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Broadband Access Helps Improve Rural Economies, But Costs Are Still High

Jan 23, 2018

At four rural libraries in Oklahoma, patrons are putting their names on a waiting list to get a hot commodity: a wireless hot spot.

The Journal Record’s Sarah Terry-Cobo writes patrons can take home the hot spot for free at libraries in Elgin, Haskell, Perkins and Seminole. Patrons have to return the hot spot after two weeks in Elgin. At the other three libraries, it must go back to the library after one week.

The four libraries are participating in a research project with Oklahoma State University agricultural economist Brian Whitacre. His goal is to reduce the digital divide that exists between rural and urban Oklahomans.

Whitacre says cost remains a barrier in sparsely populated areas, but high speed internet access at home can boost a rural community’s economy.

“We find it does have a meaningful impact on income growth and the availability of jobs in rural areas,” he said.

But installing infrastructure isn’t enough, Whitacre said. Broadband connections must be fast and affordable so people actually adopt it. Median household incomes are significantly higher and unemployment is lower in rural areas where people have home access.

“We find people are buying things on Etsy and selling things on eBay,” Whitacre said. “They are participating in the gig economy.”

The Elgin Community Library Director, Leslie Durham, told the Journal Record there are two internet providers in and around her community, but the speeds are pretty slow. The majority of the people who come to the library are there to apply for jobs on internet-connected computers, or to use the library’s wireless connection when home systems are not functioning.

Richard Ruhl, the General Manager of Pioneer Telephone Cooperative, Inc., told the Journal Record that federal and state funds are necessary to expand broadband access to rural homes. Much of western Oklahoma’s population density is so low that it would not be cost-effective for Ruhl’s company to install fiber-optic networks without government subsidies.

Terry-Cobo writes:

Expanding broadband internet is as necessary and comparable as the rural electrification program that began in the 1930s.

But it can cost up to $15,000 per mile to lay new fiber-optic cable. For someone who lives 10 miles from the closest connection, that’s a substantial investment that the co-op could never get a return on.

The lower the population density, the more expensive. Pioneer’s average density is about five customers per mile, but it is as low as 0.5 customers per mile.

He said a federally funded program will provide his co-op $180 million over 10 years to expand the fiber-optic network to his members.

“This is parallel to the rural electrification days,”Ruhl said. “But the funding has to be there, either from the Universal Service Fund or low-cost loans and grants.”

Tribal governments are also looking at ways to provide high-speed home access. The Choctaw Nation, for example, is participating in a program called ConnectHome. The Journal Record reports the federal program subsidizes internet service and hardware.

Muscogee (Creek) Nation Principal Chief James Floyd has said his tribe is doing an analysis to determine how much it would cost to work with East Central Oklahoma Electric Co-op to put in fiber-optic cables, according to the Journal Record’s Molly Fleming.

“This would also help the tribe expand into telemedicine where their citizens could get medical help without having to go into a medical center, or they could go to a medical center and speak online to a professional that may not be working in the Muscogee (Creek) Nation area,” Fleming said.

FULL TRANSCRIPT

McCleland: It's the Business Intelligence Report, a weekly conversation about business news in Oklahoma. I'm Jacob McCleland and I'm joined by Molly Fleming. She's a reporter with The Journal Record newspaper. Molly, thank you for talking with us.

Fleming: Hey, you're welcome.

McCleland: I want to talk about rural broadband access today, starting with a story that your colleague Sara Terry-Cobo wrote about recently. There are four rural libraries that are loaning out Wi-Fi hot spots for one or two weeks at a time. And this may seem like a relatively small thing but there are really long wait lists for this equipment. And a researcher at Oklahoma State University says access to high speed Internet service at home increases economic activity. What else did this researcher find?

Fleming: Yes. His name is Brian Whitacre and he works, like you said, at Oklahoma State University. His research shows that when people have fast broadband internet connection at home they, you know, they look up jobs and they try to apply to jobs and just feel a little more connected to the rest of the world where economic activity is likely happening. He built his research project on what had been done in rural Kansas and in rural Maine. And he negotiated a low cost with Sprint to provide wireless internet connections are the company's cellular network. And there are about ten dollars per month for the device. He said it does have a meaningful impact on income growth in the availability of jobs in rural areas.

McCleland: One of the participating communities is Seminole and another is Elgin in Comanche County in southwest Oklahoma and the librarian there says the project's popular. What makes the project so popular there?

McCleland: There are only two internet providers in the area and the speeds are slow and I think they're pretty expensive as well. So Sarah spoke with the librarian in Elgin, in Elgin named Leslie Durham and she said people who come in to use the Internet-connected computers are using it to search for and apply for jobs. So when they take the wireless hotspots home, they likely do the same thing. And Whitacre joked during his presentation that you are sure they are watching Netflix but they really are trying to get connected to the rest of economic activity in the country and in the state.

McCleland: Getting broadband out to some of these sparsely populated areas like out in western Oklahoma is an expensive endeavor and can cost up to 15,000 dollars to lay a mile of new fiber optic cables so state and federal funds help offset some of the cost. And so are tribal governments. There was a story in The Journal Record last year about the Choctaw Nation and that it's participating in a program called ConnectHome which is a federal program. This is one run through the Housing and Urban Development. How does this work?

Fleming: Catherine Sweeney wrote about this in our 2017 tribal economic impact edition and she spoke with Choctaw Nation's Housing Director Scott Grosfield, and she reported that the ConnectHome program subsidizes Internet service as well as the hardware such as routers and widespread hotspot devices so it makes them all cheaper for people. And it's too difficult to get typical infrastructure such as fiber optic to serve the customers in that part of the state like we talked about earlier where it's 15,000 dollars to lay out a mile of new fiber optic cable. Not only is that expensive, but you know, in urban areas you have a lot of people within that one mile. But in rural areas you might have one family, you might have one farm.

McCleland: So how are people in the Choctaw Nation using that ConnectHome program?

Fleming: They're using it for more than Facebook, actually. Elders were using it to order prescriptions online, which then get shipped to them so they don't have to go to a nearby town to pick them up. Younger people were using it just to do their homework, get resume help ,or even look for jobs and attend school.

McCleland: What other tribes are considering similar projects to this?

Fleming: Well, you know, with 39 federally recognized tribes in the state, I'm certain other nations have provided a similar service. But last week when I was at Oklahoma State University I heard Muscogee (Creek) Nation Principal Chief James Floyd speak, and he said the tribe is doing an economic analysis now to see how much it would cost to work with East Central Oklahoma Electric Co-op to install fiber optic lines and connect their citizens. This would also help the tribe expand into telemedicine where their citizens could get medical help without having to go into a medical center or they could go to a medical center and speak online to a professional that may not be working in the Muscogee (Creek) Nation area.

McCleland: Molly Fleming is a reporter with The Journal Record newspaper. Molly thank you so much for your time.

Fleming: You're welcome.

McCleland: KGOU and the Journal Record collaborate each week on the Business Intelligence Report you could find this conversation at kgou.org. You can also follow us on social media or on Facebook and Twitter @journalrecord and @kgounews.

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