Building Assets for the Rural Future

Construct Next-Generation Infrastructure

The Opportunity

Communities with access to high-speed broadband Internet possess several advantages over communities with only dial-up access. Broadband reportedly spurs economic development;[1] increases jobs and earnings;[2] facilitates the practice of telemedicine;[3] increases access to distance education programs for elementary, secondary, and post-secondary levels;[4] strengthens community participation and civic engagement;[5] and expands markets and opportunities for rural businesses and farms.[6]

Access to broadband in rural areas has increased significantly during the last decade, yet a rural-urban gap still exists. The gap is more pronounced when income is considered, with lower-income rural households much less likely to have broadband than their urban and wealthier counterparts.[7]  Further, even if broadband is available in a rural community, the cost of the service may be prohibitive for many households.[8]

How the Tactic Is Applied

  • Work with private providers to improve broadband access for those on the economic margin.
  • Provide public sector broadband.
  • Evolving Practice: Public-Private Partnerships for Broadband.

Work with Private Providers to Improve Broadband Access for those on the Economic Margin

Town of Houston (Minnesota)

The rural town of Houston, with approximately 1,000 residents, succeeded in connecting low-income families to broadband Internet as a by-product of the school system’s effort to build its student base. With the school system facing a rapidly declining student population, the superintendent and other school system leaders sought to increase enrollment by offering an online education program.[9]  In order to make the online program accessible to local students, the school system pursued a two-part approach. First, it recognized that many families needed a computer. The town therefore partnered with the Mayo Clinic, located about 60 miles away, to obtain donations of used computers for families in the town.[10]  Second, the school system worked with the local phone and Internet service provider to offer reduced-cost broadband for families with children who qualified for the free and reduced lunch program.[11] The school system reports that this initiative expanded broadband use to almost every household in the community.[12]

Provide Public Sector Broadband

City of Wilson[13] (North Carolina)

The City of Wilson offered broadband Internet to its citizens in a program called Greenlight after private broadband providers were unwilling to provide service at rates deemed acceptable to the city.  The project began as an attempt to provide high-speed Internet services only to city government offices, but it expanded once several businesses expressed interest in using the city’s network and a feasibility study revealed broader community interest.

Starting in 2007, the city began expanding the network throughout the city, covering the entire city of about 23 square miles in one year.  Greenlight’s prices are lower than those of the area’s private cable and Internet service provider, although private rates have dropped since Greenlight’s services began.  Currently, about 25% of the city’s households use Greenlight, as do a regional bank, the local community college, and the city school system.

There are risks that accompany municipal forays into broadband service. First, the enterprise may not generate sufficient revenues to cover its costs, and therefore taxpayers could be asked to subsidize the service.[14] Communities should engage in a healthy debate over whether the benefits are worth the costs. Additionally, the regulatory environment in which municipal broadband operates will inevitably change over time. At the time of this writing, state legislators are considering bills which would place limitations on the ability of municipal broadband providers to cross-subsidize broadband operations with other municipal revenue sources.[15]

Evolving Practice: Public-Private Partnerships for Broadband

As a hybrid approach, several municipalities are exploring ways to build infrastructure in partnership with private broadband providers, in essence subsidizing private broadband service in underserved or unserved communities. Other states have encouraged these partnerships through direct grants, loans, and by enacting local taxing authority for broadband installation.[16] The level of subsidy provided to private broadband providers by local governments will ultimately depend upon the relative bargaining positions of local governments and their private partners, to be settled by legislation in the North Carolina General Assembly. To the extent that local governments are permitted to establish public broadband service independently, local governments will possess a stronger negotiating position when determining whether and how much to subsidize a private broadband provider. After all, if the local government is not pleased with the timing or subsidy proposed by the private provider, it will have a realistic option to establish a public broadband service independently. If, however, local governments are restricted in their ability to provide public broadband service on their own, then private providers will be in a position to dictate the terms and subsidies required for the installation and operation of broadband infrastructure in each community.

Learn More

Brian Bowman
Public Affairs Manager
City of Wilson
Wilson, NC

On the Internet

National Broadband Plan: Connecting America

Capturing the Promise: A 10-Year Action Plan Using Broadband Internet to Increase North Carolina’s Competitiveness and Sustainability in the Global Economy

[1] Economic Research Service, Rural Broadband at a Glance 2009 Edition 4 (2009), available at http://www.ers.usda.gov/publications/eib-economic-information-bulletin/eib47.aspx (noting that broadband access allows rural businesses to benefit from efficiencies of high-speed access by increasing direct sales, business-to-business transactions, and operational effectiveness).

