Getting it Right on Rural Broadband

Carl Weinschenk

Two things can be concluded from this very interesting Associated Press story on a dustup over a broadband stimulus award posted at siliconvalley.com over the weekend. One is that few things in life are black and white. The other is that the fairness and fate of big federal initiatives isn't decided in Washington, but by thousands of small interactions in the field.

 

The story describes the complaints of Eagle Communications, a rural Kansas cable company with about 16,000 subscribers. Company President Gary Shorman says that it is "extremely unfair" that another provider, Rural Telephone Service, is getting $101 million in stimulus grants and loans to serve rural parts of the state, including Eagle's hometown of Hays.


Multichannel News touches on the situation in Hays, and quotes American Cable Association President Matthew Polka as saying "numerous" other providers serve the town. The story says that the issue of using stimulus funds for un-served versus under-served areas has been discussed by a subcommittee of the House of Representatives.

 

On the surface, it seems that Shorman has a point. Why, after all, should an established company get a federal subsidy to compete with Eagle? Why should the company that is better at paying attention to paperwork get an advantage? That certainly doesn't seem like a level playing field.

 

There are questions to ask, however, before accepting this argument. One element of the broadband stimulus plan is determining, through the (admittedly rocky) grant applications process and its broadband mapping component, the true level of coverage in the area that the grant covers. This can be a very tricky topic: Does a provider really offer services to the lion's share of the area, nor just say that it does? Telecommunications companies often say that they provide comprehensive services when, if fact, they only really serve a sliver of the area in question. It's an trick mastered decades ago by cable operators. So, in this case, the first thing to do is match up the grant to Eagle's verified service map.


 

The second element is price and services. It is entirely possible that a single provider is offering service levels that are within financial reach of the entire community. But it also is possible that it is "cherry picking" the best customers, or somehow taking advantage of being the only game in town. Shocking as that sounds, such things happen. The presence of one broadband provider is anything but a guarantee that the majority of residents will have access to reasonably priced broadband services.

 

It is entirely possible that things worked out unfairly for Eagle. It also is possible that the rural Kansas market will benefit from having multiple providers, in the same way that urban, suburban and exurban markets do.

 

Rural entities -- including the Navajo Nation and 24 rural counties in southern Illinois -- are getting wired and wireless services through the stimulus. In the end, it is far more important to be vigilant for these residents than it is to make sure that the incumbent's toes are not being stepped on.

 

Whether Eagle and the thousands of providers like him, are being treated unfairly can only be determined by a case-by-case analysis. This should be possible: An appeals process should be available, and providers who have lost the competitive struggle shouldn't have their bacon saved by government intervention. In general, however, the relative lack of broadband in sparsely populated areas suggests that the people charged with sifting through applications should lean toward approval.



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