Transcript

David Bass: I'm David Bass, senior economic education outreach specialist at the Federal Reserve Bank of Richmond.

The COVID-19 pandemic exposed the digital divide and the need for rapid broadband infrastructure expansion. How can states and localities make best use of the resources available for broadband infrastructure and create a conducive environment for broadband expansion?

To tackle this important question, the Richmond Fed has partnered with the Pew Charitable Trusts to organize a broadband summit on June 8. The virtual event will highlight best practices for broadband policy and innovative approaches for broadband infrastructure projects and deployment.

We'll talk about the broadband summit with two of the event's organizers. Anna Reed leads the Broadband Access Initiative at the Pew Charitable Trusts. Her work focuses on research and promising practices that will help legislators and other policymakers expand connectivity and close the digital divide. Alex Marré is the Richmond Fed's regional economist based in Baltimore, Maryland. He's spending a lot of his time examining differences in economic outcomes in rural and urban communities, including the role of broadband access in those differences.

Thanks for being here, Anna and Alex.

Alex Marré: Thanks, and thanks for the invitation.

Anna Read: It's great to be here. Thanks, David.

Bass: In a previous episode, we discussed the need to close the so-called digital divide and how the COVID-19 pandemic exposed the extent of this issue. Can you summarize for our listeners the differences in broadband access that you and other researchers have found?

Read: Sure, I can start and I'll let Alex go from there.

When you're looking at the data on broadband access, there are two components: access to the infrastructure necessary to provide service at broadband speeds, and then the adoption piece where people are subscribing to that service where it's available.

When you're looking at challenges in broadband access, it's primarily a rural challenge. Rural areas are significantly less likely to have access to service at broadband speeds for a number of reasons, primarily related to the cost of building infrastructure. Telecommunications infrastructure, broadband infrastructure is very much related to the density of population. As your density of population falls off, the cost to provide service increases and the number of customers who can subscribe to that service decreases. So there's not always a great business case for providers.

When you're looking at the adoption side, our colleagues at the Pew Research Center have done some really great research on that challenge, on who's online and who's not online. You see lower rates of adoption among older adults — people age 65 and up — among adults earning less than $30,000 a year, and among the non-white population.

Marré: Yeah, I think Anna summarized that really well.

We did some research looking at households with school-age children at home, and we looked at whether they lived in rural, suburban or urban, inner city school districts. If you look at — as Anna was mentioning — both infrastructure and adoption, the availability of an internet subscription at home, the kids in rural school districts and in inner city school districts actually look very similar in terms of the share of those households that don't have internet at home.

The reasons may be different but I think the point is that, either through lack of infrastructure or affordability issues, the challenges parents are facing are very similar in both very rural and very urban households. There's some common threads, even though the reasons may be different underneath. This is not only a rural issue but also an issue for many urban families.

Bass: Alex and Anna, what resources are currently available for state and local governments to help them address these disparities? Have these resources changed since we last spoke in December?

Marré: I'll take a stab and then pass it over to Anna.

At the federal level, the largest pot of money has been through auctions that the Federal Communications Commission, the FCC, has run. Those are basically subsidies to internet service providers to expand infrastructure into areas that currently have no broadband infrastructure. At the state level, it's been a mixed bag.

I think the big change we've seen since we last spoke in December is a significant amount of new funding for broadband — both on the infrastructure side and also on subsidies for internet service — that have come through in response to the COVID pandemic. For example, the American Rescue Plan that was passed on March 11 includes a $220 billion COVID-19 pandemic recovery fund for states and localities, and states and localities can use that money for broadband. My understanding is that the rules around how you can use it and where exactly it can be used, what types of things, is still being worked out.

The larger point is that there are significantly more resources available now, certainly at the federal level and the state level. And so the key is really, how do you take advantage of this money and make sure that it's spent in ways that really increase access to broadband.

Read: Building on what Alex said, there's a lot more money available at both the federal and state levels to address broadband, between the American Rescue Plan and the available funding there, for which the interim final rule was released earlier this month, and states previously being able to use some of the coronavirus relief funds towards broadband and then discussion about additional infrastructure funding.

At the state level, about half of states have some form of broadband grant program now. This year, the funding commitments to those programs — both existing programs and some of the newer programs — have been larger than what we've seen over the last few years. So there's that increased focus on the need to address broadband and the amount of money that it will take to fully address that challenge above the state and federal levels.

Bass: Anna, how can state officials create a conducive environment for internet service providers to expand broadband infrastructure in places where it has not been done?

Read: There are a couple of things that we see states that are really working on this challenge doing, and it starts with the policy setting — how they're addressing who can and cannot provide broadband access to allow some of those tools in the toolbox to address the challenge.

You start with that policy level, and then you have those grant programs which are really important for helping expand access into those currently unserved areas. Generally, they provide funding for which the provider or the community partnering with their provider also contributes match funding. Those funds help essentially buy down the cost of extending infrastructure in those areas and creates that necessary business case for providers to be able to expand service.

States can also support planning and capacity building activities. They are helpful for evaluating the model that will work locally, they're helpful for forming partnerships between communities and providers for building awareness and support in the community and for moving those projects forward.

