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Lack of broadband infrastructure is holding rural America back, but cooperative model may be one solution to bring broadband to the countryside.

September 27, 2018

2 Min Read

A new CoBank Knowledge Exchange Division report, “Broadband Partnerships,” addresses some of the long-standing challenges to building broadband networks such as the high cost to entry, tax and legal implications, and even the lack of investment incentives. The report includes an overview of the current situation, reiterating the need to close the digital divide, and highlights several cases where, through partnerships and differentiated thinking, cooperatives have found success in building broadband in various locations across the country.

“The interviews are wide-ranging case studies that underscore the importance of thinking outside the box to serve rural communities,” said Doran Dennis, regional vice president of electric distribution for CoBank. “The standard model of providing broadband to rural customers is changing daily in order to accomplish the goal of closing the rural-urban divide in America.”

While cooperatives finding new ways to serve customers is a positive sign for the future, other research efforts continue to validate the economic impact broadband access has on rural America.

A known hurdle for broadband projects is that customer-generated revenue may not cover the costs of building an entire network, which has kept many cooperatives from entering the market. However, a new study from Purdue University, referenced in the CoBank report, finds while that may still be the case, there is a net benefit. For example, the net economic impact to society as a whole in Indiana is 4:1 benefit to cost. This further underscores the important role of investment incentives for broadband.

“The trend of broadband access in rural America is going in the right direction,” said Dennis. “As it stands, cooperatives are working through obstacles to build broadband networks, and while they are finding creative solutions, everyone who has a stake in rural broadband can do more.”

Among the report’s findings:

  • As of Dec. 31, 2016, 24 million Americans, most in rural areas, lack fixed terrestrial broadband, which is holding rural America back in terms of health care, education, business investment, farm income, civic engagement and even property values.

  • More than 92% of urban Americans have access to fixed terrestrial broadband, compared to 73% in rural America

Source: CoBank

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