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How to bridge the broadband divide: Allow ISPs to bid on urban-rural territories

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For most city dwellers, going without internet is almost unthinkable. Every day we connect to the internet via ubiquitous Wi-Fi or 4G connections, with the occasional dropped call or slow video being the perfect example of “first-world problems.”

But get outside of an urban area, even just several miles, and connectivity changes dramatically. According to the FCC, 53 percent of the people living in rural communities in the U.S. — about 22 million people — lack access to broadband speeds that reach even 25 mbps. To put that in context, our urban populations and businesses have become accustomed to internet speeds four times faster than this and peak 4G speeds that are twice as fast at 50 mbps.

Speed accounts for only a portion of the divide, however. Intermittent connectivity is also a huge problem, and it can cripple business and innovation. Many rural areas now can be characterized as “internet deserts,” and the connectivity divide is a major reason rural America has been left out of the post-recession economic growth seen in major cities.

Consider the case of a large timber provider in rural Oregon that made a sizeable purchase of physical computer infrastructure to run its internal ERP software. When leaders were asked why they chose this path rather than using a cloud storage strategy, as most businesses today do, they replied simply, “Because our internet goes down for hours at a time.”

The timber provider’s experience is not unique. Tens of thousands of rural employers are forced to navigate these waters every day. While this lack of consistent internet connectivity is a huge hassle for individuals, the broader impact on rural businesses is much greater. Mitigation strategies, which typically include storing data locally or minimizing dependence on technology, cause rural businesses to miss out on key technology innovations in their industry — and, by default, mean that they will never be at the center of that innovation.

Between slow speeds and intermittent connectivity, the promise of the digital economy to “work anywhere” rings increasingly hollow. As the pace of innovation continues to increase, our rural areas are becoming drive-by or fly-over areas with a large percentage of the population getting left behind due to an accident of geography. As populations flee rural areas in favor of cities, small-town service businesses — including restaurants, hospitals and theaters — are already feeling the effects.

The cost of building out broadband infrastructure is a significant barrier. By some estimates, it can cost as much as $30,000 a mile to run fiber optic cable, meaning it could take many decades to recoup installation costs for broadband internet. This problem is compounded if subscriptions are expensive and adoption is spotty in sparsely populated and often poor rural areas.

A public-private partnership offers a viable solution to this challenge. Such a partnership would require dividing states into combined urban and rural areas that internet service providers (ISPs) could bid on. Profitable urban ISP territories would be dependent on rural connectivity, with states providing significant subsidies for rural broadband subscribers in exchange for ISP commitments to both uptime and coverage levels of 98 percent or more of the population. The right level for this subsidy would be to put the pass-through cost for the user at the same level that a comparable dial-up connection would cost.

By allowing private industry to bid on these dual urban-rural territories, states could reap the benefits of private sector efficiency, technology, and innovation while making sure that as many residents as possible were connected. The FCC has earmarked $2 billion to closing this divide, which represents a potential windfall to states that make this investment.

For urban dwellers, investing in rural connectivity is not entirely selfless. Improving internet access outside cities unlocks new opportunities for telecommuting and remote living as work becomes increasingly digital. This could help to ease the burden on strained cities with nearly unbearable commute times. It also would benefit cities in the form of increased revenue from travel through airports and waterways, and through access to a larger talent pool. By slowing demand for urban housing and easing the burden on road infrastructure, the quality of life for both rural and urban areas could be improved simultaneously.

If we don’t act now to effect change, the urban-rural divide will only continue to widen.  Growth in tech has become the primary way to generate wealth in the U.S., and that growth is unquestionably concentrated in cities — cities fueled by fast, reliable connectivity. A public-private partnership offers the opportunity to change this trajectory and bring prosperity to millions of rural Americans falling further and further behind.

Joaquin Lippincott is the founder of Metal Toad, a consulting firm that has helped modernize software for industry leaders like Sony, Daimler, Intel, the Golden Globes, Siemens Wind Power, ABC, NBC, DC Comics, Warner Brothers, and the Linux Foundation.

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