Coronavirus Exposes America’s Broadband Problem
Poor internet access in rural areas was already an issue before the pandemic. It is now more important than ever
Kiran Stacey in Washington
Financial Times
Tom Egan is the kind of entrepreneur America needs right now. For 30 years, Mr Egan has run a company making lifts to get wheelchair users in and out of vehicles and around the home. But now he has converted his upholstery shop to make surgical masks and gowns, and his 3D printing machines to make face shields, which he is planning to sell to medical centres in New York City, the current world epicentre of the coronavirus pandemic.
The only problem was that until last week Mr Egan, who is based in upstate New York, had no broadband internet, like tens of millions of other rural Americans. For years his patchy and makeshift internet connection was an irritation, cutting him off from customers and suppliers. Then it became a more serious issue.
“We make things with fabrics,” he says. “Not many people do that in the US any more — it is a lost art. Now we are getting a flood of people asking us what we can produce. Nothing has shown up our need for a connection quite like the Covid-19 crisis.”
Mr Egan finally got a connection at the end of last week after years of lobbying and the intervention of his local congressman. Other rural Americans, however, are not so lucky.
Even as the US races to be the first country to roll out superfast 5G internet connectivity nationwide, 21m Americans remain without any broadband connection at all, according to the most recent figures published by the Federal Communications Commission last year. BroadbandNow, a consumer website, puts the figure at double that.
It is especially a problem in rural areas: the Pew Research Center estimates that a third of rural Americans do not have broadband at home.
Even before the pandemic, rural broadband had become a simmering political issue, an acute example of being left behind which some Democrats were using to prise rural voters away from President Donald Trump. It is a subject that resonates from congressional districts in upstate New York to presidential swing states such as Iowa.
With the virus spreading rapidly beyond cities into rural counties, poor access to broadband has exploded into a major Congressional row, as politicians tussle over billions of dollars’ worth of stimulus money.
“I think rural communities are realising that this is as deep a divide as access to electricity was at the turn of the century,” says Abigail Spanberger, a Democratic member of Congress who recently won her semi-rural Virginia seat from the Republicans. “And if politicians want to be attentive to the communities they represent, broadband matters.”
Before the pandemic, many people in excluded rural areas found workarounds. Small business owners visited friends’ houses to communicate with customers or file online accounts. Schoolchildren would go to their local libraries or even fast food restaurants to do homework. Mr Egan paid over $4,000 to put up a radio antenna on a friend’s house on the adjacent hill and beam a wireless connection to his office.
But now, with public buildings closed and people confined to their homes, children are in danger of falling behind, medical patients are unable to contact their doctors and businesses cannot contact their customers. Many farmers cannot even operate their machinery: modern irrigation systems, for example, use real-time weather data to calculate how much water to pump out.
“I don’t think there has ever been a moment where everybody understands the profound role that broadband plays in our nation’s life, says Jonathan Spalter, chief executive of the industry association US Telecom. “This is no longer a matter of commerce, it is a matter of life and death.”
The US is not the only country to have struggled to provide broadband access to all its citizens. But the problem is much smaller in other industrialised nations. The UK has now rolled out broadband to 99.5 per cent of its population, according to the telecoms regulator Ofcom, while the EU average was 96.7 per cent in 2018.
Broadband rollout has proved a particularly difficult challenge in the US, thanks in part to how large and spread out the country is. Pew research shows it takes an average of two years between getting a grant to provide broadband to a particular location and the connection being switched on.
“There is no other OECD country that has the kind of vast rural land mass that the US has, and no country that has the kind of geographic and demographic challenges when it comes to delivering broadband,” says Mr Spalter. “Just think of the challenge of trying to get it from one end of Alaska to the other.”
It is not just Alaska that lacks broadband. Mr Egan is just a 15-minute drive away from the nearest city. Charter Communications had laid cable to within half a mile of his property, but until last week had been dissuaded from taking it the extra few hundred yards by high costs and a lack of potential customers. State and national governments have already spent billions of dollars trying to incentivise telecoms companies to build out to homes, offices and farms such as Mr Egan’s, and explanations vary on why it has not yet worked.
