RUS Redux: Fighting Once More to Encourage Government Funding for Rural Broadband

Last summer, I called attention to the importance of access to high-speed Internet service to agriculture and farming related businesses and the underperformance of government programs that are supposed to help rural underserved areas get the infrastructure they desperately need. I wish I could say that conditions have improved.

They haven’t.

Unsurprisingly, Internet use among Latino- and Native American-owned farms and ranches remains low. In many cases, this is because the service simply isn’t available where they live and work. What’s more surprising—and frustrating—is that the programs designed to cure this ill have yet to be upgraded to meet our needs.

Last Fall, the Federal Communications Commission took an aggressive step by reforming its Universal Service Fund (USF) program to give better guidance and direction to companies that receive subsidies to build telecommunications networks. In doing so, the FCC was able to shift more money to supporting high-speed Internet deployment and adoption in truly unserved areas. Obviously, this was a step in the right direction, and the National Latino Farmers and Ranchers Trade Association and the Rural Coalition membership supported the FCC’s efforts.

Now, as Congress considers a new Farm Bill, we will need to once again tell Congress either to reform or to provide stricter targeting and utilization of the USDA’s Farm Bill Broadband Loan Program. Created in 2002, this program suffers from lax rules that permitted government funds to flow to areas that were already served by broadband, and a lack of incentive to apply for funds in unserved areas. As I wrote last year, an internal USDA audit revealed that funds frequently go to areas in which 60% of the households already have service, and at least 10% of USDA loans are awarded to areas that aren’t even considered “rural.”

Without reform, the program has been stagnant. USDA has not dispersed a rural broadband loan in nearly three years. As of a year ago the program was still authorized to spend $300-$400 million in new loans. That number is higher now, no doubt, as Congress continues to fund the program each year.

In the next Farm Bill, Congress can make some simple changes to fix this well-intentioned program. The obvious, most necessary change is for Congress to mandate that the Farm Bill Broadband Loan Program funds exclusively target unserved areas. There’s no reason not to do this: the FCC found that about 5% of U.S. housing units don’t have access to high-speed Internet, so spending money on the other 95% that already benefit from private investment is plain wasteful. And as we know, the current program hasn’t helped any truly rural areas to get access despite having loaned roughly $2 billion.

In this upcoming 2012 Farm Bill, Congress has a unique opportunity to improve the program by changing the award from a loan to a grant or a combination loan/grant program. Let’s face it: a loan implies that the borrower will one day make enough return on its investment to repay the loan. But in unserved areas, which are so sparsely populated that investors would never recoup the massive amounts of money it would take to build out high-speed Internet infrastructure, repayment is far less likely. Many would-be applicants simply don’t bother to apply. A grant program would attract more companies by dramatically lowering the risk involved.

With these changes, the USDA’s Farm Bill Broadband program could finally—after nearly a decade—bear some fruit for unserved farmers and ranchers.