A number of state legislatures used the 2022 session to approve funding for extending wired broadband access to rural areas. It is something we see every year. The push for spending took on more urgency this year, thanks to so many rural students struggling to do school online during the COVID pandemic. But the problem existed long before COVID. Lackluster rural internet access has been a pervasive problem since the internet was born.
Anyone who believes in the power of government spending has to wonder why. Collectively, Washington and the states have spent billions of dollars to improve internet access in areas the private sector doesn’t want to invest in. And yet, little has changed in many markets. A recent Wall Street Journal post gives a hint as to why that might be.
It Has Happened Before
Before discussing why federal spending has little improved rural internet, a little history is in order. The truth is that we have seen this film before. Back in the 1930s, Congress began looking for ways to force private telephone companies to create universal service. The Communications Act of 1934 started the ball rolling.
That was followed some 30 years later by the Ozark Plan. Another 30 years went by before we got the Telecommunications Act of 1996. Tons of money was spent over six decades. Still, there were rural communities just catching up with decent landline telephone service when the rest of the country was being introduced to the public internet. What we are seeing now with broadband is just a retelling of the same story.
They Will Do the Bare Minimum
Now to the current problem at hand. Cable companies and fiber-optic providers continue to resist building infrastructure in rural areas because there are not enough customers to support spending the money. They cannot make a profit. They certainly aren’t going to take a loss, so the only way to get them to build is to offer government subsidies.
That is where federal and state funds come into play. Washington and the states dole out subsidies year after year and get little to show for it. Here’s why: the companies that take those subsidies do the bare minimum. For example, a company might use a federal subsidy to connect ten census blocks in a rural area. As long as one home or business in a given block is connected, the government considers the entire block connected.
This nonsense allows companies to say they are doing their part by connecting all these new census blocks – even though they are not actually connecting homes and businesses. They take advantage of the government’s inability to police its own programs to take government subsidies and deliver only what is absolutely required of them.
The Wireless Internet Solution
While rural households continue waiting on subsidized internet connections that may never come, companies like Houston-based Blazing Hog are meeting the rural need with a wireless solution. Blazing Hog provides 4G rural wireless internet in markets around the country. They and their competitors are stepping up to offer service that is arguably better than DSL and satellite internet and equal to anything you could get with a 4G cell phone.
Government subsidies eventually got the job done with landline telephone service. But by the time the work was completed, the rest of the country had already moved on. We are looking at the same scenario with rural internet. Federal and state subsidies are continuing to focus on expensive technologies from the past. And due to inefficiency and a lack of accountability, their ongoing efforts are not amounting to much.
