WASHINGTON, June 22, 2017 – While lawmakers and witnesses at a congressional hearing on Thursday agreed that rural America desperately needs more and better broadband service to prosper, it was unclear where the funds to expand the service would come from.
Rep. Rod Blum, R-Iowa, chairman of the House Small Business agriculture subcommittee, kicked off the hearing with a description of how important broadband is to rural communities.
“These technologies provide a gateway in opportunity for economic growth and job creation, particularly in the rural areas,” Blum said in his opening statement. “One of the most important tools the internet offers to small business, is the ability to access the national and global electronic marketplace.”
The benefits of expanded service are clear, witnesses said. Chris Allendorf, vice president of external relations and general counsel at Jo-Carroll Energy in Elizabeth, Illinois, said that wireless and wired internet service allow businesses to exist and thrive in rural locations. Without the service, businesses, including family farms are at a competitive disadvantage, he said.
Brad Schneider of Illinois, the panel’s ranking Democrat, noted that despite the obvious importance of broadband, the U.S. is ranked 16th in the world for broadband access, with some 34 million Americans lacking access to high speed internet. Blum added that 39 percent of rural Americans don’t have access to high-speed telecommunications capacity, compared to 4 percent of urban dwellers.
Expanding broadband to unconnected or poorly connected rural areas is a challenging and costly task, witnesses said.
Tim Donovan, senior vice president for legislative affairs with the Competitive Carriers Association, and Allendorf told lawmakers of the difficulties in complying with federal regulations and red tape. Providers also face high costs to lay the foundation for broadband connection and tight profit margins once the internet connection exists.
Rep Don Bacon, R-Neb., asked how much it would cost to fund up-to-date wireless service across the country. Donavan cited a study by CostQuest Associates which put the tab at $25 billlion.
The returns can be substantial. Rural broadband companies contributed an impressive $24.1 billion to the economies of states where they operated in 2015, according to witness Mike Romano, a senior vice president with NTCA — the Rural Broadband Association, who cited a study by the Hudson Institute. That’s a pretty sizable contribution to the nation’s Gross Domestic Product ($18.46 trillion in 2016).
Both witnesses and lawmakers spoke optimistically about possible improvements in the broadband situation. Still, no one at the hearing could point to where the money would come from to fund expansion.
In a visit to Iowa on Wednesday, President Donald Trump said he was committed to enhancing broadband access to rural areas and would include broadband in his upcoming infrastructure package. But he provided no further details.
Dealing with red tape may be easier.
One of the witnesses, Dave Osborn, CEO of VTX1, expressed optimism that the new chairman of the Federal Communications Commission, Ajit Pai, would roll back some of the regulatory barriers that impede broadband providers from taking on new projects.
“If you’re going to be competitive with India, with China, with the rest of the world, we’re going to have to kick it up a notch and bite the bullet and put some money in it,” Osborn emphasized.
However, NTCA is raising concerns about the reduction of the federal Universal Service Fund (USF). The association released data from a recent survey of its members who are looking at a 12.3 percent cut in funding in just the past nine months, NCTA said in a release.
To put that in perspective, the USF, which helps small businesses to recover costs of deploying networks and delivering services in rural areas, will drop by about $173 million during the year starting July 1, NCTA said.
“On the Universal Service Fund in 1996, Congress got it right directing the FCC to have reasonably comparable services at an evolving standard in urban and rural areas,” Donovan said. “We need to make sure we are putting policies in place to make sure that’s the case on the ground.”
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