fiber and erecting wireless towers used the funds to create working groups or offices dedicated to solving broadband issues.
The federal government put an additional $100 million into its Rural eConnectivity (ReConnect) Pilot Program, which provides grants to increase high-speed broadband access in rural areas.
None of this includes the millions of dollars in local allocations, or the millions in funding distributed to increase connectivity for remote learning and telehealth, which includes wireless hotspots and devices as a more short-term solution.
Will It Be Done In Time?
The CARES Act funds used for rural broadband projects have a caveat: They must be spent by Dec. 30, or they’ll have to be returned. In states like New Hampshire, any broadband projects that had already begun the field construction or build processes, and any projects related to existing commitments or contractual agreements are ineligible for CARES Act grant funding. Lawmakers introduced a bipartisan bill to Congress in August to extend the deadline through 2021, but the bill has remained stuck in a Senate committee, the Washington Post reports.
Missouri’s CARES Act-funded Emergency Broadband Investment Initiative included language to work around this issue, committing $5 million of its grants to reimburse companies that connected unserved and underserved areas in response to the COVID-19 pandemic.
SEMO Electric was one such recipient of the reimbursement program. When the pandemic began, the company put together a fast-track program to get homes broadband fiber within 72 hours, rather than the typical two-week process. Because of the fast pace, workers often had to go back and finish the process after receiving the permits needed to bury the fiber, leading to higher costs. Loyd Rice, the manager of the SEMO Electric’s fiber services, said the expansions were necessary to help people in neglected areas work from home during the pandemic.
“We had to bridge the digital divide. Rural southeast Missouri was getting skipped,” he said. “People were not going to be able to continue to live and work [here].”
Rice said the rest of the CARES Act funding SEMO received is being used to lay fiber to about 60 households, as part of the co-op’s goal to eventually build out 2,000 miles of fiber and connect around 7,000 to 8,000 customers. But SEMO’s project using CARES Act funds must be completed by the end of November. Rice laughed nervously when I asked him if he was concerned about making the deadline. “Always concerned,” he said, as they were working to complete a four-month project in just two months.
SEMO has 62 employees, and only 12 of those work exclusively in its fiber division. Some companies that received CARES Act funds are significantly larger —Big River Communications received $2.9 million from the federal ReConnect program’s CARES Act expansion to provide broadband for nearly 5,000 households in southeast Missouri, which is as much as 70% of SEMO’s ultimate goal. SEMO does have one advantage: It is a telephone company as well, not just a broadband company. That means it has its own utility poles that it can hang fiber on without having to wait for additional land-use permits, until the last miles where the company buries the fiber.
Why Is Broadband Deployment So Slow?
Alex Kelley, the broadband deployment manager at the Center on Rural Innovation, said it typically takes months or even years to complete a broadband expansion if you have to work through permits and partnerships. In its efforts to expand broadband access around Nashville, for instance, Google Fiber faced slow procedures in using utility poles. Companies with their own utility poles also don’t have to pay the pole attachment fees that other companies would charge.
Kelley also proposed some faster solutions, although not as reliable. Wireless towers are notoriously unreliable, but can be built quicker and can reach more people. Hotspots and Wi-Fi signals in public places are not as strong or reliable, but can offer the short-term relief that is needed to combat economic damage from the pandemic.
“Fiber is really the long-term solution,” Kelley said. “It’s the North Star, and so, how do you enact short-term solutions that also can contribute to those long-term solutions?”
A Long Way To Go
Despite the boost in funding during the pandemic, the total still only represents a fraction of what it would take to make broadband accessible across the country. Experts vary on their estimates in costs, ranging from around $60 billion to upwards of $100 billion to access all rural areas.
Even with nationwide access a long way away, broadband companies are concerned that projects will not be economically viable without government supplements. Rice said he doesn’t expect SEMO Electric’s fiber broadband program to be profitable for about 10 years. It is for reasons like this that Kevin Cantwell, the president of Big River Communications, said many companies are dependent on government grants to expand to rural areas, which typically cost more with less return, as households are more remote. These recent government grants are a step toward universal broadband access, but are still billions of dollars away from being complete.
Without these grants, people like Holmes would not have access to the opportunities he’s had today. In October, PumpTrakr was named one of 10 semi-finalists in the American Farm Bureau’s 2021 Ag Innovation Challenge, and will compete in January for awards up to $50,000, a success Holmes says was greatly helped by the fiber SEMO Electric laid down two years ago.
This story and others on New Builders Dispatch are made possible by a sponsorship from the Ewing Marion Kauffman Foundation. The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that provides access to opportunities that help people achieve financial stability, upward mobility, and economic prosperity – regardless of race, gender, or geography. The Kansas City, Mo.-based foundation uses its grantmaking, research, programs, and initiatives to support the start and growth of new businesses, a more prepared workforce, and stronger communities. For more information, visit www.kauffman.org and connect with www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.