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The Digital Divide: Financing Broadband in Our Communities

By Community Development

Access to the internet is something that many individuals and communities take for granted. We use it to access educational tools, employment and business development opportunities, and medical, financial and housing information. But what if you lived in a community where broadband access was unreliable or nonexistent?

That is the case for many low- and moderate-income (LMI) and under-served communities across the country, in both rural and urban areas, where limitations on broadband affect daily life despite global advances in communications technology. This “digital divide,” as it is commonly known, creates a host of community problems and economic and social inequities.

The Richmond Fed’s Community Development team is working with stakeholders throughout the region and nationally to address community inequities stemming from this divide. “We are engaged in identifying new and evolving opportunities for financial institutions to partner in communities and with state governments to improve access by leveraging the Community Reinvestment Act,” said Richmond Fed’s Jeanne Milliken Bonds, senior manager, regional community development.

The Community Reinvestment Act (CRA), enacted in 1977, requires federal banking regulators to assess a depository institution’s record in helping meet the financial credit needs of its local communities, particularly LMI neighborhoods. In 2016, the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency updated the CRA requirements, making broadband a form of infrastructure investment and identifying it as an essential community service. Investments can now include facilitating the construction, expansion, improvement, maintenance or operation of essential infrastructure or facilities for health services, education, public safety, public services, industrial parks or affordable housing. Regulators also provided guidance on how banks show that “alternative delivery systems,” such as online banking services and other financial technology, are effective in providing services to LMI individuals.

“The updates in the CRA guidance are important acknowledgements that there is an increasing digital nature in banking,” Bonds added. “The guidance can be a spark for innovations for closing the divide and improving economic opportunity.”

The Richmond Fed’s contributions to advancing understanding of CRA requirements and opportunities have included hosting CRA training sessions, membership in the Charlotte-Mecklenburg Digital Inclusion Task Force since its inception in 2015 and making presentations. In 2018, Bonds presented at the National Digital Inclusion Alliance’s Annual Conference in Cleveland, “Net Inclusion.” Charlotte, North Carolina, is scheduled to host Net Inclusion in April 2019.  

The North Carolina/South Carolina CRA Bankers Collaborative met for a training session conducted by our team on workforce and broadband. Another program focused on the history of internet access in North Carolina — a model for its creation as an “information highway” in the 1990s. The collaborative, a more than decade-long alliance of North and South Carolina banks and the three banking regulators, focuses on banker education and networking so banks can increase understanding and technical capacity and share best practices of the CRA. 

In Maryland, our Community Development team is holding listening sessions with a state taskforce on rural broadband and the governor’s newly created Office of Rural Broadband. Three roundtables in Southern Maryland, Lower Eastern Shore and Western Maryland will bring together local and state officials, internet service and telecommunications providers, and representatives from the financial, education, health care and business sectors to discuss potential recommendations to expand internet access to rural Maryland communities. 

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Jim Strader (804) 697-8956 (804) 332-0207 (mobile)
Laura Fortunato (804) 697-8196 (804) 698-0927 (mobile)