This week, our Building Local Power podcast contains a conversation between guest host Nick Stumo-Langer and ILSR researchers Hannah Trostle and Christopher Mitchell to discuss the importance of connectivity in rural America and the barriers high quality local investment.
The group discusses a number of topics, including how electric cooperatives are changing the dynamic on who gets connectivity in America.
Finally, a number of barriers to rural connectivity come up throughout the conversation. This includes the millions of federal dollars that go to large companies such as AT&T and Century Link instead of small, local providers (or municipalities to invest in their own infrastructure).
“The answer is because AT&T, Century Link, Frontier, these other big companies are hoovering up all of the money that is available through services like the Universal Fund, which is now called Connect America through the Federal Communications Commission,” says Christopher Mitchell. “They’re giving out billions of dollars and they’re spending it on some of the worst products. You look at what AT&T is doing, AT&T is going to be getting $2.5 billion from the federal government to expand rural access. The speeds they are going do deliver, obsolete. The prices are $60 to $70 per month for this very slow service that has data caps. It’s awful.”
Here are some reading recommendations from the podcast today:
Get caught up with the latest work from the Institute for Local Self-Reliance on fighting monopoly power and the state of broadband access across our economy:
|Nick Stumo-Langer:||So Hannah, rural broadband, it’s going to be really expensive, right? Something that we could never, ever invest in.|
|Hannah Trostle:||That’s not true in any way. It’s pretty affordable overall. We just got a story out of Jackson county in Indiana. The Jackson county rural electric coop there is going to build out fiber to the home to its entire service area, 1,400 square miles, about 24,000 members for only $60 million in the next five years.|
|Nick Stumo-Langer:||That seems really cheap. I’m shocked.|
|Hannah Trostle:||It’s pretty reasonable overall.|
|Nick Stumo-Langer:||Alright, that sounds great. We’re going to dig pretty deep on this issue of rural broadband access today on this episode of Building Local Power. My name is Nick Stumo-Langer and I’m the communications manager for the Institute for Local Self-Reliance. You just heard Hannah Trostle, who is a researcher for our Community Broadband Networks initiative. Also on the line is frequent host and founder of the Building Local Power Podcast, Christopher Mitchell.|
|Christopher Mitchell:||Hey, good to hear from you.|
|Nick Stumo-Langer:||Let’s break it down at the very beginning of this issue of rural broadband access. I’d like it if both of you could give our listeners a little bit of perspective on what the quality of rural broadband access is, what it is and the issues that we’re facing.|
|Christopher Mitchell:||Sure. I think it might be interesting to note that I think I come at this from a little bit more of a detached perspective. I grew up not necessarily in large cities but in urban areas, moved through a number of them frankly. Whereas Hannah comes from a more rural part of Minnesota and so has a more direct relationship with this. But I have to say that I’m somewhat offended when I hear any claims that we just can’t connect rural populations with high quality access because we can.
We don’t have to settle for some kind of poor substitute, something that’s just merely cost effective and leaves rural areas with substantially worst access than one would find in urban areas. You can look at the numbers in terms of how much it cost when you it well. You can look at the long term costs. Frankly, it makes sense to connect rural communities with high quality access. I just say that’s where I’m coming from on this.
|Hannah Trostle:||Yeah, you could actually say that I’m a child of coops because my electric service growing up was from the electric coop from the next county over. My telephone service and internet service actually came through the telephone coop. Minnesota has a great tradition of cooperatives. It has really built up the rural areas of the state.|
|Christopher Mitchell:||Nick, I want to come back and mention one other thing. Which is that this country has a long standing commitment to universal access, whether it’s through electricity, we made sure that just about everyone had access to it, telephones. It’s interesting, when I talk to rural groups in Wisconsin, I met a group that actually represents businesses all across Wisconsin. They noted that some of the first roads the state of Wisconsin built were to the dairies. That’s one of the reasons we think of Wisconsin as a dairy state, because once government built roads the marketplace for dairy products thrived.
