When G. C. Kincer started his own Internet service in Whitesburg, Kentucky, the big telecom moved in to beat him. And after the big company won, it slowed its investment. There's a lesson in that story.
Businessman and small-town mayor G.C. Kincer would like to take just a little credit for helping bring broadband Internet access to Eastern Kentucky. But it’s not your typical success story.
Around the year 2000 there was no wireless broadband in downtown Whitesburg, a county seat town in the Appalachian coalfields, now with a population of 2,100. So Kincer invested his money in equipment to serve downtown businesses and homes with wireless Internet access.
About the time he hit 50 customers, he said, bigger telephone companies started to notice. “When I invested in the community, the phone company sort of speeded up their investment,” he said.
Kincer closed his Internet business when the phone company rolled out broadband to the areas he was serving, offering lower prices. Then, when Kincer went out of business, the phone company, which was then BellSouth, slowed its expansion into this part of rural Eastern Kentucky.
“That’s when I figured out that if we were going to solve this problem of broadband access, it’s going to have to be a community solution,” he said.
Kincer, a radio station owner and mayor of nearby Jenkins, Ky., was one of about 20 speakers at a public hearing on the future of broadband in rural communities held this week in Whitesburg. The event was sponsored by the Center for Rural Strategies (publisher of the Daily Yonder) and media advocacy groups Center for Media Justice and Free Press. The purpose of the hearing was to gather stories about how broadband access and other communications policies affect rural communities.
Stories like the one told by Mayor Kincer illustrate how a lack of competition in rural areas delays the advent of broadband services.
Kincer got agreement on that point from Jonathan Adelstein, administrator of the Rural Utilities Service (RUS) at the U.S. Department of Agriculture. Adelstein attended the hearing to speak and listen to citizen comments. (For a report from WMMT-FM on the hearing, click here.)
RUS provides grants and loans to rural communities to build basic infrastructure, including broadband services. RUS distributed $2.5 billion in federal stimulus bill funding for improving broadband in rural areas over the past two years.
“There is a market failure in rural communities,” he told an audience of about 60 people at the Appalshop Theater, where the hearing was held. “And that’s why there’s a reason for the government to be involved.”
One mechanism that has helped level the playing field in less competitive rural markets is the Universal Service Fund (USF), Adelstein said. This pot of money is collected from all telephone users and helps defray the cost of phone service in harder-to-reach rural areas. The Federal Communications Commission is in the process of revising its guidelines so that USF can be used to build out broadband services in rural areas.
“Some people look at the Universal Service Fund as a gift to rural America,” Adelstein said. “That’s not what it is. For any connected technology to work, it needs to work over rural America, too. A partially connected rural America makes about as much sense as having a highway system that’s paved about 25 percent of the time.”
Adelstein said he hopes the new USF policy, due to be released later this month (October 2011), will be pro-consumer and will help pay for getting rural communities online. Currently about half of all rural Americans have broadband connections at home, according to the Pew Center for Research’s Internet and American Life Project. In metro areas, the access rate is about 10 percentage points higher.
Citizens who spoke at the hearing described how broadband access has become a basic necessity, not a luxury. “When companies call me about coming to Letcher County, the first thing they want to know before they even ask about running water is what kind of broadband access you have,” said the county’s economic development officer, Joe DePriest.
April Caddell, an intern at Highlander Research and Education Center in New Market, Tennessee, said she learned in applying for law schools that broadband was essential. Prospective students must have online access to apply for admission, financial aid, scholarships, and transcript requests, and to carry out other common tasks. Admissions counselors have started interviewing candidates via Internet applications such as Skype, which won’t work without a high-speed connection.
Much of the conversation focused on the cost of providing broadband in rural areas. Lower population density means a smaller customer base and increased equipment costs. But universal service to all residents should be the goal, said Mark Kidd of Whitesburg.
“We’re told that universal access in Appalachia is too expensive and is not profitable,” Kidd said. “But what we know is that our people are capable of producing great wealth. We need to start with universal access as the goal and work backward from that, rather than moving forward from the mess we have now.”
Nathan Hall of Floyd County (Kentucky) said his home has no Internet access at all, not even dialup. He can stand in one spot in his house and get cell phone service. Holland said he traveled to India as a student last year and used his cell phone frequently. “I found that I had more regular cell phone access in rural India than I have in Floyd County,” he said.
Beth O’Connor of the Virginia Rural Health Association said higher speeds were essential for delivering health services via Internet. She said specialists in urban areas can serve rural populations via broadband. But doctors need at least four megabytes per second connection speed to make these services work.
O’Connor also said the Appalachian region has a wealth of talented people who can make a contribution to the national economy if given the opportunity and the connection. “I like to say, ‘There’s an ‘App’ for that,” O’Connor said. “Whatever you need done, there’s an Appalachian for that.”
Tim Marema is a vice president at the Center for Rural Strategies.