Powering Strong Communities

Public Power’s Role in Closing the Digital Divide

For the past few years, the Federal Communications Commission has prioritized getting every American access to high-speed broadband internet connectivity. This priority, according to the FCC, is because “high-speed broadband and the digital opportunity it brings are increasingly essential to innovation, economic opportunity, healthcare, and civic engagement in today’s modern society.”

Put in plain terms, people with access to broadband have fewer barriers in being able to apply for jobs, complete some work from home, have tele-health appointments, and access information. Children living in households without high-speed internet, especially as schools moved to virtual formats during the pandemic, have greater difficulty learning and in completing schoolwork.

Just as public power utilities formed to provide essential electric service, cities and towns are turning to municipal broadband to offer residents reliable, affordable internet service options. Whether fully run by the utility or building off local electric infrastructure, community broadband service is helping communities gain access to high quality, affordable internet connectivity.

Expanding Access

In its latest Broadband Deployment Report, published January 2021, the FCC noted that about 14.5 million Americans live in areas without access to broadband service – which is down from nearly 18 million only two years earlier.

The Infrastructure Investment and Jobs Act authorizes $65 billion for broadband, including $43 billion for grant programs through the National Telecommunications and Information Administration to support broadband equity, access, and deployment. The funds will be allocated largely to states and tribes based on the extent of unserved and underserved areas each has.

While the overall trends point to increased adoption across the U.S., certain populations continue to face barriers to access along income, geographic, and demographic trends. According to a Pew Research Center survey, more than 40% of households making less than $30,000 annually do not have broadband service at home. More than a quarter of adults in this income group rely solely on a smartphone for internet access and do not have broadband access at home – a percentage that is more than double what it was in 2013.

People living in rural areas also have lower adoption of broadband, with 72% of rural adults reporting having broadband access at home, compared to 79% of adults in suburban settings. In a 2018 Pew survey, almost a quarter of rural adults across all income levels reported access to quality, high-speed internet as a “major problem,” and another third reported it as a “minor problem.”

A study by the Joint Center for Political and Economic Studies found that Black Americans in the rural South were nearly twice as likely than White rural southerners to not have internet access at home. The study also found that across southern rural counties with at least 35% of residents that are Black, more than a quarter (25.8%) of residents did not have the option to subscribe to broadband service.

The FCC’s definition for “high-speed” is service that reliably provides download speeds of 25 megabits per second and upload speeds of 3 Mbps.  Some of the grant funding through the infrastructure act ups the requirement for minimum speeds to 100/20 Mbps, which would allow for reliable high-speed access across multiple devices.

A Great Equalizer

In Barbourville, a small city of about 3,000 people in rural southeastern Kentucky, the Barbourville Utility Commission has been working to offer residents better connectivity than surrounding communities for more than three decades. Josh Callihan, Barbourville’s general manager, said that the public power utility started offering residents broadband service through cable in the late 1990s, at a time when such service was often only available to people living in bigger cities.

The offering earned Barbourville the distinction of being named one of “America’s Most Wired Cities” by Yahoo Internet Life Magazine back in 2000.

Callihan said that having the service set Barbourville apart from surrounding communities and brought jobs, including data processing centers, to the area – with many such jobs still local two decades later.

“We have internet speeds that are comparable to bigger cities in a rural Appalachian town,” said Callihan. “It’s a great equalizer, when you live in a rural area and you have geographical constraints, to be able to bring information and opportunities to people – and broadband is a mechanism for that for sure.”

Once established, the utility wanted to be sure to stay on the forefront of offering its community the connectivity. Starting in 2017, the utility intentionally overbuilt the cable system to become a fiber-to-the-home network accessible to the entire area. Callihan estimated that about 4,000 customers in the area can now access the service, which is available in speeds up to one gigabit per second. He said that about 2,000 customers are signed up for the service, and that the utility has been steadily adding customers since the fiber to the home service first became an option in 2018.

In the past few years, having the high-speed service has allowed residents to more easily adapt to increased teleworking, virtual school, and more. Having the connectivity already in place meant one less hurdle for residents and local businesses to navigate.

“If you are trying to do business globally, you can do it right here in Barbourville. [Broadband] brings it to the people,” added Callihan.

Helping Communities Grow

Having reliable, high-quality service is increasingly seen as a vital need for businesses of all sizes.

“As far as economic development, I don’t know that you could have any type of growth without broadband,” said Jeff Bergstrom, general manager of Marshall Municipal Utilities in Missouri.

He explained that the public power utility grew the fiber network from the utility’s internal communications network, which originally was built to provide fast connectivity between substations and other utility facilities.