Some believe it simply needs more money. The Federal Communications Commission last year launched one of the biggest national schemes yet, promising to auction off $20bn worth of incentives for rural broadband access. But the FCC itself estimates it will cost as much as $80bn to get fibre optic cable to every household in the US, while the consultancy firm Deloitte puts the figure as high as $150bn.
Others believe the money has simply been misspent, focusing on incentivising private companies, which need to find a profit margin, rather than smaller non-profit groups.
“For the most part, we are still hoping that the private sector will find a way to make it happen, and it’s just not happening,” says Christopher Mitchell, a researcher at the Institute for Local Self Reliance. “The FCC has long believed that the big telephone companies could solve this problem, but they don’t consider things like rural electrification co-operatives.”
A far more fundamental problem is that no one knows who actually lacks broadband access. The official maps run by the FCC define an entire census block — which can run to many hundreds of people — as connected if just a single property within it has access. According to those maps, Mr Egan has long had a connection. But when BroadbandNow took a sample of more than 11,000 addresses and checked them against whether any internet service provider would provide a connection, it found the number of unconnected households was probably double that counted by the FCC.
The commission is now working on new maps which it says will provide a more accurate picture of the problem. But Ajit Pai, the Trump-appointed FCC chairman, wants to begin awarding money to areas before the new maps are released. He intends to start auctioning $16bn worth of money this October, just weeks before the presidential election.
Jessica Rosenworcel, a Democratic commissioner at the FCC, says: “The chairman has proposed, 13 days before the election, sending out $16bn. But I feel like we have put the cart before the horse. We are going to spend the money and do the data collection later — we have got it entirely backwards.”
The current crisis is spurring a wave of short-term solutions. Several telecoms companies have opened up their public WiFi hotspots for people to use for free, while some are providing free packages for families for whom affordability is the main problem rather than the lack of a connection.
Schools are also proving resourceful. Teachers in the Morrisville-Eaton school district in New York state are filming lessons and uploading them on to flash USB drives to be distributed to students without broadband at home. The district has also bought 60 Verizon hotspots, which use cellular networks to provide internet at home.
Such solutions however, are often expensive. The Verizon hotspots cost $40 a month each — money the school district can ill-afford. Greg Molloy, the area’s school superintendent, says: “We don’t know where the money is going to come from but we know we have to do this for the kids and we will figure out the money situation later.”
Democrats in Congress pushed for $2bn to be included in last month’s stimulus package specifically to help schoolchildren get online during the coronavirus outbreak. That plan was scotched at the last minute amid rancorous negotiations between the two parties. But some are hoping that it might make it into the next round of crisis spending.
Teachers worry that short-term fixes such as this will not stop long-term damage being done during the coming months. Grades are likely to suffer — a study by Michigan State University published earlier this month showed pupils with fast home internet access scored half a grade higher than those with none.
And some worry about the possibility of children suffering more serious, but less measurable harm. “I have spent a lot of time on the phone to pupils who don’t have internet access at home.” says Rachel Murat, a teacher at Maine-Endwell High School, also in rural New York. “But I rely on being able to see them to know whether they are getting what they need at home: do they have shelter, food, a stable place to be. Do they feel safe?”
Over the long term, campaigners for digital access hope that the pandemic will push this issue further up the political agenda. Even before the outbreak, there were signs that politicians were taking it more seriously. Mr Egan, Mr Molloy and Ms Murat all live in a district represented by the Democratic congressman Anthony Brindisi.
Mr Brindisi won his seat from an incumbent Republican last year in part by campaigning on this issue, regularly attacking Charter Communications, which runs the local cable service under its Spectrum brand. Mr Brindisi says: “A big piece of what I ran on was the lack of broadband service, especially in our rural areas, the unwillingness of our large corporations to expand our broadband service in this area.”
Now, the issue is being taken up by presidential candidates. Joe Biden, the presumptive Democratic nominee, has pledged to spend $20bn on expanding rural broadband, while Mr Trump said last month that he is “committed to ensuring that every citizen can have access to high-speed internet, including — and especially in — rural America”.
