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More Public Spending Needed For Rural Areas to Catch Up on Internet 

The pandemic resulted in millions of American children having to attend school and complete homework online. For some families, this presented significant hurdles, and in rural communities, there are many children who effectively lost a year of their education due to a lack of Internet access.

Internet Access in Rural America

The current estimate is that 85% of American households have access to broadband internet. That may seem good at first glance but appears less so when you consider that access is highly concentrated in cities and the suburbs that surround them. In fact, if you remove rural America from the equation, the percentage of households with access nears 100%. In rural regions, only about 70% of households have access to high-speed internet. In some areas, the number is significantly lower, and we have not even touched on the fact that having access does not necessarily mean that a household can afford it.

Nevada Is a Microcosm of Rural America

The Santa Fe Reporter recently published a story that discussed the challenges faced by rural communities in its state. Some of the counties in this region are extremely rural in the sense that many homes do not even have access to wired electricity and run their homes via diesel-powered generators. In the midst of the pandemic, the local school district struck a deal for T-Mobile hotspots that were distributed to students. It was a nice gesture but an ineffective one since many of the students only had access to a Verizon tower. Eventually, a local internet service provider would give these households solar-power Wi-Fi routers. But the service costs $70 a month. That is palatable while the $50 Emergency Broadband Benefit is available, but that will not last forever, and the service will then be unaffordable.

Closing the Availability Gap Is Expensive

It seems that at one point federal and state governments hoped that this problem would go away on its own. Capitalism would come to the rescue, and the major ISPs would eventually extend out to these rural communities. That never happened. The bottom line is that the profit motivation just is not there. The expansion that has occurred has generally been due to smaller ISPs that have a real vested interest in the communities they serve. But it is expensive. The Santa Fe Reporter article discusses one of these small companies. It costs Sierra Communications about $25,000 a mile to lay cable. It charges $39 for its service. It needs 8 new miles to acquire at least 50 new subscribers, which means that it will not get a return on its investment for four years. In other words, the local banks will not give them loans.

Affordability Is a Component of the Digital Divide as Well

The challenges facing not just rural children but the rural workforce and thus the U.S. economy at large are not limited to the availability gap. Starlink from SpaceX is a satellite-based Internet service that has already been a tremendous success and which will soon be available to the farthest corners of North America and eventually the world. But it currently costs about $500 to set up and then $100 each month. The average rural household cannot afford that. Lifeline is a permanent program available to low-income families, but it only provides $9.25 a month. The EBB provides $50 a month, but it is a temporary measure that will end when funds run out or the pandemic draws to a close.

The Infrastructure Bill

The recently passed infrastructure bill provides $65 billion to expand broadband infrastructure in the U.S., and this could be significant in closing the availability gap if the money is distributed well and in a timely manner. Some of that money is earmarked for affordability and adoption as well, but it remains unclear how that will happen. Outside of increasing the Lifeline benefit to $50 like the EBB, it is hard to imagine a momentous change on that front.

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