Since the 1930s, policymakers have known that rural communications is a “market failure” — something that happens when private companies cannot or will not provide a socially desirable good because of a lack of return on investment. At that time, electricity and telephone companies were simply unwilling to enter rural America: The population was too sparse and the geography too vast. As a result, President Franklin Roosevelt created the Rural Electrification Administration in 1936 to provide loans and grants to rural electric and telephone companies. It was a tremendous success: Within 20 years, 65 percent of farmers had a telephone and 96 percent of them had electricity.

 

We have a similar problem with rural communications today — not with telephones or electricity but with broadband internet. In 2017, a full 30 percent of rural Americans (or 19 million people) and 21 percent of farms lacked broadband access. What we need today to solve this digital divide is a renewed federal commitment to rural communications. We need a national rural broadband policy, demonstrating that the United States is serious about becoming a fully connected nation.

 

The Rural Utilities Service — the successor to the Rural Electrification Administration — has subsidized internet connectivity since 1995. It is one of two federal agencies charged with subsidizing rural broadband: The Federal Communications Commission provides about $8.8 billion per year in broadband subsidies (rural, tribal and low income) with at least $4.6 billion earmarked for rural. The Rural Utilities Service (a division of the Department of Agriculture) metes out about $800 million per year for rural broadband loans and grants. Last summer, Congress allocated an extra $600 million to the Rural Utilities Service to subsidize broadband projects for the most underserved communities. This is in addition to the $7.5 billion in rural broadband loans and grants provided by the 2009 Recovery Act.

 

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