There’s a couple of key points I always want to make. One is we have this historic commitment. The second is this is not charity. I can’t stress this enough, that this is something that we all benefit from. Making sure that people like Hannah grow up being able to be productive, being able to get a great education, being able to push the limits of their individual talents, that’s something that benefits all of us and it’s not something that urban areas should think smugly, “Oh, we’re doing this out of the goodness of our hearts.” Urban areas benefit when everyone has high quality infrastructure access.
|Nick Stumo-Langer:||Something we love on Building Local Power as you know are statistic. What is the current situation for rural America? How many people are not connected? How many people don’t have access to these high quality options?|
|Hannah Trostle:||Let me go back to the last good statistic that came from the FCC as to that. That would have been about 39% of rural Americans did not have high quality internet access of 25 megabits per second by three megabits per second. The last statistic that came out for some reason decided to include satellite data. Satellite coverage is not a substitute for good internet service and so it has greatly skewed the latest statistic.|
|Christopher Mitchell:||You see numbers anywhere from 19 million people in rural areas, to much higher numbers. I think 19 millions is people who can’t get any kind of DSL type of connection and there’s a higher number for people, it’s I think closer to 40 million, when you look at cannot get access to the higher quality broadband product.|
|Nick Stumo-Langer:||That strikes me Chris, that we’re losing out on a lot of opportunity and a lot of productivity in these rural areas. What kinds of things are being shut out of these rural communities by not having high quality access? I know you mentioned some of them but enumerate them for our audience.|
|Christopher Mitchell:||One of the things that has struck me for years was a conversation I had in rural Minnesota with a guy who had been working on what has become RS Fiber Coop, which is as you know one of incredibly successful approaches to rural broadband service. We’ve written about it in a report called Fertile Fields people can find on our website. But he said that his family had been farming a piece of land for, I believe it was, four or five generations. He and his wife were concerned that if they continued to live in that area without high quality broadband they would actually be harming their children. They were considering moving because their children would not have opportunities if they grew in this land that their family was so attached to. I just think that’s something that family should not have to make the choice over.
Frankly, they do not have to make the choice over when we get the policy right. The question is ultimately, how should we do it? What is the best approach from a perspective of quality and from a perspective of cost effectiveness, to make sure that everyone has high quality service? As I argue and as Hannah’s research has shown, we can do this. I think we can ultimately connect everyone who’s on the electric grid to high quality broadband service as well using some of these time tested methods which are in rural areas public ownership and cooperatives. I wouldn’t say that they’re equal answers. In areas that have cooperatives, that’s probably the best approach.
In areas that don’t have cooperatives, it may be smart to first see if you can create a new cooperative or get an existing cooperative to expand near you. But there’s also areas where you might have an enthusiastic local government, whether that’s a city county township where you can get the kind of competence you need to build a municipal network. In many cases municipal networks are working on these issues as well, but I think when we look at the vast amounts of territory involved, coops are probably the best solution. I think Hannah can tell us more about many coops that have done this, but one in particular that is showing what can be done.
|Hannah Trostle:||Yeah, across the US there are about 900 electric cooperatives and about 54 of those have some sort of project for improving internet access in their communities. One of the latest one that we saw was Tombigbee Electric Cooperative in Alabama. They have started a project called Freedom Fiber.|
|Hannah Trostle:||Okay. Freedom Fiber, it’s going to start surveying two towns in early September. It’s going to be in one of the least served counties in the US. 75% of Marion County does not have access to broadband. Tombigbee Electric Cooperative is going to start building in the two largest population centers. It’s only going to be about $8 million, and then they’re going to build out over the next five years, serve the two biggest population centers in the county. And then it’s going to be another $30 million to build out to their entire service area.|
|Christopher Mitchell:||One of the key issues that it’s worth noting is that when you look at these numbers, it comes down to sometimes $5,000 per household as you get in the lower density areas, and for a small number of households even more than that. But the cost of building electrical networks is actually greater than the cost of building fiber networks, if you talk a electric utilities that do both. You might wonder, “How did we ever build electricity out if it was so expensive and now we can’t built fiber out?” The answer is because AT&T, Century Link, Frontier, these other big companies are hoovering up all of the money that is available through services like the Universal Fund, which is now called Connect America through the Federal Communications Commission.
They’re giving out billions of dollars and they’re spending it on some of the worst products. You look at what AT&T is doing, AT&T is going to be getting $2.5 billion from the federal government to expand rural access. The speeds they are going do deliver, obsolete. The prices are $60 to $70 per month for this very slow service that has data caps. It’s awful. The amount that they’re getting per household is actually about $2,400, which would cover the cost of fiber in a lot of Indiana for rural areas per house, in Vermont we’re seeing this as well with the big telephone company there, Fairpoint, where they’re getting so much money that it’s almost the cost of building fiber, but because they’re focused on shareholder returns, they’re not putting it into fiber, they’re putting it into DSL and they’re going to look for future handouts to get higher quality service. There’s no doubt.
