The Cost Of Broadband In Every Rural Home

dave562 writes "In an analysis of the effectiveness of the the 2009 stimulus program (American Recovery and Reinvestment Act of 2009 or ARRA), one of the programs that was investigated was the project to bring broadband access to rural America. Some real interesting numbers popped out. Quoting the article: 'Eisenach and Caves looked at three areas that received stimulus funds, in the form of loans and direct grants, to expand broadband access in Southwestern Montana, Northwestern Kansas, and Northeastern Minnesota. The median household income in these areas is between $40,100 and $50,900. The median home prices are between $94,400 and $189,000.' So how much did it cost per unserved household to get them broadband access? A whopping $349,234, or many multiples of household income, and significantly more than the cost of a home itself.'"

Comments

Warning, not exactly objective research here

[elrous0]

Keep in mind that this study was conducted by Jeffrey Eisenach (former head of Newt Gingrich's political action committee and longtime conservative activist) and Kevin Caves of Navigant Economics (a bunch of professional "experts" who spend most of their time testifying in favor of various pro-big oil, pro-energy concerns). The article that cites it is by Nick Schulz, of the conservative think-tank American Enterprise Institute.

And it also includes some data that I'm highly skeptical of, to say the least--like asserting that all but 1.5% of users in Montana had wired broadband access and all but 7 households in the whole state had access to 3G broadband prior to this funding. Those numbers are better than my own state, and we're not nearly as rural or mountainous as Montana.

Re:Warning, not exactly objective research here

[MickyTheIdiot]

Question from a lazy person: does anyone have any idea what was said about the TVA back in the day. Getting rural broadband to me seems to have a lot in common with rural electrification... including all the people saying that it isn't a necessity, people who crying about "market forces" and all that.

I know everyone seems to have their biases, but it seems like every study that has come out over the last 2 years is two biased to consider no matter what "side" it supports.

Re:Warning, not exactly objective research here

[hjf]

In a modern capitalist world, the role of the state is making sure that minorities (not in the racial sense, but in the economical sense) have access to the same tools and benefits the "majority" has. The problem with corporate thinking is that it tends to concentrate its resouces in developments that will offer an assured AND short-term return of investment. While this is an efficient policy for corporate, it leaves outside the game to basically everyone not living in a big city. Mid-sized are second, and small cities and towns are often ignored - but can easily be served by a small individual with enough capital.

But rural areas are vast extensions of nothing. Long range WiFi access has been a blessing to many of these communietes - all over the world. These are often working with "lower" grade equipment. Sometimes MikroTik or many other economical wifi solutions (NanoStation), others run on off the shelf hardware. Very few run in true long-range outdoors solutions like WiMAX or Motorola Canopy, because the initial cost is too high for individuals to afford. And this is where "stimulus" funds should go.

The growth (explosive growth) of the internet was ONLY due to the ease of access available through simple phone lines. It was an already-installed network, across the nation. HIGHLY REGULATED, which resulted in a service that was available in even the most remote locations. Broadband was never regulated that way, and as a result of that, there is a huge breach between people with access to broadband, and people still on dialup.

Some argue if there should be stimulus funds at all. Leaving aside that most big companies receive money from the govenrment one way or another (tax breaks to money from their military/aerospace branches, to subsidies), there shouldn't be a discussion IF people in remote locations want or need broadband. They might not want it now, but they surely need it - or will, eventually.

This is an online world. For most people in cities, Internet is a part of their lives, just like electricity and phone service. Do we want people from rural areas coming to the Big City for a better life, because we couldn't provide them with a good life where they lived? Do we want mom and pop farms to disappear because their kids and grandkids got fed up with the country lifestyle? Do we want all farms to be property of Monsanto? Because that's where we're heading.

Disclaimer: I'm not american but here in Argentina we have the same problems. Big cities have good internet and phone service, while smaller cities often have 1 ISP, and small towns either don't have anything or have a single 1mbit connection (that cost $500 a month, really) shared between 100 people over wifi. Local farms either have been bought by corporations, or their owners have been pushed to plant only soybean (which isn't consumed in the country, but exported to China) instead of wheat (which, because of our italian roots, is heavily consumed: bread - which the chinese don't seem to eat), which is missing in supermarkets. Bread price has gone up considerably, and there are days when you just can't get flour.

