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With government help and at a cost of hundreds of millions of dollars, telephone and Internet providers are extending fiber-optic cable to more and more corners of rural America. The work is essential to closing the 'digital divide,' experts say. IMAGE: Broadband Association of North Dakota

A necessity, not a luxury: How public-private partnerships are extending broadband access to rural areas

HERREID, S.D. – At the weekly Herreid Livestock Auction here, area ranchers no longer see as many cattle buyers checking out the cattle as the animals move through the ring.

“We’ve still got 12, 15, 18 buyers there, but it’s not like it used to be,” says Joe Vetter, auction co-manager.

But the buyers really are there in a virtual sense. They’ve simply arrived via the fiber telecommunications routes of America instead of the Interstates and two-lane highways.

Thanks to high-speed Internet, the buyers study video of the auction and buy cattle at every sale.

“You never meet them. They bid online, and the cattle go wherever they’re at. They could be at their feedlots in Minnesota, Iowa, Kansas, Nebraska, Texas, Oklahoma – anywhere,” Vetter says.

“Technology has changed the world.”

Rural broadband

Including the rural-economy world, and the technology that has changed that world is broadband. Broadband means producers who had been used to doing business within a radius of 50 or 100 miles now can participate in a worldwide economy, said David Crothers, executive vice president of the Mandan, N.D.-based Broadband Association of North Dakota.

And of vital importance is the fact that North Dakota, South Dakota and Minnesota all are making progress in providing broadband services, despite vast areas in all three states where few people live., a comparison and research website, said nearly 95 percent of North Dakotans, nearly 92 percent of Minnesotans and nearly 90 percent of South Dakotans have access to wired broadband of 25 megabits per second or faster.

That isn’t as meaningful as it might appear, given that most of the population lives in urban areas. But even in South Dakota, which trails Minnesota and North Dakota in broadband rollout, the South Dakota Telecommunications Association reports that rural providers in the state are already reaching more than 65 percent of their customers’ homes or businesses with broadband.

Real challenges remain. In the SDTA’s recent report, South Dakota ranked 35th among the 50 states in average download times, meaning it takes roughly twice as long to download a high-definition movie in South Dakota as it does in first-place Rhode Island.

Still, many small communities have made impressive gains, thanks in part to cooperatives and small telephone companies that are investing in rural America. That includes American Indian communities on reservations, some of which are doing well.

A case in point is the Cheyenne River Indian Reservation in South Dakota, where the Cheyenne River Sioux Tribe Telephone Authority – formed in 1958 as the first tribally owned telephone company in the nation – finished rolling out broadband in 2016.

“We had an old copper network that was 35-plus years old. Obviously we had to do something,” says Mona Thompson, general manager for the tribal telephone authority.

“Fiber was our answer.”

Government help

But the way broadband got to those reservation areas in Dewey and Ziebach counties is a lesson in what works for rural America. For it was a local telephone company – the tribal authority in this case – that had been providing telephone service for decades that stepped up to install fiber for high-speed telecommunications.

And it did so with the help of the federal government, which loaned money for the project through the U.S. Department of Agriculture’s Rural Utility Service.

Other federal programs, such as the Federal Communications Commission’s Universal Service Fund, help support other telephone cooperatives or independent telephone companies.

Without such assistance, those in the industry say, it would be very difficult to serve sparsely populated pockets of the Great Plains.

Here’s why the help is required. Last year, the South Dakota Telecommunications Association – which has 18 member companies – calculated that it costs an average of $16,000 per mile to install “backbone fiber” in rural South Dakota, compared to an average of $60,000 per mile in Sioux Falls, the state’s largest city.

But that’s not the bargain for rural areas that it first appears. As the SDTA report points out, the Sioux Falls metro area has 2,490 residents per square mile compared to 4.48 residents per square mile in the area served by the association’s 18 member companies.

The cost to bring fiber to rural South Dakota is an average $3,571 per resident compared to $25.54 per resident in Sioux Falls.

Bottom line? Companies will reap a much greater return on investment in urban areas. And that means government help is vital in ensuring timely upgrades in rural areas.

“I think what makes the business model work is the fact that a number of our companies – actually all of our companies – receive some level of federal Universal Service Fund support because they serve ‘high-cost areas,’” says Greg Dean, director of industry relations for the SDTA.

County as well as state governments also are pitching in. “Over the past few years, several counties in Minnesota have partnered with local electric and telephone cooperatives to expand high-quality Internet access as an economic development strategy,” reported Katie Kienbaum, research associate with the Community Broadband Networks Initiative of the Institute for Local Self-Reliance, in December.

“In many instances, county governments have offered financial support to the local co-ops, in the form of grants and loans, to connect their rural residents with high-quality fiber networks, often supplementing federal subsidies or statewide Minnesota Border-to-Border Broadband Development grants.”

These efforts plus multi-million dollar investments by Internet providers such as Arvig, Midco and Dakota Carrier Network mean more and more rural customers can access high-speed service.

North Dakota is “within seeing distance” of having no gaps in coverage, said Todd Domres, DCN’s director of sales and business development for the network, to Forum News Service earlier this year.

“Whether that takes months or years to accomplish will depend on continued investment and emerging technologies,” Forum News Service reported.

Said Domres, “I think you’ve got the hard part done” with existing technology.

Flat land vs. uphill

Erica Hager, owner of a company called Bison Booties that she started 8½ years ago, is another reminder of why all of this matters. Hager runs her business from rural North Dakota, but she’s anything but landlocked. The footwear that she designed for her own children when they were infants now has a global market.

She’s shipped product to all 50 states and 18 countries.

“I connect with the world from my rural Mandan house,” Hager said.

Could she have done it without the Internet? Specifically, the kind of high-speed Internet that a fiber connection makes possible?

“It definitely would be much more of a challenge for me in my business,” said Hager.

“Think of it like running on flat land compared to running up a hill. It would be holding your business back. There’s no way you could keep up without that faster Internet service. It’s not a luxury anymore, it’s a necessity.”

Lance Nixon

Freelance writer

Pierre, S.D.