Gov. Scott Walker’s effort to bridge rural broadband disparities falls well short of a solution for most subscribers outside of urban areas, according to Internet service providers and industry experts.
The governor, in last week’s State of the State speech, touted a plan to triple funding for Wisconsin’s Broadband Expansion Grant Program, which started in 2014 with up to $500,000 annually in matching funds to allocate.
In its first two years, the program has benefited a few thousand households served by 14 Wisconsin service providers, but despite the increase to $1.5 million annually, rural broadband advocates say the program’s impact will be hardly noticeable.
“The amount of money we’re talking about is insignificant to the amount of money needed to upgrade rural areas to real broadband,” said Barry Orton, professor emeritus of telecommunications at UW-Madison. “So, the increase is only slightly better than nothing.”
The Federal Communications Commission’s definition of broadband has been a moving standard since the inception of high-speed Internet access. The agency’s current standard is a download speed of 25 megabits per second (mbps) in cities and 10 mbps in rural areas. Netflix recommends 5 mbps for streaming its high-definition video and 25 mbps for ultra high definition.
But with data usage rising and networks strained everywhere, access to broadband in rural areas has emerged as a nationwide problem, and companies that provide Internet service have shied away from expensive infrastructure improvements that would affect only a small customer base.
A draft of an FCC annual report found that only 39 percent of America’s rural population has access to wired broadband. But access problems exist even in near large metropolitan areas.
Dane County is Wisconsin’s fastest-growing county, but late last year, the towns of Vermont and Cross Plains adopted resolutions condemning the service some of its residents are getting from TDS Telecom. According to Cross Plains officials, some residents have reported download speeds of 1 to 1.6 mbps.
Drew Petersen, TDS vice president of external affairs, quickly acknowledged the company’s service shortcomings in those areas. He said TDS has lowered advertised speeds and gone as far as urging customers to look at other service providers.
“In some of the most-difficult-to-serve areas we’ve seen customer usage increase to the amount where it does have an impact on the network,” Petersen said. “We’d rather them leave our service than be dissatisfied with us.”
But many people in rural areas have only one option for wired service providers, and satellite Internet service remains a limited and expensive alternative. That’s what prompted the town boards to take action.
“The notion that ‘This is all we can do for you,’ isn’t as good as a response as, ‘Tell us what it would cost to get good service,’” Cross Plains town chairman Greg Hyer said. “I think it’s important to reinforce to utility providers that people aren’t necessarily happy with their level of service. It’s not like everybody has a lot of choices.”
Orton said Wisconsin’s deregulation of the telecommunication industry over the last 15 years has created a situation where companies decide levels of service for certain areas without sufficient oversight from the Public Service Commission.
“Cable service, landline service, broadband service is all marketplace driven,” Orton said. “So, what happens if you’re in a rural area where the market is not so good? You’re out of luck.”
Petersen said TDS, which operates in 36 states, spends around $160 million annually, or 10 to 12 percent of its revenue, on infrastructure improvements networkwide. Replacing copper lines with fiber optic cable costs the company $40,000 to $50,000 per mile, so costs to extend better service to the most remote households can easily rise above $6,000 each, he said.
“Money is fundamentally critical to the future deployment of broadband,” Petersen said. “All of the areas that we serve have seen that investment, but to get to the last 5 percent — the most hard-to-serve customers — it’s going to take a public-private partnership.”
Internet service providers have looked to states and the federal government to help make extending service more cost feasible, but in many cases, Wisconsin is behind its peers in rural broadband funding.
In 2011, state officials returned $23 million in federal stimulus money that was earmarked for expanding high-speed Internet access, calling the requirements that came along with the money risky.
The amount of money in its broadband grant program is also on the low end.
Minnesota, by comparison, spent about $20 million on matching grants in 2014 and $10 million last year. Just last month, Gov. Mark Dayton asked lawmakers to approve $100 million of the state’s $1.2 billion surplus for broadband grants during the upcoming legislative session.
Walker’s spokeswoman Laurel Patrick said the program’s $1.5 million combines with local and private matching funds to equal an investment of about $5.5 million.
“Governor Walker realizes the importance of investing in broadband services, which is why he created the Broadband Grant Program in his first budget and worked to triple funding in the most recent budget,” she said in a statement.
TDS was the beneficiary of a $100,000 matching state grant in 2014, which it used to extend service to 79 customers in Cranmoor, near Wisconsin Rapids. But in an industry that requires as much capital investment as broadband, Petersen said those dollars dry up quickly.
“We commend the governor for making that commitment. The challenge is Wisconsin’s budget is such that there’s not a whole lot that can be dedicated to the broadband program today,” Petersen said.
Instead of relying on Wisconsin dollars, TDS and other telecommunications companies are lobbying Congress to change the FCC’s Universal Service Program, which was created to ensure telephone service in unprofitable markets by subsidizing costs with fees collected from all telephone users.
The companies want the FCC to reallocate dollars from telephone service to modernizing the nation’s broadband infrastructure.
‘Cable service, landline service, broadband service is all marketplace driven. So, what happens if you’re in a rural area where the market is not so good? You’re out of luck.’ BARRY ORTON
UW-Madison professor emeritus of telecommunications