Pay no attentiont to anti-government conservatives. They all want what's good for companies - not for people. You have the right to bear arms, the civil rights, why can't you have "the right to broadband access" too? Oh yes, because it's the government spending money. We better spend it in warfare, right? Cause the US doesn't really have a big enough budget for "security" and military.

Re:Warning, not exactly objective research here

[coolgeek]

I don't care if the numbers are real or not. It costs between $1,000,000-$9,000,000 per lane mile of highway out to those rural homes. If we're talking 2-4 homes/mile, the road costs many more times than the cost of the homes too. And $350K to give them broadband is pretty cheap by comparison. Broadband deployment should be viewed as a similar infrastructure to homes, power lines, etc.

Re:Warning, not exactly objective research here

[Grishnakh]

Shhhhhhhhh! This is part of the Republican 2012 election plan - the old story of painting Democrats as wasteful of tax dollars

The problem is, they're exactly right: Democrats ARE wasteful of tax dollars. Just look at all these stupid stimulus programs that amount to handing giant piles of cash to giant corporations, thinking they're going to do something useful with it, and then being "surprised" when instead they just take the cash and keep it.

But the other problem is that the Republicans are ALSO wasteful of tax dollars. Did Federal spending go down during Bush's term? No way. The Republicans want to get us involved in as many wars as possible, so that their buddies in the defense industry can make more profit. Strangely enough, Obama is also a big fan of giant defense spending.

What's the solution? Well, I think it should be fairly obvious the answer isn't electing more Democrats or more Republicans, but apparently this concept is beyond the ability of the voting public to grasp.

As someone who is looking at rural homes..

[Anonymous Coward]

I live in Canada, but we also have this same sort of pledge to bring high speed internet (not broadband specifically) to rural areas. I've been looking at rural homes, and to be honest, it's a real pain.

As someone who torrents heavily, games a lot, and generally uses about 300gb/month at least in traffic, I need a fast connection. There is literally nothing in most parts of rural Ontario that exceed 3mbps down / 1mbps up, and with unlimited (or at least, overage charges that won't make you go broke) caps. If you go the 3G/4G route (which I would love to), many areas don't actually have coverage even if they claim they do, and the caps are 5gb if you're lucky. If you go satellite.. well, it sucks. Latency is awful. And if you go Xplornet or something (wireless antenna), they all block torrents, are known to be highly unreliable, have low caps, and the speed is 3/1 at best.

It's kind of sad, because I don't want to live in the city, yet there's no real options out there either.

the circle of pork

[CrAlt]

1) Comcast/ATT/Cablevision/COX/etc all get their lobbyists push for this in the bill.
2) The Gub-ment pays these mega corps billions to build out in the mountains.
3) The people in these areas now have "access" to broadband... for only $79/month.
4) They don't sign up... Comcast/ATT/cablevision/etc don't care. They already made $300K per house passed in the build out already.
5) PROFIT!

What was the trillion dollar stimulus spent on?

[xzvf]

While the source of this data is obviously biased, I wonder where the stimulus money was actually spent. Think what a trillion dollars actually is. A new aircraft carrier costs ~10 billion dollars, planes double that cost, meaning that the country could have purchased 50 with the stimulus (we currently have 11). In todays dollars the Apollo program cost 150 billion meaning that we could duplicate it six times with a trillion dollars. A highway bridge near where I live is being replaced for a cost of 300 million, thus a trillion dollars could have replaced that bridge 3000 times. It could have paid the 14 million unemployed, $35000 a year for two years. Where did it go, and what did it do?

Re:What was the trillion dollar stimulus spent on?

[jedidiah]

The auto manufacturers and airlines and banks that were bailed out NEEDED TO DIE.

They were diseased things that really should not have been allowed to live any longer under anything resembling a true free market economy.

Actually rebuilding some of our crumbling infastructure would have been a great idea. Too bad not much of that actually happened.