When you look at this you might be thinking, “Hannah’s saying that that’s really costly,” but actually it’s well within the realm of what we’re already subsidizing firms to build for obsolete technology. If we actually directed this to local institutions that wanted to invest in the communities, we would basically be there. There might be a need for some of those farther away farms to get a one time grant, but the cost of the ongoing service is actually low enough that these electric utilities will not need operating subsidies. They may need one time capital subsidies, and that’s totally affordable and totally doable, if we would just stop writing checks to AT&T and Century Link and Frontier and these other companies that have totally failed rural America.
|Nick Stumo-Langer:||To lay out the thread of what you’re saying here, millions and millions of rural Americans do not have high quality broadband internet access. We have solutions that we know are tried and true, building on the infrastructure of these cooperatives, these municipal utilities and even new infrastructure investments in these smaller communities that are going to be able to allow for local providers. But you see so much money getting siphoned to these monopolies and these giant political and market power entities, like AT&T and Century Link. How do we communicate that to those in power, to say, “Stop giving money to these people that are providing a terrible service for rural America?”|
|Christopher Mitchell:||That is a very good question in terms of what we can actually do about it. In fact, when you look at building local power, it’s challenging. I’ll go back a little bit to a presentation I just gave in the Appalachians, in Marietta, Ohio, in south east Ohio. In that I was making the point that in rural Kentucky we already see some high quality fiber to the home networks in large areas of Kentucky because of coops that have reinvested historically in them.
After I spoke, one of the people came up to me and said, “Did you know that actually one of those areas that has fiber to the home is one of the poorest counties in the entire country, not just Kentucky?” They’ve been able to create jobs because of this, which I think makes the point first of all that this can be done when you have the right incentives and the right investments. But if you look at other areas of Kentucky, where we had local success stories, many of them are building wireless solutions. That’s because they’re making very rational decisions, which is to say the cost of building fiber is very expensive in the first few years.
It’s a very high capital cost and so lower income counties, counties that have bleak job prospects and people are unfortunately feeling that they have to move out of in order to get jobs, those counties don’t have the money to go and build fiber to the home. Now in talking to them, many of them realized that over 30 years the cost of operating and building wireless networks actually exceeds the cost of fiber optic networks. It’s just that fiber networks, they’re all front loaded and so what we have is a financing challenge that local communities themselves will really struggle to meet without innovative financing options like we saw in RS Fiber actually.
To a limited extent some local communities may be able to get around that but we absolutely need the federal government to help out in these areas. For that, we need rural folks to be educating themselves and demanding their representatives and their senators actually pursue what’s best for the county, rather that just what they hear is working inside the beltway of DC. The problem is, is that you need a federal government solution and that federal government solution is going to come from an area in which the only voices people listen to are AT&T and Century Link and Verizon and the big cable companies. We need to break through that kind of lobbyist power in DC in order to make sure that we have the right programs to finance these local solutions.
|Nick Stumo-Langer:||A point I know you made during your presentation at the Appalachian Connectivity Summit was that wireless has a little bit of a problem going through a mountain, has a little bit of a problem going through large areas, large fields where there may be telephone wires. I think that’s a good point to make for any one that is looking for a solutions. It’s good to look at this fiber that gets in the ground, that goes right to the house and that you understand person to person that you’re going to have good connectivity if you have a wire going to your house. You’re able to get on the internet. You have the upload speeds, the download speeds that you need, that type of thing.|
|Christopher Mitchell:||Yes. I think it is worth remember that wireless is not magic. It does have problems, particularly in areas like West Virginia, in the Appalachians, in the Rockies. Now it is true that fiber is going to be much more expensive. In some cases it may be prohibitively expensive. Wireless could be a good short term solution but I think that we should not forget that we too electricity to just about everyone in the country and over time we can find ways of cost effectively getting fiber out to everyone if we look for the right entities, which are the cooperatives that will reinvest all of the gains until they connect everyone.|
|Hannah Trostle:||We’ve seen a number of cooperatives work with both fiber and wireless solutions for rural areas. I was recently just looking at the Orcas Power and Light coop. They operate as Rock Island Communications. They took over an old DSL network and then they have been building fiber to the home out in San Juan County in Washington, which is about 20 islands. As they build from island to island, they’ve also been using wireless to connect further away islands. They’re hoping to cover their service area in mid-2018.|
|Christopher Mitchell:||I think that’s one of the key issues, is recognizing that, the time element. People often forget about the time element but the coop is going to keep reinvesting and keep reinvesting. AT&T is going to keep extracting and keep extracting from the community. Over time, those trends, they’re either exciting if you’re a coop or really disturbing if you’re served by AT&T.|
|Nick Stumo-Langer:||Both of you have mentioned rural electric cooperatives, cooperatives that are being formed around internet access, as well as municipal utilities being able to invest in these networks for themselves. I want to get a little bit of a sense of the barriers that exist to expansion, whether it’s to these municipalities or these rural electric cooperatives look at their neighbors, literally their neighbors and saying, “You deserve the internet access just like we have.” How is that coming up in the political scene or in any other way?|
|Christopher Mitchell:||It varies from state to state. We have seen many municipalities that have their own fiber networks wanting to share it. Now, partially this is self interested, in that they have a large investment and a fixed cost of … had investments that include network operating center and the ability to deliver television signals and things like that, where if they can spread it across a wider base it’s going to be much less risky and they’ll have a greater return with which those who make a profit often reinvest in the community.
