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Small towns join forces to bridge the digital divide

July 3, 2016 at 11:31 AM EDT  | Updated: Jul 7, 2016 at 1:05 PM
While cable companies provide internet services for the majority of Americans in urban areas, many rural residents have been left on the dark side of the digital divide. According to a report by the Federal Communications Commission, 34 million Americans lack access to high speed Internet -- 23 million of them in small towns and rural areas of the country. Now, some communities are banding together through internet cooperatives to build their own high speed networks. NewsHour Weekend Correspondent Ivette Feliciano reports.

By Zachary Green and Ivette Feliciano

America still lags behind other developed countries in internet service and availability.

As of this year, according to the Federal Communications Commission, roughly 34 million Americans lack access to high speed internet, which the agency describes as having download speeds of at least 25 Mbps and upload speeds of at least 3 Mbps.

But that number only tells part of the story. The vast number of those Americans lacking access live in small towns or rural communities, about 23 million people. That’s 39 percent of all rural residents in the country.

Those people with access to high speed internet in the US usually receive it through large cable providers and telecommunication companies. But many of those companies don’t offer internet services in more sparsely populated parts of the country.

Susan Crawford of the Berkman Center for Internet & Society says that large corporations don’t see it in their financial interests to connect smaller areas.

“They are responding rationally to Wall Street, and Wall Street wants them to keep their profits up very high,” she said. “And for them, it’s not as profitable to run a wire to a remote, isolated area with a few houses in it.”

However, some small towns have taken a page from the playbooks of cities like Chattanooga, TN and Cedar Falls, IA, which have built their own publicly-owned high speed networks using fiber optics, the fastest internet connection available. But where Chattanooga’s fiber network serves only one community, these towns are looking to serve dozens of communities.

In two rural areas of the country–western Massachusetts and southern Minnesota–townships and small cities have banded together on a new model for online service: internet cooperatives. Small communities pool their resources together to build a high speed fiber network which will service all the communities involved. Subscribers to the network would also be part-owners of the cooperative, so that any profits the coop sees would be passed on as savings to its members. In this way, people in rural areas can gain access to low cost, high speed internet.

Crawford says that this is vital for small towns in the 21st century.

“The risk of not treating our rural areas well when it comes to high-speed internet access is that they become even more hollowed out than they already are, that their population just vanishes, that they are no longer sustainable places to live,” she said. “Who would buy a house today without high-speed internet access?”

Editor’s Note: An earlier version of this piece incorrectly referred to internet speeds by “megabytes” and “gigabytes”. Internet speeds are correctly expressed as “megabits” and “gigabits”. We have since updated the segment to reflect that and corrected any errors in calculation.

Read the full transcript below:

IVETTE FELICIANO: Visiting the rural hill towns of Western Massachusetts, you probably wouldn’t be surprised by people in cafes or coffee houses taking advantage of free Wi-fi to work and check emails. But you might be surprised by the lengths they go just to get online.

NAOMI PITMAN: My strategy, do it late at night when everybody in my house is, like, asleep so that everything works well.

MATT BELCHER: Because we have so many people that use it, it overworks our router, so we have to reset it periodically.

IVETTE FELICIANO: Beyond the Boston Metropolitan area there is a digital divide in Massachusetts. Though the state has the 15th largest population in the country and a thriving tech industry, small towns in the more rural central and western regions–like New Marlborough, Goshen, and New Salem–still struggle with connectivity because cable companies–the most common providers of internet access to American homes and businesses–don’t offer them high speed internet. And the Bay State isn’t the only one facing this problem.

Earlier this year, the Federal Communications Commission released findings showing that 10 percent of Americans are without access to high speed internet. But when you go to a rural area like here in Western Massachusetts, that number rises to 39 percent.

That lack of high speed access is affecting residents and businesses alike. Jane Iredale’s makeup company in Great Barrington, Massachusetts employs more than a hundred residents in the area. In the 24-hour-a-day world of online retail, her employees need to be able to work from anywhere. And that’s where they run into problems.