Those who have campaigned for years for every American to get broadband access hope that the combination of renewed attention, better mapping and the promise of billions of dollars in funding might provide the push needed to make it finally happen, even as the US prepares to enter the 5G age.
But even if it does, for many people who still struggle to do things online which most Americans take for granted, it will have come years too late.
“It is 2020,” says Ms Murat. “Internet really should be a utility at this point.”
Frontier: the rise and fall of a rural telco
Frontier Communications was once the archetypal rural telecoms company. Tracing its roots to Minneapolis in the 1930s, the telecoms business spread its wings slowly across the country providing telephony services to remote areas. By the 1990s it was scooping up smaller rivals in Idaho and Utah and in the internet era it started to think bigger.
Under the leadership of Maggie Wilderotter, it paid Verizon $8.6bn for its landline business in 14 states followed by a $2bn purchase of AT&T’s business in Connecticut. Six years later, it paid Verizon $10.5bn for its legacy customer base in Florida, Texas and California that added large urban populations to its footprint.
But problems quickly arose. It bungled the integration of assets that, in retrospect, it had overpaid for. It also struggled to compete in areas where it did not have a monopoly. Ms Wilderotter, having left the business, said in 2017 that it had to start “body tackling” its opposition.
Customers voted with their feet and, saddled with $17bn of debt, Frontier has withered at a time when the telecoms market has boomed. With a market value of only $37m, there is little to suggest that Frontier is a major player in US telecoms. In its last published quarterly results, it reported a $345m net loss on revenue of $2bn, although It still has 4m broadband, pay TV and landline phone customers.
The meagre valuation reflects its parlous financial state. It deferred interest payments on its debt to trigger a 60-day grace period last month. The final frontier appears to be looming for the telecoms company as it enters talks with its debtholders.
A collapse into Chapter 11 would be the biggest US telecoms bankruptcy since WorldCom but would also allow new management room to reset. It plans to tap government subsidies to upgrade copper lines in rural areas to optical fibre cables, returning the company to its historic roots as a regional and rural player. Nic Fildes
Kiran Stacey in Washington
Financial Times
Tom Egan is the kind of entrepreneur America needs right now. For 30 years, Mr Egan has run a company making lifts to get wheelchair users in and out of vehicles and around the home. But now he has converted his upholstery shop to make surgical masks and gowns, and his 3D printing machines to make face shields, which he is planning to sell to medical centres in New York City, the current world epicentre of the coronavirus pandemic.
The only problem was that until last week Mr Egan, who is based in upstate New York, had no broadband internet, like tens of millions of other rural Americans. For years his patchy and makeshift internet connection was an irritation, cutting him off from customers and suppliers. Then it became a more serious issue.
“We make things with fabrics,” he says. “Not many people do that in the US any more — it is a lost art. Now we are getting a flood of people asking us what we can produce. Nothing has shown up our need for a connection quite like the Covid-19 crisis.”
Mr Egan finally got a connection at the end of last week after years of lobbying and the intervention of his local congressman. Other rural Americans, however, are not so lucky.
Even as the US races to be the first country to roll out superfast 5G internet connectivity nationwide, 21m Americans remain without any broadband connection at all, according to the most recent figures published by the Federal Communications Commission last year. BroadbandNow, a consumer website, puts the figure at double that.
It is especially a problem in rural areas: the Pew Research Center estimates that a third of rural Americans do not have broadband at home.
Even before the pandemic, rural broadband had become a simmering political issue, an acute example of being left behind which some Democrats were using to prise rural voters away from President Donald Trump. It is a subject that resonates from congressional districts in upstate New York to presidential swing states such as Iowa.
With the virus spreading rapidly beyond cities into rural counties, poor access to broadband has exploded into a major Congressional row, as politicians tussle over billions of dollars’ worth of stimulus money.
“I think rural communities are realising that this is as deep a divide as access to electricity was at the turn of the century,” says Abigail Spanberger, a Democratic member of Congress who recently won her semi-rural Virginia seat from the Republicans. “And if politicians want to be attentive to the communities they represent, broadband matters.”