Bass: This is for you, Alex. Partnerships between the public and private sectors have been mentioned as a way to build up broadband infrastructure. Could you provide a few examples of that in the Fifth District?

Marré: Sure, David.

This is, I think, really key for the places in our district where there's either no existing broadband provider, or there may be potential providers in the area but they're just not willing or don't have the resources to expand infrastructure.

The point is, how do you put together partnerships that can help get the job done on broadband infrastructure? At the summit that we'll be having, we're going to hear from three successful public-private partnerships that are either currently underway or have been completed throughout our district.

One is from West Virginia, it's a project between Generation West Virginia and the Benedum Foundation. The innovation is the fact that they're involving philanthropy in helping to provide key funding and other resources to get projects put together, which can then access the federal subsidies. You really do need subsidies in order to build out this infrastructure in areas where it's very expensive to do that, and so putting these projects together that can they can apply for that funding is really key.

Another we'll be hearing from is All Points Broadband, which is a network in Virginia. What's interesting with this public-private partnership is they're working very closely with electrical utilities to help share the cost burden of building out broadband infrastructure. Again, it's the partnership that's really key here at spreading the risk and spreading the reward of expanding this broadband infrastructure.

The third is from South Carolina, the Allendale Broadband Pilot Project, which was innovative in a couple of different ways. One is that they were ready to use the CARES Act money from the federal government when it came. They had a very short window available to use that money and they had a plan in place and were able to use the money and get it on the ground and working. It's a fixed wireless project that's using a type of fixed wireless technology that doesn't require as much of a line of sight as you needed to with the old fixed wireless technology. They also are taking advantage of the vertical assets like water towers throughout the small towns' service area. There's also a component to the Allendale project which involves free public Wi-Fi in certain areas, which will certainly help with low-income households and in terms of their ability to access the internet.

These are just three different projects we see that are successful throughout our district. They really point to the wide variety of ways of putting these projects together and the variety of partnerships that can really help get the job done.

Bass: Anna, what other innovative approaches have you heard about?

Read: We're seeing states look at a few approaches focus on new models to help facilitate the expansion of broadband into those unserved communities.

One of those is the formation of regional utility districts for broadband service in a way that multiple communities would come together to form a utility district for other services such as water. Vermont, for example, has communications union districts, which allow multiple municipalities to come together to form a broadband entity. Washington State allows public utility districts to provide wholesale telecommunication services.

Several states have also started programs that allow their investor-owned utilities to lease excess capacity on their fiber. So as utilities are working to modernize their grids and installing fiber for those purposes, [they are] allowing the installation of excess capacity and the leasing of that capacity to provide middle-mile service that will help facilitate those last-mile connections in unserved areas. Virginia is one of the earliest states to do this and we'll share about their experience with that program on the panel at the summit.

Bass: You mentioned the broadband summit and talked about who some of the participants are, but could you talk a little bit more about the summit, the topics that are going to be covered and who should plan to attend the event?

Marré: We would love anybody who's interested in expanding broadband infrastructure and access within our district to attend.

We're going to have an opening talk by Tom Barkin, the president and CEO of the Federal Reserve Bank of Richmond. Our partners at the Pew Charitable Trusts will be handling the first set of discussions about successful state broadband policies [and] we'll hear from some innovative approaches there. The second panel will be focused on public-private partnerships in the broadband space and we'll be hearing from people involved in the three projects that I just mentioned in the last question.

Then we'll have a series of breakouts by state, we'd love to have you in conversation with key people who are working on broadband in your state and also with each other to talk about what you've heard. Our goal with that is to really help move the conversation forward and be of help wherever we can in making sure that all the communities within our district have access to broadband.

Bass: So why is the Richmond Fed organizing this event? Why is Pew participating and partnering with us? And what other ways will we focus on this topic in the future?

Marré: Broadband is just really key for economic vitality, especially of rural and small towns but really for everybody. Access to digital resources is really, really key to full participation in a 21st century economy.

We've been continuously going through our district listening to people in rural and small towns as well as in cities, listening to the issues they're facing with the economy and being able to participate fully in it. Especially in rural and small towns, we've heard over and over again how lack of broadband access is really holding them back from economic opportunities.

Read: Building on what Alex said, broadband is very important for the economic vitality of communities. Policymakers have been focused on the role that it does play in economic development.

Additionally, the last year really illustrated not just the need for broadband to be able to participate in online school, to work from home [and] to access services, but also how widespread gaps in access are and how necessary it is to address that challenge. Over the last few years, we at Pew have been looking at the role that states are playing in closing gaps in broadband access through the programs that they have in place.

States are very important partners in this space and have for communities looking to improve broadband access. States across the Fifth District has been actively engaged in working to expand broadband access.

Bass: Anna and Alex, thank you very much for joining us today. Appreciate hearing from you, and I look forward to seeing the both of you at the broadband summit on June 8 along with an exciting group of panelists. Appreciate it.

Marré: Thank you so much, David. We're really looking forward to this summit.

Read: Yeah, thank you and looking forward to the event as well.