Rural Wifi investment

For some time I have pointed out that the best way to ensure economic development in our rural counties is to provide broadband wifi services to those areas. Free access would be ideal, but fees for service will most likely be necessary.

A letter to the editor in Saturday's News and Observer demonstrates a need for some kind of program in North Carolina that would bring wifi service to our countryside. The letter writer feels she is "sealed off from the digital age, because broadband service has not been extended to our homes."

We live in an area of Chatham County where there is no DSL or cable and weak cell signals. The best service one can get is satellite or a trip of 10-15 miles to a library when it is open…

Our incumbent provider promised DSL for years then later stated in a letter to the FCC that it had no plans to serve us. The only light at the end of the tunnel is that Randolph Telephone Membership Cooperative is seeking funding through the broadband experiments to extend fiber into rural Chatham.

(name omitted for privacy)

Here in the big city, we claim we want jobs in our rural counties, but lack of wifi access will keep business ventures located there from becoming truly successful. Even the much desired ‘factory jobs’ now require wifi access. We claim we want all our children educated in how to write code and use the internet, but that can't happen in rural areas without access. In fact, the digital textbooks some NCGA education committee members tout as a cost saving measure would be difficult to provide to some of our schools. And even if wifi arrangements are made for the school itself, the children may not be able to get (let alone afford) wifi service at home.

But in North Carolina, we are not allowed to have local government involvement in wifi expansion as our NCGA passed a bill that effectively prevents towns and municipalities from offering broadband directly to their citizens. This preserves Time Warner's potential profits, but does not help the citizens of our state--and ultimately, our legislators are supposed to serve citizens.

How did this happen? 2010, Rep. Marilyn Avila, a Wake County Republican, introduced a bill that would prevent cities from building or expanding existing broadband networks, by requiring them to follow prescribed and time-consuming procedures and financial requirements. The bill became law in May 2011….

Avila's colleagues in the General Assembly describe her as a friend of telecommunications companies. Before heading to Raleigh in 2006, Avila worked for the John Locke Foundation….

In the 2012 election cycle, when her bill passed, Avila's campaign received $9,000 from CenturyLink, AT&T and Time Warner Cable, four times more than the previous cycle, according to the National Institute on Money in State Politics. Fayetteville's Internet provider Time Warner Cable gave $6,000 of the total, 12 times the $500 the company gave in the previous cycle. Avila was among the five North Carolina lawmakers who received the most from the telecommunications industry that year....

At the time that bill was being discussed, Sen. Eric Mansfield proposed an amendment to exempt Fayetteville, which already had in place fiber optic wifi connecting its governmental buildings and wanted to offer this service to residents. His amendment was blocked by Sen. Thomas Apodaca.

Apodaca, chairman of the powerful Rules Committee, is a big beneficiary of telecommunications company largesse. He received $16,750 from AT&T, CenturyLink, Time Warner Cable and Verizon Communications Inc. in the 2012 election cycle, the third-largest amount among North Carolina lawmakers, according to the National Institute on Money in State Politics. Since he was first elected in 2002, Apodaca has received $62,000 from the telecommunications carriers, the second most of any lawmaker in North Carolina.

Fayetteville had already used tax payers’s dollars to set up the infrastructure, and was now prohibited from allowing those same tax payers access to what they had already paid for.

But private companies, whose first obligation is to their shareholders, will not expand wifi service to every dirt driveway in our state. As a country, we knew when we created the Rural Electrification Program in the 1920s, that private companies have no economic incentive to increase their costs for a measly return in profits. Contrary to what you hear from those who hate it, there really is a place for government in our world and not everything should be privatized. Today our world is dominated by those (ALEC) who do not believe government has a role to play in being far-sighted enough to plan for a better future for all. We’ve lost our belief in the Common Good.

But back then, the government saw a need to expand electrical service to every home in America. Business was not going to do this, so GOVERNMENT created a means to help.

Of the 6.3 million farms in the United States in January 1925, only 205,000 were receiving centralized electric services. The Rural Electrification Administration (REA) was created by executive order as an independent federal bureau in 1935, authorized by the United States Congress in the 1936 Rural Electrification Act, and later in 1939, reorganized as a division of the U.S. Dept. of Agriculture. It was charged with administering loan programs for electrification and telephone service in rural areas. Between 1935 and 1939 – or the first 4½ years after REA's establishment, the number of farms using electric services more than doubled.

The REA undertook to provide farms with inexpensive electric lighting and power. To implement those goals the administration made long-term, self-liquidating loans to state and local governments, to farmers' cooperatives, and to nonprofit organizations; no loans were made directly to consumers. In 1949 the REA was authorized to make loans for telephone improvements; in 1988, REA was permitted to give interest-free loans for job creation and rural electric systems. By the early 1970s about 98% of all farms in the United States had electric service, a demonstration of REA's success.