[2] Ibid. at 4 (stating that broadband allows for teleworking and increased marketing opportunities, thus generating jobs and economic development); Peter Steinberg, et al., Broadband Internet’s Value for Rural America 21-22 (2009), available at http://www.ers.usda.gov/media/155154/err78_1_.pdf (noting that wage and salary jobs grow faster and private earnings are greater in rural counties with a longer history of broadband availability).


[3] Ibid., at 24 (noting that telemedicine helps to reduce transportation expenses and missed time at work for patients, provides savings to healthcare providers, and treats emergencies more effectively); Economic Research Service, above note 1, at 5 (listing numerous medical and economic benefits of telemedicine).

[4] Ibid. at 25 (noting that broadband allows rural residents increased access to educational opportunities and resources at lower costs than without distance education).

[5] See, e.g., Michael J. Stern & Alison E. Adams, Do Rural Residents Really use the Internet to Build Social Capital?  An Empirical Investigation, 53 Am. Behavioral Scientist 1389, 1416 (“The quantitative and qualitative results from this study indicate that indeed some rural community members are using the Internet to build social capital.”); Michael J. Stern & Don A. Dillman, Community Participation, Social Ties, and Use of the Internet, 5 City & Community 409, 420-21 (2006)  (“The results of our analysis show clearly that Internet users are more likely than others to be involved in the community, whether it is attending local events, being a member of an organization, or taking a leadership role in local undertakings.  More importantly, Internet use appears to have an independent influence on the latter forms of involvement.”)

[6] Steinberg, et al., above note 2, at 32, 36 (noting that rural broadband allows businesses to increase effectiveness and exploit market niches and that it may change the economic relationship between farms and local economies).

[7]See e-NC Authority, Capturing the Promise: A 10-Year Action Plan Using Broadband Internet to Increase North Carolina’s Competitiveness and Sustainability in the Global Economy, http://www.alaska.edu/oit/bbtaskforce/docs/North%20Carolina%20Broadband%20Plan.pdf, 20, 23 (stating that in North Carolina the availability of infrastructure for broadband is more of a challenge in rural or low population density areas than in urban distressed areas, that rural areas of urban counties are often underserved, and reporting complaints from rural businesses that they have no high-speed internet access with the exception of satellite service that is viewed as having limited capacity and reliability); Lee Rainie, Internet, Broadband, and Cell Phone Statistics, http://www.pewinternet.org/files/old-media/Files/Reports/2010/PIP_December09_update.pdf (reporting from a survey concluded in December 2009 that rural broadband is present in 47% of rural households, over 60% of urban and suburban households, 42% of households earning less than $30,000 annually, and 24% of individuals earning less than a high school education); Steinberg, et al, above note 2, at 9-10.

[8] Steinberg, et al, above note 2, at 38.

[9] See Will Lambe, Small Towns Big Ideas: Case Studies in Small Town Community Economic Development 227 (2008), available at http://old.sog.unc.edu/programs/cednc/stbi/.

[10] Ibid.

[11] Ibid.

[12] Ibid.

[13] Interview with Brian Bowman, Public Affairs Manager, City of Wilson, NC (Mar. 23, 2010).

[14] David Boraks, Davidson, Mooresville get their cable bill: $6.4 million, DavidsonNews.Net (May 7, 2010), available at http://davidsonnews.net/blog/2010/05/07/towns-get-their-2010-11-cable-bill-6-4-million/ (reporting a $6.4 million shortfall in revenues for a municipal telecommunications enterprise due to competition from satellite and local telephone providers). See also Michael Sanera & Katie Bethune, Wilson’s Fiber-Optic Cable Boondoggle (January 2009), http://www.scribd.com/doc/23884780/Wilson’s-Fiber-Optic-Cable-Boondoggle-City-Invests-28-Million-in-a-Technology-That-Could-Be-Obsolete-Before-It’s-Paid-For (arguing that Wilson’s fiber-optic network will become obsolete as wireless Internet becomes faster).

[15] Gary D. Robertson, NC cities, cable still at odds on broadband entry, NewsObserver.com (May 9, 2010). The City of Salisbury, North Carolina, is also considering constructing a public broadband network. See Fiber to the Home (FTTH), http://www.salisburync.gov/Pages/index.aspx

[16] See e-NC Authority, Capturing the Promise: A 10-Year Action Plan Using Broadband Internet to Increase North Carolina’s Competitiveness and Sustainability in the Global Economy App. 5

Public Officials - Local and State Government Roles