Decades ago, I was lucky to have interviewed a number of rural people who told me what it was like when they finally got electricity. Almost every person I talked to mentioned how life-changing it was to brightly illuminate their homes with electric lightbulbs.
Other than that, everybody’s electricity story varied according to their economic circumstances and priorities. Wiring a home with electricity was a big expense for a lot of folks, and many got loans from their electric coop to help pay for wiring and appliances. Others introduced wiring gradually as their budget would allow. Farmers often lit their barns before their homes. The most valued and first appliances bought by many homes were washing machines and refrigerators.
People also told me about the frustration of waiting for decades to get electricity that was available in the county seat or other nearby towns. They said that most adult children left the farm, attracted by the lure and conveniences of electricity. They described how access to electricity clearly defined a world of haves and have-nots.
Rural electricity was largely funded by low-income loans to newly formed electric cooperatives. Electricity to the farm enabled the agricultural revolution that made the U.S. the breadbasket of the world. Rural electricity immediately raised the standard of living for rural residents and gave them the same opportunities as everybody else. I’m not sure how to do the math, but electrifying rural America was probably the best infrastructure investment that the U.S. Government ever made – rivaled perhaps only by the interstate highway system.
We took a different approach to stringing telephone copper in rural areas, with a mix of private and public investment. In 1900 there were over 3,000 telephone companies in the country – many of them in small towns and rural areas. Many of the rural networks were built and financed by farmers, but a huge amount of rural copper was also funded by government loans given to small telephone companies and newly formed rural telephone cooperatives.
Since it’s now clear that broadband is the newest utility that homes need to participate in today’s economy, the federal government naturally got involved in funding rural fiber networks. Some of this was funded with subsidized loans, but a lot more has been accomplished through federal grant programs like RDOF, ReConnect, and the Capital Projects Fund. The BEAD program was supposed to be the big grant program that filled in the final gaps in rural fiber – and many State Broadband Offices were well on the way to fulfilling that goal.
I’ve never understood why and how we lost the lessons we learned in the past. I am certain that a lot of rural America would already have fiber today if the federal government had offered 40- or 50-year loans at 1%. Electric and telephone cooperatives would have gladly taken that money to expand fiber networks across regions. Some of the big telcos would have taken the money. I am certain that new cooperatives would have been formed in areas where there were no logical recipients of the loans. Just like with electrification, the vast majority of these loans would be repaid, meaning there would be very little net cost to the government to fund rural fiber through loans.
Instead, the FCC chopped the rural landscape into Swiss cheese areas with the RDOF program, and other grant programs have tried to fit fiber projects around the messy jigsaw puzzle that was left over. I’m not sure that we could have designed a worse way to mess up the rural broadband landscape.
We’ve now suddenly decided that it’s too expensive to build rural fiber – even though we were near the finish line with BEAD. And to be fair to the critics of BEAD, it is expensive to give away billions in grants. But once we started down the grant pathway instead of the loan pathway, BEAD was the logical conclusion to the effort.
It’s sad we didn’t remember the lesson we learned from electrification. The best solution for stringing a wired network in rural areas is to loan the money to local companies who have a vested interest in making it work for the long haul.