How does the investment in internet infrastructure compare to the results that come from having it? That has been researched by many, many groups.

• ITIF Estimates A $10 Billion Investment In Broadband Would Produce Nearly 500,000 New Jobs. "These investments will create new jobs up and down the economic food chain, said Robert Atkinson, president of the Information Technology and Innovation Foundation.... Source: Joelle Tessler, "Broadband Funding In Stimulus Plan Sparks Debate," The Associated Press, 2/6/09)

• For every one percentage point increase in broadband penetration in a state, employment is projected to increase by 0.2 to 0.3 percent per year. Source: The Effects of Broadband Deployment on Output and Employment: A Cross-sectional Analysis of U.S. Data. Robert Crandall, William Lehr and Robert Litan, the Brookings Institution

• An increase in the broadband penetration rate by 10 percentage points raises annual growth in per-capita GDP by 0.9 to 1.5 percentage points. Source: Broadband Infrastructure and Economic Growth, 2009. Nina Czernich Oliver Falck, Tobias Kretschmer and Ludger Woessmann

• According to the U.S. Department of Commerce, between 1998 – 2002 communities that gained access to broadband service experienced an employment growth increase of 1% to 1.4%, a business establishment increase of 0.5% to 1.2%, and a rental value increase of 6%.

• The SRRI, in California, estimates that for every one percentage point of the adult population using broadband, the employment growth rate rises by 0.075 percentage points and the payroll growth rate also grows by up to 0.088 percentage points.

• It is estimated that for every $1 million granted for broadband development, 15 jobs would be created. Source: U.S. Department Of Commerce, Bureau Of Economic Analysis, Regional Input, Output Modeling System Regional Multipliers: A User Handbook For The Regional Input Output Modeling System (Rims Ii), At 8 (Mar. 1997).

• A 2001 Study From The Brookings Institution Predicted 1.2 Million Jobs And As Much As $500 Billion Per Year Could Be Added To The U.S. Economy If All Homes Had Basic Broadband Services. Source: Carol Ellison, "U.S. Needs Muni Wi-Fi To Plug Broadband Wireless Gap,", 5/4/05)

• The Internet Employs 1.2 Million People Directly and a Total Of 3.05 Million Jobs. "The Internet employs 1.2 million people directly to conduct advertising and commerce, build and maintain the infrastructure, and facilitate its use. Each Internet job supports approximately 1.54 additional jobs elsewhere in the economy, for a total of 3.05 million, or roughly 2 percent of employed Americans. The dollar value of their wages is about $300 billion, or around 2 percent of U.S. GDP." Source: John Quelch, Quantifying The Economic Impact Of The Internet,"

•U.S. Investment In Broadband And Related Information Technology Has Driven 1/3 Or More Of The Productivity Growth Of This Decade.The Ongoing Productivity Impact On GDP Growth Could Exceed $200 Billion Annually. USTelecom Analysis

• Connected Nation Reported National Broadband Would Provide A $134 Billion Economic Stimulus Nationwide.

There is a digital divide in North Carolina that is holding us back. And in many cases, the legislators now trying to punish the urban areas that they claim are succeeding at the expense of our rural areas were the same who voted to put this law into place. But there may be hope. The town of Wilson is urging the FCC to preempt the state’s wifi limitation law, and the Kansas bill to create the same restrictions there died in committee earlier this year. That’s in Kansas, the home of the Koch brothers and their ALEC organization that proposed this kind of ‘regulation’ in the first place.

If Kansas legislators recognize the value of investment in rural infrastructure there can be nothing wrong with our own ALEC legislators recognizing the same. This law is ridiculous and holds back our economy. It’s time to call for repeal.


A great job of following the money

In free-market fantasyland, everybody eventually gets what they need to keep up. Too bad "eventually" usually means "sometime long after they're dead and gone."

A major impediment

to economic growth, and I think those Internet employment numbers are kind of slim.

My daughter got a really good job working for a start-up out of San Francisco, doing mostly marketing stuff. While they did provide her some office space just outside of Charlotte, she mostly works from home and only uses the office for client meetings and such. She wouldn't have found the job, much less excelled in it (they have online meetings a couple of times a week), without access to broadband.

That telecommuting thing is already big, but it will be huge in another few years. And you're going to see more of these part-time office buildings popping up, too. Only a few cars in the parking lot during the week, because most of the folks are working from home.

We may not be able to magically fix the economic problems in rural areas, but we can do this.