— General Manager Pat Lewis has a fine Web site at Patriot GM Superstores in Princeton, Ind. Would-be customers can search the dealership’s inventory and look at any vehicle it has available, customizing their purchases and setting up a variety of other services.
Well, some of them can.
Actually, not many.
Using Patriot’s site can be a mind-numbingly slow experience in Princeton, a town of 8,700 in Gibson County in southwestern Indiana, where affordable and reliable broadband access has yet to arrive as the calendar turns over to 2010.
Lewis said it’s been a pain both for local users, for whom navigating the site can be painfully slow, and for the dealership, whose Chevrolet, Buick, Pontiac and GMC stores are connected to the same special T1 line he had to have set up for $600 a month.
“It’s just the cost of doing business,” Lewis said. “I have to sell one more car a month to pay for Internet access we don’t get.” Otherwise, he said, “we can’t sell cars.”
A Web that’s more trouble than it’s worth
In Gibson County and many other rural areas, the “information superhighway” is really more like a one-lane dirt road. The Internet & American Life Project of the Pew Research Center reported in April that broadband penetration remains below 50 percent in rural areas — compared to nearly 70 percent in urban areas.
What the federal government calls the “rural-urban gap” contributes to the nation’s also-ran status as a broadband country. The United States — where the Internet itself was invented — has fallen rapidly down the rankings of broadband penetration, from first a decade ago to 15th this year.
And for rural customers who are lucky enough to have broadband, most are still limited to relatively slow digital subscriber lines, or DSL service. In better-connected cities, most customers can choose from higher-speed cable, satellite or fiber-optic options — so-called “true broadband.”
That lack of service can leave rural residents and businesses at a real disadvantage.
“We’re in a very competitive business,” said Martin T. Wilson, president of SleeveCo Inc. of Dawsonville, Ga., which prints labels on some of the world’s best-known consumer products, including Ocean Spray juices, Anheuser-Busch beers and Arizona Ice Tea bottles.
“A small company like ours needs every advantage that we can get,” Wilson said, but the pokey dial-up and DSL service in town can’t quickly transfer the huge graphic files Wilson must exchange with his customers.
“Some of these files can actually come in and take overnight for them to get downloaded,” he said.
Peter J. Hill, president of HDA Architects in Dawsonville, said the lack of true broadband severely also slows his firm’s exchange of plans with clients, making the Internet a chokepoint, not a tool.
“What we do now, we write it to a CD and mail it to them, because we really can’t send out those kinds of files on DSL,” Hill said.
‘Who’s going to pay for that?’
The bottleneck in Dawsonville, a town of 815 people in north Georgia, is so bad that the Obama administration chose to use it as a stage for Vice President Joe Biden, who traveled to town this month to announce the first federal grants, totaling $182 million, for projects to expand high-speed Internet networks in rural areas. The program will eventually spend more than $7 billion in federal economic stimulus funds to hook up underserved areas.
The government said it needed to step in because there aren’t enough incentives for private companies to fill the breach in regions “where population is widely dispersed over demanding terrain.”
“These characteristics can make the fixed cost of providing broadband access too high, or limit potential demand, thus depressing the profitability of providing service,” the U.S. Agriculture Department said in a report it released in August (PDF) comparing broadband and dial-up customers.
Translated into non-bureaucratese, that means it costs so much to build a broadband network in a rural area that it’s too expensive for many customers to afford.
The least-served areas encompass entire states and regions, the report found, especially in the Plains and the Midwest, the parts of America that are the farthest from big urban centers: all of the Dakotas, eastern Montana, northern Minnesota, eastern Oregon, the Missouri-Iowa border and nearly all of Appalachia.
The reality, Biden said, is that in such areas, “private enterprise is not going to make that investment because they can’t see an immediate return.”
“It wasn’t economical to come to a community that was small, and particularly to go to a farm that was 12 miles out,” he said. “Who’s going to pay for that?”
Partnerships build ‘economy of tomorrow’
Increasingly, it’s local private-public initiatives like the South Georgia Regional Information Technology Authority, a state-funded program that is working to bring broadband to five counties.
The authority flipped the switch on its first 700-megahertz broadband distribution equipment in August — after more than two years of lobbying and infrastructure work. The project took so long because “it’s a very difficult task to bring broadband Internet service — true broadband Internet service — to rural areas,” said Lee Conner, director of the authority.
But it’s worth it because broadband is the backbone of “the tools that will fashion the work of the 21st century,” Biden said. “We are laying the foundation for the economy of tomorrow.”
Economic research bears out that assessment. In a study last year, Connected Nation, a nonprofit group based in Washington that works to expand broadband adoption, projected that raising the broadband adoption rate by 7 percentage points nationwide would reap $134 billion a year in immediate economic impact.
And in a report it released in August comparing broadband and dial-up customers, the U.S. Agriculture Department found that the broadband users were 31 percent more likely to take advantage of government services online, 39 percent more likely to search for jobs online and 1½ times more likely to make charitable donations online.
The USDA concluded that greater broadband access in rural communities correlates closely with greater economic growth across a wide spectrum of sectors, particularly retailing, health care, education and farming.
“Broadband Internet access has become the crux of today’s policy debate,” it said.
FCC sees long, slow conversion
As the need for universal broadband becomes more apparent, the Federal Communications Commission is on track to deliver a national broadband plan to Congress in February. Julius Genachowski, the FCC’s chairman, outlined some of the many challenges as the commission began its final work this month.
“Fully achieving this transformation may take years,” Genachowski said, citing not only the high per-customer cost of extending full broadband to areas with few residents but also the prospect that demand for data-rich services could soon outstrip the supply of available spectrum.
Blair Levin, head of the FCC task force preparing the report, said it was clear that the effort would require “massive private investment ... in a time of real fiscal constraint.” That means the recommendations will reflect “difficult challenges, choices and trade-offs,” he said.
Levin did not say what those trade-offs would be. But in a working paper (PDF) prepared earlier this month, the task force concluded that besides leaning heavily on private investment, any plan would have to make “better utilization of existing assets” (that is, add heavier loads on existing channels and systems, rather than build new equipment) and ensure “more effective market allocation,” which means auctioning off spectrum to the highest bidder and imposing new fees on its use.
But the USDA concluded in its August report that such efforts must be undertaken.
“Any shortfall in rural broadband availability is an implicit loss in economic opportunity for businesses, consumers and governments,” it said. “... Investment in broadband Internet access leads to a more competitive economy.”