But many communities also recognize the benefits of a strong region, and so you see communities like Chattanooga fighting got the right to expand to their neighbors when the state will not allow them to. Tennessee has literally chosen rather than allowing cities like Morristown, Jackson, Tullahoma, Pulaski, Chattanooga to expand at no cost to tax payers. Tennessee is taking $45 million of state tax payer money and trying to give it to companies like AT&T, because AT&T is so powerful in the state.
It’s incredibly frustrating to see that municipalities that have been incredibly successful, I think Chattanooga made $20 in net income last year, they’re not able to use that to better their surrounding communities because the state has decided instead it wants to use tax payer dollars to throw at a company like AT&T, that is literally delivering a service that is 1,000 times slower at a greater cost to the rural areas. Now Hannah’s also tracked a number of barriers to rural electric coops, which actually violate federal law but state still have them in place.
|Hannah Trostle:||A lot of these barriers for cooperatives are actually based around funding. They prevent the coops from using department of agriculture money to build networks for internet service. Now a number of states have started to encourage cooperatives to invest in fiber networks. They have passed some laws straight up saying, “Yes, electric coops, you should do this. This would be great.” That would be Tennessee.
Then, there are cases like in Indiana, where the state realized that they needed to explain some issues with [pole 00:19:47] attachments and they passed an act called the fiber act, specifically to encourage to coops to use their existing infrastructure. They had to actually allow the coops to use all their easements that they previously had. North Carolina is the state that had prevented electric coops from providing internet service.
There have a been a number of little ways around it, such as partnering with other telephone coops or local telephone companies or not directly offering internet service to the public but having dark fiber. I know one had to create a subsidiary called, I think it was [Columbia 00:20:26] River Electric coop had to create a subsidiary called Blue Wave Connections. The rules around coops are complicated and they vary so much state to state.
|Nick Stumo-Langer:||Yeah. It really strikes me that our research and your expertise, both of you, runs the gamut from these great state programs and investment programs, and I guess even just the infrastructure allowing these cooperatives to invest, such as Minnesota, to all the way to North Carolina where it seems like the state legislatures, the state government in general is not wanting their rural areas that are already disadvantaged and areas that are losing population and losing economic vitality, to make themselves better. It seems like a no brainer to me that these communities should be able to invest in better internet access and all the benefits that come with it, but it seems like an odd thing. Why are these state legislatures so against this investment?|
|Christopher Mitchell:||You have to recognize that the people working in stage legislature, the elected officials, many of them mean well and they’re really trying to represent the best interest of their community. Let’s give them the benefit of the doubt. I think North Carolina has some exceptions in particular. But they are very limited in their capacity. They have almost no staff to help them understand issues. Many of them are normal people who have not studied these issues in depth. They’re people who have other jobs.
The only people they can get information from are lobbyists because there is not a local group that is going to inform an elected official in North Carolina or Tennessee about the public interest view on telecom. Telecom is kind of this forgotten thing. If you’re working in energy, there’s lots of environmental groups that are working it. They’re still totally outnumbered but in telecom there’s practically no one. State legislatures are really at the mercy of these big cable and telephone company lobbyists.
That’s to some extend why even though we oppose additional barriers and we try to work with state legislatures where we can, one of the things that’s so exciting about cooperatives is that largely they can make investments that work. They may have to jump through some hoops as Hannah was describing, but people who are listening who are served by an electric or a telephone coop and they’re unhappy with their broadband service should contact their coop board. They should talk to their neighbors and organize local businesses to demand that the coop do something about it.
This is something that we have a ton of resource on at muninetworks.org, the website that houses most of our broadband work. A lot of it is work that Hannah’s done. There’s a number of interviews also that I’ve done with electric coops about this. We’ve created a wealth of resources for people who want to learn more about how they can push their own coops to solve this problem for them.
|Nick Stumo-Langer:||As we’re heading toward the end here, I think it would be useful for our audience to have a little bit of connective tissue with some of our other Building Local Power episodes. How does internet access, how does local investment for high quality internet access fit in the philosophy of the Institute for Local Self-Reliance? How does this all fit together? Can you map that for us, either of you?|
|Christopher Mitchell:||The Institute for Local Self-Reliance is really focused on how to make the maximum use of your resources locally, how to make sure you have a lot of political and economic power locally. Without economic power, you struggle to have political power. Which is to say that if your community’s dependent on jobs from Walmart and other massive firms, you probably don’t have much control over the future of your community. Now if you are generating electricity locally, that means that money you’re paying for for this thing that everyone uses is staying in the community, it’s recycling in the community.