JANE IREDALE: It’s very difficult to find those people who can actually go home and get the right connectivity for their laptops. Because a lot of people here don’t have connectivity. And this is very difficult when you’re dealing with a manager who has 12 people under her, and she can’t go home and supervise what’s going on in an emergency.

IVETTE FELICIANO: The population in Western Mass has stagnated or declined as more young people leave the area in search of better job opportunities. For example, Berkshire County–which borders New York state–has seen its population drop more than two-and-a-half percent in the last six years. Tim Newman, who moved to the Berkshires in 2002 and opened a small cafe, says people leave the region, in part, because of a lack of connectivity.

TIM NEWMAN: It’s bad for real estate values, it’s terrible for economic development, it is unfair as far as education is concerned.

IVETTE FELICIANO: Susan Crawford, director of Harvard’s Berkman Center for Internet and Society, says in 21st Century America, being on the wrong side of the digital divide can be devastating for economic growth.

SUSAN CRAWFORD: The risk of not treating our rural areas well when it comes to high-speed internet access is that they become even more hollowed out than they already are, that their population just vanishes, that they are no longer sustainable places to live. Who would buy a house today without high-speed internet access? Why would you do that? And so you’re leaving these places and their property values at tremendous risk of simply collapse.

IVETTE FELICIANO: Western Massachusetts residents often resort to dial-up phone lines or satellite dishes for their online access, which offer download speeds starting around 5 megabits per second — far slower than the 25 megabits per second that the FCC has set as a minimum standard for high speed internet. Customers can pay up to $90 a month for satellite service, almost double the average amount charged by large internet providers.

Crawford says big diversified media companies that provide internet and cable service avoid building high speed online networks in rural communities because the expense of doing so in a sparsely populated area doesn’t offer them enough bang for their buck.

SUSAN CRAWFORD: They are responding rationally to Wall Street, and Wall Street wants them to keep their profits up very high. And for them, it’s not as profitable to run a wire to a remote, isolated area with a few houses in it.

IVETTE FELICIANO: I mean, can you blame them if it doesn’t make financial sense to service a less-populated area?

SUSAN CRAWFORD: For many utility companies in the United States, it does make sense. If you’re looking for modest, steady returns until the sun explodes, this is actually a great investment. If instead you’re a diversified media company, it doesn’t make sense.

IVETTE FELICIANO: Treating the internet as a public utility — like a phone or electric company — has been growing more popular in recent years. Chattanooga, Tennessee, Cedar Falls, Iowa, and Lafayette, Louisiana are examples of the more than 80 US cities that have built publicly-owned high speed networks using fiber optics, the fastest and most efficient internet connection currently available.

Though building a municipal fiber network is a big task that many small towns and rural areas may be unable to do on their own, residents in Western Massachusetts may have found a solution.

Over the past six years, more than 40 towns throughout the region have come together to form a high speed internet cooperative called “Wired West” whose goal is to build a high speed fiber optics network, connecting all the towns’ residents and businesses.

Newman is now on Wired West’s board as a delegate for his town, New Marlborough.

TIM NEWMAN: The fiber will pass every — it will be on every road, it’ll pass every driveway, and anyone, however remote they are, will be able to get service.

IVETTE FELICIANO: Bob Labrie, who serves on Wired West’s executive committee, says that the cooperative model calls for towns to pool their resources and form a larger customer base, who will all be part owners of the network.

BOB LABRIE: We’re not a stock company. We don’t have to earn a return on equity that we have to pay back to our shareholders. These are all things that are savings that can be passed on to the customers that we ultimately serve, making it more affordable and sustainable over the long run.

IVETTE FELICIANO: Is building a fiber network really something that small towns are able to do? Or is this something better left to professionals?

