Wiring Rural America: Which Technology Is Best?

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SPECIAL REPORT

CEO Guide to Broadband Stimulus

• Telecom Companies Scramble for Funding
• Wiring Rural America: Which Technology Is Best?
• Slide Show: World's Fastest Broadband
• Podcast: Rural Broadband
• To Spread Broadband, $7.2 Billion Isn't Enough

The idea for this story came from BW reader David Hanna, 2009 president of the Chicago Association of REALTORS and managing partner of Prudential SourceOne Realty in Chicago

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About 37% of those loans have gone to providers who run fiber optic cables directly to homes, 23% has gone to wireless services, another 22% to so-called digital subscriber line (DSL) technology, 17% to services running over cable networks, and 1% to broadband services that run over electric lines. Yet other analysts say that wireless has a much better chance in areas that aren't served by any type of broadband service because wireless technologies can be installed much more quickly. "My gut feeling is that there will be more wireless than anticipated," says Vince Vittore, principal analyst for broadband at research and consulting firm Yankee Group. Vittore doesn't include satellite services in that prediction because he says the cost of satellite equipment and service is currently too high for rural markets.

The Fiber Network Option

With speeds up to 100 Mbps, running fiber directly to homes is one of the fastest ways to deliver broadband service. The speed can easily be increased by changing the equipment attached to the network, which means it's unlikely to be made obsolete in the near future. Still, fiber networks are one of the most expensive options since installation is labor-intensive with construction crews often ripping up roads. To serve many rural residents in Vermont, for example, a 2007 report by the Vermont Public Service Dept. estimated it would cost about $4,000 per subscriber. Between 2004 and 2010, Verizon (VZ) plans to spend about $23 billion to build its broadband fiber network. This service is mainly deployed in non-rural areas, and consumers can get 15 Mbps download speeds for $49.99 per month and up to 50 Mbps for $144.95 per month.

Hill Country Telephone Cooperative in Texas says it costs about $9,250 per subscriber to serve 95% of its customer base with broadband Internet service using digital subscriber line technology. Subscribers can get up to 512 kbps for a monthly fee of $39.95 and up to 3 Mbps for $69.95. Hill Country is one of about 580 small and rural telephone cooperatives that are part of the National Telecommunications Cooperative Assn. Those members say the time has come to take a hard look at the costs of providing high-speed Internet access to rural America, says Tom Wacker, vice-president of government affairs at the association. "For years we've heard policymakers talk about the need for ubiquitous broadband deployment, but until now not a lot of attention was paid to the cost of it."

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King is a writer for BusinessWeek.com in San Francisco.

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