Bergstrom said the utility recognized a greater community need, since the only option available at the time was dial-up service, and the rural town wasn’t big enough to meet the subscriber minimums required by private companies.

Marshall Municipal Utilities saw an opportunity to fulfill that need. He said that two employees began to work on expanding the fiber network in 2005, connecting a handful of customers at a time. Since it was a slow process, the utility didn’t advertise the offering for several years, and it took as long for the service to be self-supporting.

Even though it took a while for the service to ramp up, Bergstrom believes starting from the utility’s network was the right approach. He said that when many utilities look at connecting their facilities, they then notice how that infrastructure will go by “a lot of potential customers.”

The service has taken off the past five years, and now about 3,500 customers subscribe to Marshall’s broadband service. The utility received a pair of grants from the U.S. Department of Agriculture ReConnect Pilot Program to further expand its broadband network to the surrounding county, which will include connecting some schools and nursing homes.

 “As a local utility, if you're helping the community then you're helping yourself,” said Bergstrom, explaining that providing a locally owned needed service supports the community in many ways.

Beyond fulfilling a community need, Bergstrom sees benefits in local ownership of broadband service. Similar to advantages on the electrical side, he cited a commitment to affordability, reliability, and customer service.

“It's not just tech service you call into and troubleshoot over the phone but if there's an actual problem, we know we've got staff available to go out and make repairs as needed,” said Bergstrom.

Not Overlooked

Rolling out broadband service didn’t go exactly as planned for the city of Rock Falls, Illinois, according to city administrator Robbin Blackert.

The city’s public power utility had laid more than 40 miles of fiber to connect substations across the city of about 8,800 people. The city began exploring what it would take to build that network out to create a fiber-to-the-home network for all residents and established $4.4 million in bonds for the build out. However, as the process began to move along, and in working with a financial consultant, the city discovered a few state and local laws applying to municipalities that would have significantly driven up the costs for the city to take on the project directly.

Instead, the city sold the infrastructure to a third party with the intent that the third party would complete the build out and provide the city with franchise fees for use of the system. While not what Blackert and city officials originally envisioned, she noted that the ultimate goal was for the city to have the service available for residents and businesses.

“We’re kind of the overlooked little towns… We know the big companies aren’t going to come in and spend that capital investment,” she said.

In early October, Blackert estimated that about two-thirds of the city had access to its gigabit service. She expects the network to be completely built out by Spring 2022.

Some of the groups that were able to get access to the service early on included area schools and businesses. The city worked to get access for these customers up quickly, and to ensure costs could be kept low. Blackert said this prioritization meant that Rock Falls’ schools were at a significant advantage in switching to remote learning compared to schools in surrounding communities when the pandemic began.

Residential customers already on the service remarked on how much better their home connections were than work – making remote work not only tangible, but attractive. As remote work opportunities expand, Blackert sees this as an ongoing selling point for the city, which is about two hours west of Chicago and an hour east of the Quad Cities area on the border of Illinois and Iowa.

“We just see this as something you have to be able to offer your residents, or they’ll go somewhere they can get it,” said Blackert. “It’s no longer just a luxury – it’s a necessity. Just like electricity.”

Reducing Cost

Having municipalities step in to help bring broadband service to their community can also bring more competitive prices.

The Open Technology Institute’s Cost of Connectivity 2020 analysis found that the average monthly price for internet connection in the U.S. is $68.38 – not including the sometimes significant taxes and fees, such as installation costs and equipment rental fees, that companies often charge consumers. Once these costs are factored in, the analysis pegged the average bill as being anywhere between $84 - $92.

The analysis found the average for a monthly fiber-based plan in the U.S., not including related taxes and fees, is $79.92. For gigabit speed, the average monthly bill is $131.70.

“In the U.S. market, prices vary widely across the country—but municipal networks tend to offer the fastest, most affordable options,” the Cost of Connectivity report stated.

Utilities touted their cost advantage and competitive rates as advantages for their communities. In Barbourville, packages range from $40 per month for 50/Mbps to $75 for the gigabit service (1,000 Mbps). Marshall’s “entry-level” package, which advertises speeds of 50 Mbps, is $30 per month, and its highest speed service, 450 Mbps, is $70. In Rock Falls, monthly costs range from $65 to $95, depending on the package, and advertise that plans do not tack on installation fees nor require long-term contracts.

Public power providers also pride themselves on being able to provide superior service for less cost.

“A lot of times, your price goes up, but your service level or your speed doesn't. And we've been able to do the exact opposite, which is raise speeds and increase service and do it for the same cost,” said Bergstrom.