BOB LABRIE: While a small town alone might not be able to build that network that you’re talking about, when you regionalize several towns and get a larger scale, you attract a different clientele or different people that might be able to help you build that network.

IVETTE FELICIANO: This do it yourself cooperative model is already working over 1,300 miles away from Western Mass in southern Minnesota, where 27 farming communities have formed “RS Fiber”.

It’s made high speed internet available for the first time to more than 15-hundred homes and businesses. And it’s continuing to extend that service to more towns and outlying farms.

For rates ranging from $50 to $130 a month, RS Fiber offers their customers internet speeds between fifty and a thousand megabits — or one gigabit — per second. At that speed, a user could download a two-hour movie from iTunes in under a minute.

Jeff Nielsen, the CEO of the United Farmers Cooperative, which has been involved with RS Fiber since its inception, says that high speed access is essential to modern farming technology, allowing farmers to determine with pinpoint accuracy how to grow the most crops with the most efficiency.

JEFF NIELSEN: This technology is powerful, because we can go up to our farmers now who have the ability with their modern equipment to adjust how many seeds per acre they plant as you’re going across the field. They have the ability to adjust how much crop nutrients they’re putting down as they go across the field. All this requires broadband technology to talk to this equipment. The high-speed internet is making this much easier.

IVETTE FELICIANO: Farmer Jake Rieke is one of the beneficiaries of the new network. His family has been farming in the area for over 150 years. With the new technology, he can share information about his crops, upload overhead drone footage of his fields, and monitor his livestock on his smartphone. Until recently, the poor quality of the internet service available to him was an impediment.

JAKE RIEKE: I would have to plan out my day in terms of do I need a large chunk of Internet at certain times? Are my kids going to try watching Netflix at a certain time? Are there any major updates to my iPhone or to my smart phone or to any of the tablets or anything like that?

IVETTE FELICIANO: Was it a pain? Was it annoying to have to deal with that?

JAKE RIEKE: Absolutely, yeah. Everything was just a struggle.

IVETTE FELICIANO: For Rieke, the new high speed internet is a boon for his farm and a necessity for his two young daughters.

JAKE RIEKE: Teachers are always assigning homework that requires internet for research. If you have a quality internet connection, it really opens up a lot of opportunities that you wouldn’t even think about if your Internet didn’t work right.

IVETTE FELICIANO: Rieke, who is also the vice chair of RS Fiber, says the network will ultimately cost $45 million to build. The towns involved have raised the money by issuing bonds, taking out loans, bringing onboard local investors, and through a $1 million grant from the state of Minnesota.

IVETTE FELICIANO: Back in Massachusetts, Wired West’s network is estimated to cost between $100 to $120 million. The towns in the cooperative have agreed to borrow two-thirds of the cost and are looking to the State to fund the remaining amount. Until then, development of the network is on hold.

IVETTE FELICIANO: Susan Crawford says that despite the high pricetag, a well thought-out high speed network will be able to pay for itself through subscriber fees and remain sustainable for years to come.

SUSAN CRAWFORD: As long as you build deliberately and incrementally and make sure that you have enough revenue to cover the next stage of the build, these are very successful implementations of something that every other thing we need to do as a country relies on.

IVETTE FELICIANO: Bob Labrie remains hopeful that the project will be completed within a few years once construction begins.

BOB LABRIE: We still think that there’s a role for a regional cooperative to exist that will provide regional services to our customers. We feel that when we have a group of towns together, a cooperative, we have a bigger voice at the negotiating table for when we’re looking for vendors to come in to provide internet service, to provide telephone service, to provide television service, to provide service that we haven’t even dreamed about yet.

IVETTE FELICIANO: Tim Newman insists the demand for these services is just as great in his small town of New Marlborough, Massachusetts, as it is in big cities.

TIM NEWMAN: There’s really no difference for people who live here than people who live in Boston and New York or Los Angeles or anywhere. In order to do things as part of your life, you need connectivity to the internet. It’s not a luxury, it’s a utility.