FCC Vote Will Crush Rural Broadband and Entrepreneurship
Ending net neutrality will decrease competition, investment, and entrepreneurship in rural America.
EDITOR’S NOTE: The Federal Communication Commission is scheduled to vote Thursday, December 14, on eliminating net neutrality rules.
A forthcoming decision by the Federal Communications Commission (FCC) to eliminate net neutrality will instantly undermine a decade’s worth of public investment in rural broadband — at the exact moment rural America is ready to realize the economic potential of the digital age.
Rural areas are already at a steep disadvantage when it comes to broadband infrastructure. As of 2016, 39 percent of rural communities lacked access to true broadband — defined as a minimum download speed of 25 Mbps — despite its ubiquity in cities. 10.6 million US households do not have access to broadband at all, and 46 million nonmetro households have only one provider offering wired 25 Mbps speeds.
In urban areas, population density and access to capital have spurred growth in digital businesses. For rural America, the internet is the best and only hope for participation in today’s economy. Poor broadband is correlated with lower population growth, less economic development, less access to education, lower property values, and slower home sales. Good broadband is a small town’s lifeline out of geographic isolation, its connection to business software and services, and its conduit for exporting homegrown ideas and products.
Unfortunately, many rural broadband customers have few options when it comes to choosing an internet service provider (ISP). If the FCC ends net neutrality, it will further harm competition in rural areas. Already, broadband prices are higher where monopolies exist, and without net neutrality incumbents would have yet another tool with which to leverage their advantage, without fear of losing customers.
That’s because ISPs will have the power to speed delivery of content from businesses that can pay a premium. And, since content providers tend to favor urban markets with higher customer density, incumbent ISPs will likely allocate even more of their infrastructure investment to cities. In comparison, their investments in rural areas would wane.
Even worse, incumbent ISPs could create a situation in which, if rural businesses want access to larger markets at a reasonable price, they must switch from their local, independent ISP. In effect, incumbents could eliminate the incentive for independent ISPs to operate at all. Competition, which is a hallmark of our economy, would be crushed.
Even more importantly, eliminating net neutrality would crush the competitiveness of rural small businesses which rely on the internet to reach their customers. Many of these businesses cannot afford to pay premiums to speed delivery of their content. As a result, they will be unable to compete with larger corporations that can.
Rural businesses may also lose access to the online tools that power them. Without net neutrality, ISPs will be able to offer tiered service plans that throttle the users access to certain websites, or even block certain content altogether. These restrictions would affect content providers and users alike.
For example, an ISP could inform Slack, a provider of business communication solutions, that— unless it pays a premium — its video-conferencing service will be slowed in rural areas where the ISP lacks infrastructure.
As a result, Slack would likely pass the costs through to rural customers, offer a less viable service, or shutter its offering in some areas. All of these outcomes would hinder rural businesses that use the service. Other online businesses that are integral to rural American life, such as agriculture services, tele-health and online education providers, would suffer, as would their customers.
The story would be a familiar one. For decades, entrepreneurship has declined in rural communities, even in proportion to population.
But recent experiences show that this trend need not continue in the digital age. In grassroots efforts to bridge the digital divide, independent broadband projects have cropped up in rural areas, increasing competition among ISPs and lowering prices.
The number of rural fiber cooperatives, for example, has increased from five to over sixty in the past six years, bringing affordable, gigabit-speed internet to sparsely populated areas. Though ISPs are difficult to start, often requiring creative financing and public-private partnerships, community fiber deployment has brought opportunity to rural towns like Springfield, Vt., Oskaloosa, Iowa, and Bemidji, Minn.
Rural communities with broadband have seen real growth in entrepreneurship. Red Wing, Minn. population 16,500, received gigabit connectivity five years ago through Hiawatha Broadband Communications. Local public and private actors then partnered to launch Red Wing Ignite, a program that supports a business accelerator, hosts a rural hackathon, and teaches coding to students. Fast broadband has helped Red Wing become a vibrant, affordable place to live and work.
This type of success can be replicated. With gigabit connections, small town musicians can jam live with studios in Nashville or Austin over zero-latency internet. Rural software developers can use massive data center capacity anywhere in the country as if it was in their basement. Health-care entrepreneurs can overcome the challenges of rural medicine by connecting patients with specialists in other geographies.
Unfortunately, ending net neutrality will make this promise far more difficult to realize. President Trump and congressional Republicans have called for more broadband infrastructure investment, more entrepreneurship and a free market. But the FCC’s prospective repeal would have the opposite effects. It would stymie rural America just as it is poised to realize the economic promise of a connected world.