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Getting Connected: How Wide Is the Digital Divide?

Buoyed by unprecedented federal funding as well as a widely accepted understanding that Internet is a fundamental part of modern life, states and cities confront the remaining obstacles to getting everyone online.

landscape with green prairie int he foreground and mountains in the background
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North Carolina has about 400,000 homes and businesses either not served by high-speed Internet or with woefully inadequate service.

“In addition to those homes that don’t have access to a high-speed Internet connection, we’ve got many homes across North Carolina that can’t afford service, or don’t have a tablet or laptop at home or don’t have the digital skills they really need to participate in the modern economy,” said Nate Denny, deputy secretary for broadband and digital equity in North Carolina, laying out his state’s broadband and connectivity scenario. “So we have several overlapping problems here. You could have one of those problems, or you could have all four of those problems.”

North Carolina, like every state and U.S. territory, is in the throes of getting a clearer understanding — than perhaps ever before — of just how wide their digital divides are. They have organized state broadband offices, generally within technology agencies, to count, quantify and analyze the depth of the problem. States have drafted broadband equity strategies that take into consideration that not everyone’s challenges to having high-speed Internet in their home are the same, and therefore the state’s approach to expanding this public utility will require a range of ideas.

This national effort to expand broadband access is part of the by now familiar 2021 Infrastructure Investment and Jobs Act (IIJA), a sweeping bipartisan $1.2 trillion plan to update and expand infrastructure across the country. Much of this funding is headed to some of the most traditional forms of infrastructure like roads and bridges. But it’s also being used to jump-start a national network of high-speed electric vehicle charging, modernize fleets of trains and buses, and invest some $65 billion into broadband.

Nate Denny, North Carolina deputy secretary for broadband and digital equity, with a quote
The centerpiece of broadband funding is the federal Broadband Equity, Access and Deployment (BEAD) program, making more than $42 billion available to 56 states and U.S. territories to help build out broadband in unserved areas.

North Carolina was awarded $1.53 billion from the BEAD program. This comes in addition to other federal funding sources like $1 billion from the American Rescue Plan Act (ARPA).

“We’re in a position where if we use the dollars right, if we stretch them as far as we can, and if we build a program that promotes strong competition and participation from the Internet provider community, then we believe we can get the job done,” said Denny.

Broadband leaders like Denny stop short of saying that the combination of “jump-start” funds from ARPA and BEAD allocations will solve their connectivity problems entirely.

“But I think we’re in a very strong position,” said Denny, who was also careful to note, “there are no guarantees,” given the fluctuating movements of labor costs and supply chain complications.

Several states away in the Mountain West, the Colorado Broadband Office is busy realizing Gov. Jared Polis’ goal to connect 99 percent of Colorado households in the next five years.

“That gave us the North Star on what the expectation was, and what we were trying to benchmark against. So for us, it’s universal coverage. It’s 99 percent of households connected,” said Brandy Reitter, executive director of the Colorado Broadband Office.

Today, about 93 percent of homes have broadband connections, said Reitter. When the state began its work to expand broadband connectivity, about 10 percent of households were not connected, which amounted to about 180,000 locations, which included unserved and underserved (most locations are considered underserved).

Colorado was awarded $826.5 million from the BEAD program. The funding, administered by the National Telecommunications and Information Administration (NTIA), sends the funding to states. The states then take the lead on funding projects in accordance with their broadband expansion and equity plans.

At the center of this process is data, and the hefty task of knowing which homes, businesses and other locations are underserved or not served at all. An April 2024 report by the Dallas Federal Reserve mapped these locations, leaning on data from the Federal Communications Commission (FCC) — which in turn can be traced to self-reported data from Internet service providers — Ookla, a company that calculates Internet speed tests, and the U.S. Census Bureau’s American Community Survey. The Dallas Fed found that the various caches of data were insufficient to give a true measure of connectivity in each state.

“While the IIJA funding is broad-based, the lack of consistent and accurate data on broadband gaps remains a problem,” the report reads, and goes on to point out, “while there are a number of data sets that seek to address those questions, each has troubling flaws.”

And indeed, states have been given the opportunity to challenge the FCC data, aiming to arrive at a more accurate understanding of what areas are unserved and underserved, since funding is tied to this statistic.

Perhaps further complicating the enormous nature of a national broadband expansion effort is the formula for allocating its many billions of dollars. Missing from the allocation formula used to determine BEAD funding, say experts and industry leaders, is the particular nature of the West, an area dominated by broad swaths of rugged terrain and low population, two factors that make broadband infrastructure development costly and difficult to justify because of so few potential Internet subscribers.

“The Rocky Mountain Range is gorgeous, but it’s really cost prohibitive to build any kind of infrastructure in those areas. Those remaining locations are the most expensive to serve,” Reitter said. “So we’re hoping that with these subsidies for capex we’re able to buy down those costs and get infrastructure deployed in those areas.”

