Does Rural America Really Need Billions in Federal Broadband Funds?

Experts are increasingly skeptical that Washington will allocate enough infrastructure money to wire rural America with high-speed internet. But SpaceX satellites, 5G wireless, and other new tech could still bring broadband to remote regions.

A Falcon 9 SpaceX heavy rocket lifts off from pad 39A at the Kennedy Space Center in Cape Canaveral, Fla., on Feb. 6.
AP Photo/Terry Renna
Feb. 20, 2018, 8 p.m.

Elon Musk is turning his gaze from Mars to Montana.

On Wednesday, SpaceX—Musk’s revolutionary reusable-rocket company—plans to launch into orbit two prototype satellites capable of beaming broadband internet back down to Earth. The launch is the first step in the construction of a staggering 12,000-satellite constellation, through which SpaceX hopes to bring high-speed internet to remote parts of the world, including rural America.

SpaceX’s launch has already received a boost from Ajit Pai, the Republican chairman of the Federal Communications Commission, who last Wednesday announced his support for the company’s application to provide broadband services in the United States.

“To bridge America’s digital divide, we’ll have to use innovative strategies,” Pai said in a statement. “Satellite technology can help reach Americans who live in rural or hard-to-serve places where fiber optic cables and cell towers do not reach.”

The FCC estimated in 2016 that 39 percent of rural America—or 23 million Americans—lack access to high-speed internet. That number dwarfs the percentage of urban Americans without access to broadband, and illustrates the huge economic hurdles faced by internet service providers when building fiber-optic cables in remote regions with few paying customers.

The massive infrastructure package now working its way through Congress was supposed to change that paradigm with billions of dollars in federal subsidies to build out wired internet to America’s backwoods. But the infrastructure plan released last week by the White House failed to include designated dollars for rural broadband projects, causing experts to question whether Washington is serious about providing high-speed internet to regions where service providers refuse to tread.

“If you have it watered down into block grants at the state level, where they pick and choose among various proposals, for a number of reasons it’s a lot easier for a state to fund the traditional projects they understand well—things like roads and bridges and waterways—than it is to do broadband,” said Doug Brake, the director of telecommunications policy at the Information Technology and Innovation Foundation.

But even as Congress and the White House bicker over funding for traditional fiber-optic projects, new broadband technologies are advancing. It’s not just SpaceX and other burgeoning satellite-broadband providers; the impending commercial deployment of 5G wireless technology is also expected to increase the ability of carriers to offer fixed wireless service to rural areas. Even some seemingly outlandish methods, such as Google’s program for balloon-powered broadband, have proven their utility following disasters like Hurricane Maria’s strike on Puerto Rico last year.

The economics of these new methods aren’t yet clear. But some experts believe that if they can get over the initial technical hump, it will be cheaper to provide high-speed internet through satellite and wireless methods than through traditional wireline deployments.

For Tom Struble, technology-policy manager and counsel for the R Street Institute, the promise of these technologies is reason enough to hold off on throwing billions of dollars at wireline broadband projects.

“In terms of using public dollars cost-effectively, I think deploying fiber to rural areas is not generally prudent right now,” Struble said, “because we don’t know that that’s really the gold standard for broadband.”

Struble added that wireless broadband, in particular, may well be the “great silver bullet for competition” in the broadband market, and that policymakers should wait to see how the market plays out before throwing more money at wired internet infrastructure.

That line of reasoning is echoed by some congressional Republicans, who’ve questioned the value of the Democrats’ $40 billion proposal for rural broadband projects. But other experts say it’s foolish to abandon a costly technology that’s been proven to work for theoretical benefits down the road.

“I think the American people have been waiting for satellite to deal with their latency and speed issues for 15 years, 20 years now,” said Gigi Sohn, a fellow at the Georgetown Law Institute for Technology Law & Policy who was a top adviser to former FCC Chairman Tom Wheeler. “I’m excited if anybody tries, but you can’t count your chickens before they hatch.”

Sohn worried that Pai could use advances in satellite and wireless broadband technology as an excuse “to further deregulate the ISP sector.” The chairman’s office did not respond to a request for comment, but in the past Pai has supported the allocation of federal funds for traditional wireline projects in addition to backing new technologies.

It’s not clear when either satellite or wireless broadband will become a viable option for most rural consumers, but both are likely several years away from dramatically altering the marketplace. Smaller wireless internet providers are already operating in some regions, but expert opinion is mixed over the ability of current tech to deliver high speeds, or whether wireless can scale to cover more of rural America.

Part of that timeline will depend on how easily the providers of alternative broadband technology can receive permits to deploy their equipment. Because SpaceX plans to deploy so many satellites around the Earth, it will need to get approval from the United Nations’ International Telecommunication Union—a daunting prospect that could significantly delay the project.

“That institution moves at a glacial pace and is fairly well captured by the incumbent satellite providers,” Brake said. “This is a really tough regulatory area to try to navigate.”

Others worry that while satellite and wireless techniques could conceivably deliver broadband to rural areas at a lower cost, the physical limitations of beaming internet over the airwaves mean consumers may have to settle for lower speeds.

“Fiber-optic cable is going to be able to scale up with advances in computing technology,” said Ernesto Falcon, the legislative counsel at the Electronic Frontier Foundation, “whereas wireless will always be limited by a matter of physics.”

But even those who caution against overselling satellite or wireless broadband technology believe both could significantly improve the high-speed marketplace. One FCC official with experience in rural wireline issues said that while the proposals won’t eliminate a government role, they will likely lead to “increasingly fewer areas that will need a significant subsidy.”

So why does Congress still seem fixated on the idea of building out wired broadband infrastructure to rural regions, as opposed to backing new technologies? “It’s been a long, long history of implicit and explicit subsidies of wireline communications, going back as far as the early phone days,” the FCC official said. “When your default assumption is a wired connection, it takes a lot to move you off of that assumption—especially if that wired connection has been a constituent of yours for a long period of time.”

There are other political calculations to consider. If Washington chooses to wait for new technologies to avoid subsidizing wireline broadband, only to see those technologies never materialize, it could cost some lawmakers dearly—especially those from rural areas.

“I don’t think it’s worth waiting around and hoping that this technology proves feasible,” Brake said. “By not moving forward on an infrastructure package, we spend more and more time with rural areas falling behind.”

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