States bypass rural Internet obstacles

• By Dibya Sarkar
• Dec 18, 2002

National Association of Regulatory Utility Commissioners

Although the number of Internet users in rural areas has been increasing

steadily, barriers still hinder broadband deployment — namely high cost,

low demand, a lack of awareness and infrastructure, and low return on investment.

Several state governments have taken different approaches to overcoming

such roadblocks, including offering tax incentives, low-interest loans and

grants, as well as allowing local public-sector entities to enter the broadband

business itself.

Earlier this year, Virginia lawmakers passed a law that permits local

governments to offer telecommunications services to residents and businesses

in rural areas where there are no competitive local exchange carriers, said

Virginia House Delegate Joe May during a session at the National Conference

of State Legislatures' fall forum in Washington, D.C., Dec. 11-13.

In essence, localities, electric commissions or boards, and industrial

or economic development authorities can provide "last mile" connections

to high-speed data and Internet access service, but not cable service. The

law allows underserved areas to get needed infrastructure sooner rather

than later, May said, adding that the law has "checks and balances" to also

allow private-sector competition at a later date.

So far, the state has approved the cities of Bristol and Danville to

provide such service, while applications for the city of Martinsville and

town of Front Royal are pending, he said. In addition, Virginia's Center

for Innovative Technology, a nonprofit group empowered to promote technology-based

economic development, was charged with putting together a template on how

to establish the service, he said.

South Dakota began planning for high-bandwidth deployment in 1996 by

wiring K-12 schools, said state Sen. Royal McCracken. But the $100 million

cost to wire 176 school districts was prohibitive. So Gov. Bill Janklow

used state prison inmate labor for the installation, providing the inmates

with marketable skills and significantly lowering the project's overall

cost to about $13 million, McCracken said.

He said Janklow also persuaded local telephone companies that it would

be in their best interests to provide continuing service because once parents

and children used the Internet in the schools, they would want it in their

homes. "The connection is now there for businesses also," McCracken added.

The Internet was needed in the state, he said, as a way of attracting

businesses from around the world as well as allowing established businesses

in the state to compete.

Nationally, high-speed Internet connections — defined as speeds exceeding

200 kilobits/sec in both directions — increased 33 percent during the second

half of 2001, to 12.8 million lines in service, according to Federal Communications

Commission statistics provided by the National Association of Regulatory

Utility Commissioners.

Citing National Telecommunications and Information Administration data,

the National Association of Regulatory Utility Commissioners also reported

that Internet use among rural households grew 24 percent on average annually

from 1998 to 2001, and the percentage of Internet users in rural areas is

53 percent, almost even with the national average.

Minnesota state Sen. Steve Kelley said there is no digital divide in

terms of access, but there is one in terms of price. On average, a rural

school district in his state pays about $2,200 per month for a T1 line,

while an urban counterpart pays only $300 to $400 per month.

One way to promote more broadband use is to bundle the service with

"competitive video," he said, possibly referring to cable TV. Video thus

becomes a way of subsidizing the broadband service's usage.