Only about 65 percent of rural areas have access to Internet in Colorado. Some cost models show Colorado’s BEAD allocation as sufficient, while others show the state coming up short.

“We believe that the BEAD money will address a lot of our issues for broadband deployment. I can’t say at this point it’s enough, because we’re still at the beginning stages,” Reitter reflected.

Even states like California, with its 39 million residents, have huge stretches of rural mountain areas that can make broadband both spotty and costly, said Joanne Hovis, president of CTC Technology and Energy, a communications and IT engineering consulting firm, adding that the BEAD funding formula does not seem to consider these nuances.

“I don’t think this was intentional on the part of Congress, or the drafters of the statute at all,” Hovis said.

That said, BEAD’s funding formula is structured so that about 10 percent of the formula was based on locations NTIA identified as high cost, while 90 percent of the formula was based on FCC map data related to the number of unserved locations as it stood at that time.

A state like Wyoming, with only about 600,000 residents, was awarded $320 million in BEAD funding, which would hardly come close to covering the cost of building broadband infrastructure across the state’s vast expanses, much of it mountainous. Compounding the terrain are the challenges associated with generating the sort of revenue to support a profitable business operation given the paltry number of possible subscribers.

Brandy Reiter, executive director of the Colorado Broadband Office, with quote

Savvy communities are sidestepping the need to attract for-profit Internet service providers and using this moment to develop not-for-profit municipal or co-op Internet service plans for their residents. Fort Collins, a city of nearly 170,000 residents in northern Colorado, is one of those communities. In 2019, the city launched its Connexion high-speed broadband service, a municipal-owned utility. The service, developed as a $150 million investment, now has 19,000 subscribers enrolled in a range of service plans, starting at about $70 a month.

The aim, said Chad Crager, broadband executive director in Fort Collins, is to continue to develop the municipal broadband model out beyond the city limits, to start to connect rural areas.

“There is a massive digital divide being created between a rural area and an urban area,” Crager said, speaking on a panel at the Bipartisan Tech Conference in Washington, D.C., in April.

“The opportunity is in the rural areas, with municipal fiber. The beauty in that is you don’t have corporate shareholders that live states away, or countries away. But everything is going back into the community,” he explained.

Municipal-owned systems have the flexibility to build equity programs into their organization. Fort Collins has set aside 6 percent of revenue for a digital inclusion fee that helps fund digital liaisons and hardware at the local school district. The fee also helps fund a program for income-qualified residents, reducing their monthly subscription cost from $70 to $20. While the FCC announced that June 1 marked the official end of the Affordable Connectivity Program (ACP), which provided a subsidy to low-income households to purchase Internet service plans, nonprofit providers like a municipal or co-op broadband network can still design low-income plans.

“We recognize the lack of longevity with ACP and wanted to do something different,” Crager said before the program’s conclusion.

With programs like BEAD and others to expand broadband connectivity, the time is ripe, say industry watchers, to grow these nonprofit service models.

“There’s a lot of opportunity for cooperatives. It helps that they don’t have to show a profit margin. A break-even scenario works,” Hovis said. “All over the country, the electric co-ops have been very active in the broadband space. I would imagine they will be significant competitors for BEAD funds.”

Chad Crager, broadband executive director in Fort Collins, Colo.

Back in North Carolina, Denny reflected on progress the Tar Heel State has made in its goal to expand broadband infrastructure. The state has awarded competitive grants to Internet service providers to bring high-speed service to about 150,000 unserved homes and businesses in 92 of 100 counties.

“That’s a pretty big bite out of that 400,000 households problem,” Denny said.

The grants were awarded to private Internet providers and other groups like electric utility cooperatives, as well as telephone membership cooperatives that are building out fiber connections directly to homes and businesses.

“The need is everywhere,” Denny said. “There’s a lot of need in the mountains, where these infrastructure projects are challenging and costly to deploy. There’s a lot of need in rural eastern North Carolina. ... There’s even significant need in kind of the rural outskirts, or exurbs, of urban counties.

“This is not exclusively a mountainous or coastal problem,” he continued. “It’s not exclusively an urban or rural problem. It’s really a broad-based challenge that affects every corner of our state. We’re really fortunate to have this once-in-a-lifetime infusion of funding.”

The essential nature of broadband in modern society hardly needs to be stated. It’s needed to access more than just Netflix, but essentials like telehealth, education and workplaces.

“I renewed my driver’s license from my phone the other day,” Denny recalled. “All of these sectors of life, and the way that we engage with society and with each other, and the government that represents us, require that connection. And so making these investments in the infrastructure really opens up possibilities across each of these sectors for the communities that currently have no, or limited, Internet access.”

This story originally appeared in the July/August 2024 issue of Government Technology magazine. Click here to view the full digital edition online.
Skip Descant writes about smart cities, the Internet of Things, transportation and other areas. He spent more than 12 years reporting for daily newspapers in Mississippi, Arkansas, Louisiana and California. He lives in downtown Yreka, Calif.