If you are doing that with your broadband service as well, then not only are you keeping that money in the community, often you’re going to have much better broadband service. Which mean you’re going to have better job prospects, you’re going to have higher property values, you’re going to be a place that people want to come to, which is going to make your community more valuable.
It’s going to make it easier to have this positive cycle of investment in the community and creating a virtuous circle. It’s hard to have a thriving economy today without a high quality broadband option. It will be even harder tomorrow. Without those high quality jobs and that sort of investment, it’s harder to be a place that people want to live. This all basically comes together and helps you to be more self-reliant.
|Nick Stumo-Langer:||This has been such a great conversation. Very informative for me and I’m sure for our listeners on how rural broadband fits into this whole mission statement. Something we do every week is we ask our guests for a reading recommendation. I’d like to ask both of you, do you have a reading recommendation? Watching, listening, anything that would be great for our listeners to experience. Hannah?|
|Hannah Trostle:||The book that I’m going to recommend is not at all related to this topic. It is a book that I have been reading at night. It is called The White Goddess by Robert Graves. It is a very old book. It’s called a grammar of poetic myth, but it’s more like an autobiography about Graves’ life and how his research consumed him.|
|Nick Stumo-Langer:||Great, thank you. Chris?|
|Christopher Mitchell:||Let me start with the book that I’m reading at night right now, which is a book called Machine Man by Max Barry. It really captures a kind of leftist snarky author’s take on an engineer approaching the world. I’m loving it for all these asides and things like that. If you like snark and if you like that kind of left wing perspective, this book really nails it. I would also say that Max Barry’s books in general, I’ve read most of them, really cover well what happens if we do not restrain in very large corporate power. They’re often near future dystopic novels in which corporations have much more control over our lives.
But I would say that a recommendation that I can recommend from both Hannah and I, because we both read this and we both found it amazing because it was on topic and I think far more interesting than I expected, is a book called Electricity For Rural American, The Fight For the REA, which is the Rural Electrification Administration. It’s by Clayton Brown. It’s a book that’s almost 40 years old I think. I got it because I wanted to know the history.
I literally was thinking to myself, “Alright, this is going to put me to sleep for a few weeks but I’m going to get through it. I opened it up and I got sucked in. It was almost like a mystery. I found it to be incredibly exciting the way the … It was almost like this suspense thriller of how the REA came to pass, the people behind it, the interest, the talking points from the big companies at the time, which were trying to oppose these coops. I have to say, if you can find it I highly recommend it.
|Hannah Trostle:||I just wanted to add that there’s a fascinating section in the middle of it about the design of a report cover. It’s kind of off topic but it’s such a human element to this book. It’s about how they really liked putting red barns on their report covers to try to encourage the man who was in charge to read them because they knew he really liked red barns.|
|Nick Stumo-Langer:||That’s a great small little element of that. I’ll give my recommended as well. I’ll keep it pretty short. I’ve been reading a lot of short story collections this summer. One that I can’t recommend enough is The Shell Collector by Anthony Doerr. There’s a number of different stories in here that go into the human experience, the intersection with nature. Really, really fun.
Short stories, as I’m kind of learning because I haven’t really gotten into them too much before, is that you can just read a little bit. You read the story, it’s like 30, 40, 50 pages, and then you can completely get out of that world. You’re not sucked in. You don’t have to spend hours and hours reading the same book. It’s great. Thank you so much Chris and Hannah for joining me today, it was a great discussion.
|Christopher Mitchell:||Thank you.|
|Hannah Trostle:||Thanks, Nick.|
|Nick Stumo-Langer:||You can find all the links to what we discussed today on ilsr.org on the show page. You can go to our website ilsr.org/donate to help us produce more podcasts, have more information for you. Click on the show page for this episode. You can also sign up for our newsletters, connect with us on Facebook and Twitter and rate this podcast on iTunes, Stitcher or where you find your podcast. A big thank you for our theme music, that’s Funk Interlude by Dysfunction Al. For the Institute for Local Self-Reliance, I’m Nick Stumo-Langer. Thank you so much for listening for this episode of Building Local Power.|
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