Creating a Broadband Policy without Doughnut Holes

People are working to get broadband access to rural areas in companies like OTELCO and at town halls, state houses and Federal agencies across the country.  The latter two groups are focused on two different vehicles for promoting broadband.  First, they set policies to promote broadband expansion and the construction of new networks.  Second, they distribute state and Federal monies in the form of grants to subsidize construction of networks where there isn’t necessarily a business case.

When setting policy and awarding grants, the focus is on the “un-served,” although there is some recognition that a second group, the “under-served,” is also important. One guideline we use to determine who belongs in these groups is a government set definition of broadband.  Currently, the Federal definition is 25/3, but it grows over time as customer demand for bandwidth increases.  If you think logically, you might think the un-served are those without at least 25/3 and Federal grants are focused on getting everyone to 25/3 – but you’d be wrong.

Actually, The Federal government sets the bar for investment much lower than that.

The Catch 22 Created by an “Un-served First” Broadband Policy

The Federal standard for “un-served” for funding under the Connect America Fund is 4 Megabits per second down by one megabit per second up – meaning that if you have more than 4 megs today, your community cannot get Federal funds to improve coverage, even though the Federal definition of broadband is 25 megs.

Impacts of Broadband policy on GreenbushLogically, it makes sense that the areas with the worst connections should get funding first, but here’s the rub: this policy all but forces rural service providers to by-pass the town centers, which get decent DSL coverage, in favor of the outskirts of town.  Some people call this the “doughnut hole effect.” Although we want to build broadband for economic development, money is not available to build broadband in town centers, where you generally find the most economic activity.  Take this example from Rural Greenbush, Maine:

If you don’t know Greenbush, it’s all very rural.  There is no cable broadband, but OTELCO does have DSL in town.  Federal funds are available to support broadband through the Alternative Connect America Model (“ACAM”) in the orange areas on the other side of the river, and in the lighter green areas in the northeast of town.  The rest of Greenbush, including the majority of the Route 2 corridor, is in the doughnut hole.  Not only are there no Federal funds to support deployment there, but most of OTELCO’s capital budget over the next several years will go to the ACAM blocks as well, resulting in faster service around the outside of the “doughnut” leaving the center of town underserved.

This is an example of a Federal program, but Maine’s own grant programs offered through ConnectME have similar drawbacks. They focus very strongly on the un-served, at the expense of the under-served.

Filling in the Doughnut Hole

I don’t know about you, but I like munchkins (not talking about the Wizard of Oz here).  The doughnut holes are just as worthy of investment as the outside of the doughnut, and we need to find ways to fill them in. Some of this can be done by private industry, but if we want it done quickly, some adjustments to broadband policy would be a big help.

Where Private Industry Can Help

OTELCO, spends millions of dollars each year on expanding and enhancing service.  Over the next several years, much of those funds will go to ensuring that the ACAM service areas are built out. However, there are some things we are doing to enhance service in areas that aren’t getting funding.

For starters, when we’re building out to an area that qualifies for funding, we pass several homes that aren’t funded. We use our own capital budget to connect them, increasing the size of fiber cables and install the necessary drops and equipment. For example, when we built a recent ConnectME funded project to 30 homes in an unserved area in Gray, Maine, we brought fiber to another 50 homes we passed on the way there.

We’re also doing stand-alone projects in unfunded areas where we can, but these projects are small in comparison to the size of the area we are working to serve.  As part of this effort, we’re currently working on deploying fiber in parts of Whiting, Vermont.

How Funding Practices Might Change to Speed Deployment in the Doughnut Hole

Modifying the funding model would also help fill in the doughnut hole.  Rather than have two standards, a definition of broadband and a lower definition of un-served, imagine having a single definition of broadband and funding broadband deployment on the net improvement in bandwidth.  For example, if we define broadband as 25/10 and used a tiered structure like the one displayed below, we could establish tiered funding based upon the net improvement in broadband speed.

Tier Service Level Service Designation
5 50/50+ Served
4 25/10 and 50/50 Served
3 25/3 and 25/10 Unserved
2 15/2 and 25/3 Unserved
1 10/1 and 15/2 Unserved
0 Below 10/1 Unserved
One Tier Improvement 10% Funded
Two Tier Improvement 20% Funded
Three Tier Improvement 30% Funded
Four Tier Improvement 50% Funded
Five Tier Improvement 60% Funded

In this way, there is funding to improve performance for the under-served, and more funding to bring broadband to the un-served.

Keeping our eyes on the ball

While we’re working on the worthy goal of bringing broadband to the un-served, let’s remember that our goal is better broadband for everyone.  Eliminating doughnut holes that leave town centers un-served requires a joint effort on the part of industry and policymakers, and smart policies that put funding where it can do the most good.

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