Businesses, state officials see promise in rural broadband subsidies

The Federal Communications Commission recently awarded $254.7 million in subsidies to 11 internet service providers to install broadband networks in rural Missouri. The funds will help bring broadband service to more than 95,000 homes and businesses in the state, according to the FCC.

Government officials, businesses and advocates view the funding as the latest sign of progress toward the development of much-needed broadband networks in rural Missouri.

“It’s been discussed for years, and now we’re finally making the moves,” said Rep. Delus Johnson, R-St. Joseph. “I think it has been a time-consuming process, but I’m pretty optimistic.”

Sue Schaefer, director of business development for Bluebird Networks, a Columbia-based telecommunications company, said subsidies are vital when developing new infrastructure.

“We don’t have deep pockets, so we count on the subsidies to get in places where there aren’t currently fiber facilities available,” Schaefer said. “In some of these areas, the bills are so expensive that it takes some kind of a subsidy in order to make it profitable for both parties. If the money is not available to be able to subsidize in some of these areas, then there’s not an ability to get those fiber connections there.”

Missouri ranks 42nd nationally in broadband availability, according to FCC data compiled by the Missouri Chamber of Commerce. Developing broadband networks in rural areas across Missouri has become a priority for government and businesses alike, according to Johnson.

“I think there is definitely a consensus between state and federal government that we need to do everything we can to expand broadband into rural areas,” Johnson said. “It’s almost like years ago when we had to expand telephones and electrical services to rural areas. I’ve talked to so many legislators that just know the importance of the expansion of economic development in the rural areas.”

Johnson sponsored a bill designed to spur investment in rural broadband by establishing a program allowing Missouri to match any federal subsidies. The bill was signed by former Gov. Eric Greitens, but the program has not yet received funding.

As momentum increased in the legislature, the Missouri Department of Economic Development established the Broadband Development Office earlier this year. The office will work with lawmakers and businesses to secure federal subsidies, fund government programs and help internet providers invest in rural networks.

Tim Arbeiter, the broadband office’s director, recognizes the potential for future subsidies to help connect rural communities.

“This is an additional way to get broadband out there faster, especially in our underserved or unserved areas, which are our very critical gaps in our network,” Arbeiter said. “So, it is an exciting time for Missouri in that respect. It’s going to be an exciting time for my office.”

Arbeiter said that Missouri has needed to invest in rural broadband development for a long time. He believes the lack of broadband infrastructure is a competitive disadvantage for communities looking to attract businesses.

“There’s really been a lot of advocacy and desire to see higher broadband services in the rural portions of the state because there are a lot of economic drivers that are out there in all parts of our state,” Arbeiter said. “This has long been an issue for a lot of different entities. It really does become a competitive disadvantage.”

According to an FCC spokesperson, AT&T decided not to invest in new broadband networks across Missouri. This led to a lot of rural areas still in need of coverage and allowed the 11 smaller ISPs to win federal funds to develop broadband.

Christopher Mitchell is the director of community broadband networks at the Institute for Local Self-Reliance, a non-profit organization dedicated to supporting small communities across America. He said a large amount of previous FCC funds dedicated to rural broadband development went to larger carriers like AT&T, CenturyLink and Verizon.

Mitchell believes large ISPs are driven by profits, not necessarily a desire to develop and maintain quality broadband networks in rural areas.

“They’re trying to figure out how to increase their profits every year rather than serving a central infrastructure,” Mitchell said.

He said smaller ISPs generally do a better job of serving rural communities.

“Prices typically remain lower and stable with local cooperatives,” Mitchell said. “The customer service and the prices are two big differences. Also, over the years, the cooperatives will continue to invest in the network, whereas the big companies will prefer to invest in urban areas where they’ll get a better return.”

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