Rural Broadband: Let’s Talk About Cost

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When the federal government brought electricity to rural America, it worried more about cost to farm families than construction. There’s a lesson here for broadband.


A message from the Rural Assembly

Cost is just as important as build-out. In fact, affordability of broadband is probably more important than its availability.

The comparison of electric service and broadband isn’t exact, of course. But it is worth pausing for a moment to reflect on the lessons we can learn from the last government-sponsored effort to bring massive infrastructural improvements to rural areas — that of the rural electrification movement of the 1920s and ’30s.

With so much of the present discourse focused on questions of build-out, it is important to realize that one of the gravest issues facing rural electrification was not simply the extension of electric lines to every nook and cranny of rural America but the affordability of electrical services for the end user.  Given the present financial situation of many rural residents, this issue must be addressed in any appropriations bill for rural broadband development.[imgcontainer left] [img:Beallradio528.jpg] [source]Lester Beall

Created in 1935 at the height of the Great Depression, the Rural Electrification Agency (REA) was originally created as a relief agency. It was a public program intended to bring electrical power to rural areas which had been ignored by private utilities and to do so by hiring laborers from the nation’s growing ranks of unemployed workers.

There were few skilled electricians among those out of work, however, which required the REA to transform itself from an agency that provided relief to one that issued loans. The REA eventually found its role not in the direct construction of lines but in issuing subsidized loans to electrical utilities, municipal power districts, and public power cooperatives.

Before the REA, private utilities required rural residents to pay the cost of constructing power lines to their homes, which frequently cost upwards of $2,000 per mile.  Private utilities, eager to make their money back as soon as possible on these investments, would require that the farmer repay the costs over a period of no more than three years. That repayment schedule made the cost of electrification prohibitive for all but the most prosperous farmers.

Most farmers who could afford electricity had already received service from private utilities by 1935.  In the eyes of the private utilities, the project of rural electrification was “finished” despite the fact that less than ten percent of rural residences were connected to the power grid.

For the other ninety percent, electrification remained a desirable yet elusive promise, as the economics of their situation did not support private build-out of the electric grid.  While electrification could bring increased productivity to certain energy-intensive pursuits, such as dairy farming, it provided almost no gains in efficiency for more common farm products, such as cotton or most food crops. There simply wasn’t an immediate commercial need for electricity on most farms. For the vast majority of farmers the real effects of electrification were to be felt in saving domestic labor time, the introduction of electric lighting, and the health benefits associated with modern plumbing.

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A message from the Rural Assembly