Before the pandemic, many people in excluded rural areas found workarounds. Small business owners visited friends’ houses to communicate with customers or file online accounts. Schoolchildren would go to their local libraries or even fast food restaurants to do homework. Mr Egan paid over $4,000 to put up a radio antenna on a friend’s house on the adjacent hill and beam a wireless connection to his office.
But now, with public buildings closed and people confined to their homes, children are in danger of falling behind, medical patients are unable to contact their doctors and businesses cannot contact their customers. Many farmers cannot even operate their machinery: modern irrigation systems, for example, use real-time weather data to calculate how much water to pump out.
“I don’t think there has ever been a moment where everybody understands the profound role that broadband plays in our nation’s life, says Jonathan Spalter, chief executive of the industry association US Telecom. “This is no longer a matter of commerce, it is a matter of life and death.”
The US is not the only country to have struggled to provide broadband access to all its citizens. But the problem is much smaller in other industrialised nations. The UK has now rolled out broadband to 99.5 per cent of its population, according to the telecoms regulator Ofcom, while the EU average was 96.7 per cent in 2018.
Broadband rollout has proved a particularly difficult challenge in the US, thanks in part to how large and spread out the country is. Pew research shows it takes an average of two years between getting a grant to provide broadband to a particular location and the connection being switched on.
“There is no other OECD country that has the kind of vast rural land mass that the US has, and no country that has the kind of geographic and demographic challenges when it comes to delivering broadband,” says Mr Spalter. “Just think of the challenge of trying to get it from one end of Alaska to the other.”
It is not just Alaska that lacks broadband. Mr Egan is just a 15-minute drive away from the nearest city. Charter Communications had laid cable to within half a mile of his property, but until last week had been dissuaded from taking it the extra few hundred yards by high costs and a lack of potential customers. State and national governments have already spent billions of dollars trying to incentivise telecoms companies to build out to homes, offices and farms such as Mr Egan’s, and explanations vary on why it has not yet worked.
Some believe it simply needs more money. The Federal Communications Commission last year launched one of the biggest national schemes yet, promising to auction off $20bn worth of incentives for rural broadband access. But the FCC itself estimates it will cost as much as $80bn to get fibre optic cable to every household in the US, while the consultancy firm Deloitte puts the figure as high as $150bn.
Others believe the money has simply been misspent, focusing on incentivising private companies, which need to find a profit margin, rather than smaller non-profit groups.
“For the most part, we are still hoping that the private sector will find a way to make it happen, and it’s just not happening,” says Christopher Mitchell, a researcher at the Institute for Local Self Reliance. “The FCC has long believed that the big telephone companies could solve this problem, but they don’t consider things like rural electrification co-operatives.”
A far more fundamental problem is that no one knows who actually lacks broadband access. The official maps run by the FCC define an entire census block — which can run to many hundreds of people — as connected if just a single property within it has access. According to those maps, Mr Egan has long had a connection. But when BroadbandNow took a sample of more than 11,000 addresses and checked them against whether any internet service provider would provide a connection, it found the number of unconnected households was probably double that counted by the FCC.
The commission is now working on new maps which it says will provide a more accurate picture of the problem. But Ajit Pai, the Trump-appointed FCC chairman, wants to begin awarding money to areas before the new maps are released. He intends to start auctioning $16bn worth of money this October, just weeks before the presidential election.
Jessica Rosenworcel, a Democratic commissioner at the FCC, says: “The chairman has proposed, 13 days before the election, sending out $16bn. But I feel like we have put the cart before the horse. We are going to spend the money and do the data collection later — we have got it entirely backwards.”
The current crisis is spurring a wave of short-term solutions. Several telecoms companies have opened up their public WiFi hotspots for people to use for free, while some are providing free packages for families for whom affordability is the main problem rather than the lack of a connection.
Schools are also proving resourceful. Teachers in the Morrisville-Eaton school district in New York state are filming lessons and uploading them on to flash USB drives to be distributed to students without broadband at home. The district has also bought 60 Verizon hotspots, which use cellular networks to provide internet at home.
