Rural Broadband: More Incentives Needed to Help Build Networks

Though progress has been made by the Federal Communications Commission to remove barriers for infrastructure investment, the rural-urban digital divide persists.

A new CoBank Knowledge Exchange Division report, “Broadband Partnerships,” addresses some of the long-standing challenges to building broadband networks, such as the high entry costs, taxes and legal implications, and even the lack of investment incentives.

CoBank is a member of the Farm Credit System. Among other functions, it provides financial services to rural power, water and communications groups and cooperatives.

The report includes an overview of the current situation, reiterating the need to close the digital divide, and highlights several cases where cooperatives have found success in building broadband in various locations across the country.

“The interviews are wide-ranging case studies that underscore the importance of thinking outside the box to serve rural communities,” said Doran Dennis, regional vice president of electric distribution for CoBank. “The standard model of providing broadband to rural customers is changing daily in order to accomplish the goal of closing the rural-urban divide in America.”

A known hurdle for broadband projects gets back to the return on investment – or lack of it. Customer-generated revenue may not always cover the costs of building an entire network. That has kept many cooperatives from entering the market, the report noted.

However, a new study from Purdue University, referenced in the CoBank report, finds while that may still be the case, there is a net benefit. For example, the net economic impact to society as a whole in Indiana is 4:1 benefit to cost. That further underscores the important role of investment incentives for broadband.

“The trend of broadband access in rural America is going in the right direction,” said Dennis. “As it stands, cooperatives are working through obstacles to build broadband networks, and while they are finding creative solutions, everyone who has a stake in rural broadband can do more.”

The report, “Broadband Partnerships: A Key to High-Speed Success for Rural Electric Co-ops” is available at cobank.com.

CoBank provided partial funding for the Purdue University study referenced in this release.


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