It's infrastructure

[Applekid]

So, how did the roads get built? How is the mail delivered? How is power transmitted? How about Plain Old Telephone Service? There used to be some bonafide investment in infrastructure in the US, so where did all that go?

Granted, I understand that water and sewer isn't too common in rural areas, but it's not like it's a backpacking adventure through the rainforest we're talking about.

Re:I think we're overthinking this

[Duradin]

How do you think they got those phone lines out there? It wasn't the invisible hand.

There were probably people saying "Can't those things be done through the mail?" when they got wired up for phone service.

Re:Fake numbers

[dnahelicase]

First of all they're dirt poor and not going to pay for broadband or own a computer. The critical part is the ratio of income to house price. Somewhere around 1:2 is OK but not ideal, 1:4 means extreme poverty, like 99% of your legally declared income must be going toward the house and you never eat anything but ramen, at least until the inevitable foreclosure and bankruptcy. Even commissioned cheerleaders for the home sales/building industry don't have the guts to ask for more than a ratio of 1:3.

Umm. That's wrong. 1:2 is great, 1:4 is still good. It is certainly not extreme poverty. I don't know if you realize this, but those in extreme poverty generally don't own homes at all.

A good explanation of ratios based on interest rate

I own a home and my income:home price ratio is 1:3.2 I comfortably pay for expanded cable and a 20/3 fiber-to-the-home internet connection, and I live in a rural community. Most of the community has access to 3 broadband choices -including fiber from an independent/non-big-telco - which are not payed for through subsidy or tax credits.

I'm not sure where you are from, but $40-50k / year is certainly a livable, comfortable, not-anywhere-near poverty condition for most of the country.

Then live in the city???

[brunes69]

Seriously. People think they can have it all these days.

Why should you get to live in the country, pay super low taxes, and have someone else in the city pay super high taxes to subsidize YOUR high speed?

Move to the country and pay for your own broadband hookup. Or live with satellite access. Or stay in the city. But don't ask for my tax dollars to pick up the bill for your personal choice to live in an inefficient location.

Re:Think even harder...

[hairyfeet]

If that were true why was there parts of downtown Nashville with No cable or DSL when I was there a few years back? is the middle of music row in a cornfield?

No friend it is called 'cherry picking" and something the teleco duopoly has done for years. When my mom built her home more than 20 years ago the cable stopped exactly 2 blocks from her house. Now more than 30 households live on this small 2 mile stretch and how far is that cable now? Exactly 2 block from my mother's door, same as it was more than 20 years ago. They haven't moved a single inch in ANY direction in more than a decade here, despite ever more houses being built, because that would mean they would have to invest rather than put the money into their pockets and in the USA it is "damn everything but the quarterly report!" and has been for ages.

No we are gonna have to open up the last mile to competition and we are gonna build it ourselves if the companies won't, just as they refused to run electrical lines and water to most of the rural areas. And how much of that "cost" is private contractors and no bid contracts? If one would let the cities and the states build instead of having them buried in teleco lawsuits which is ironic since they are suing for customers they refuse to serve even if they win, well then I bet you'd see that price plummet.

The problem is the current system like the "stimulus" bullshit was done classic government style, which means it doesn't get done if Sen Porkus and Congressman Kickbackus don't get to throw some to their cronies who promptly raise their bids by 600% and act like they won the lotto. We should do it ourselves and demand that the 200 billion we gave the telecos back in 96 for nationwide broadband (who said "Gee thanks! and then gave us the finger, just like GE who took a bailout and used it to send another factory to India) be paid WITH interest in 90 days or we seize the last mile.

The ONLY way we are ever gonna catch up with the rest of the world is to stop tying the hands of the local and state governments and bust up the teleco monopoly on lines. They want a monopoly? Fine we'll give you 20 years for every currently underserved or unserved neighborhood you give FTTH. Make it 15 for every large city you change out, 20-25 for every small town. Otherwise all we are gonna get is ever nastier caps while the CxOs get extra hookers to snort blow off of while we get the short bus to the information superhighway.