Such solutions however, are often expensive. The Verizon hotspots cost $40 a month each — money the school district can ill-afford. Greg Molloy, the area’s school superintendent, says: “We don’t know where the money is going to come from but we know we have to do this for the kids and we will figure out the money situation later.”
Democrats in Congress pushed for $2bn to be included in last month’s stimulus package specifically to help schoolchildren get online during the coronavirus outbreak. That plan was scotched at the last minute amid rancorous negotiations between the two parties. But some are hoping that it might make it into the next round of crisis spending.
Teachers worry that short-term fixes such as this will not stop long-term damage being done during the coming months. Grades are likely to suffer — a study by Michigan State University published earlier this month showed pupils with fast home internet access scored half a grade higher than those with none.
And some worry about the possibility of children suffering more serious, but less measurable harm. “I have spent a lot of time on the phone to pupils who don’t have internet access at home.” says Rachel Murat, a teacher at Maine-Endwell High School, also in rural New York. “But I rely on being able to see them to know whether they are getting what they need at home: do they have shelter, food, a stable place to be. Do they feel safe?”
Over the long term, campaigners for digital access hope that the pandemic will push this issue further up the political agenda. Even before the outbreak, there were signs that politicians were taking it more seriously. Mr Egan, Mr Molloy and Ms Murat all live in a district represented by the Democratic congressman Anthony Brindisi.
Mr Brindisi won his seat from an incumbent Republican last year in part by campaigning on this issue, regularly attacking Charter Communications, which runs the local cable service under its Spectrum brand. Mr Brindisi says: “A big piece of what I ran on was the lack of broadband service, especially in our rural areas, the unwillingness of our large corporations to expand our broadband service in this area.”
Now, the issue is being taken up by presidential candidates. Joe Biden, the presumptive Democratic nominee, has pledged to spend $20bn on expanding rural broadband, while Mr Trump said last month that he is “committed to ensuring that every citizen can have access to high-speed internet, including — and especially in — rural America”.
Those who have campaigned for years for every American to get broadband access hope that the combination of renewed attention, better mapping and the promise of billions of dollars in funding might provide the push needed to make it finally happen, even as the US prepares to enter the 5G age.
But even if it does, for many people who still struggle to do things online which most Americans take for granted, it will have come years too late.
“It is 2020,” says Ms Murat. “Internet really should be a utility at this point.”
Frontier: the rise and fall of a rural telco
Frontier Communications was once the archetypal rural telecoms company. Tracing its roots to Minneapolis in the 1930s, the telecoms business spread its wings slowly across the country providing telephony services to remote areas. By the 1990s it was scooping up smaller rivals in Idaho and Utah and in the internet era it started to think bigger.
Under the leadership of Maggie Wilderotter, it paid Verizon $8.6bn for its landline business in 14 states followed by a $2bn purchase of AT&T’s business in Connecticut. Six years later, it paid Verizon $10.5bn for its legacy customer base in Florida, Texas and California that added large urban populations to its footprint.
But problems quickly arose. It bungled the integration of assets that, in retrospect, it had overpaid for. It also struggled to compete in areas where it did not have a monopoly. Ms Wilderotter, having left the business, said in 2017 that it had to start “body tackling” its opposition.
Customers voted with their feet and, saddled with $17bn of debt, Frontier has withered at a time when the telecoms market has boomed. With a market value of only $37m, there is little to suggest that Frontier is a major player in US telecoms. In its last published quarterly results, it reported a $345m net loss on revenue of $2bn, although It still has 4m broadband, pay TV and landline phone customers.
The meagre valuation reflects its parlous financial state. It deferred interest payments on its debt to trigger a 60-day grace period last month. The final frontier appears to be looming for the telecoms company as it enters talks with its debtholders.
A collapse into Chapter 11 would be the biggest US telecoms bankruptcy since WorldCom but would also allow new management room to reset. It plans to tap government subsidies to upgrade copper lines in rural areas to optical fibre cables, returning the company to its historic roots as a regional and rural player. Nic Fildes
No comments:
Post a Comment