Missouri Business

Sowing Speed

A cable plow slowly crawls along a gravel road near Salisbury, a small town in Chariton County. It burrows a narrow trench into the earth. As the machine moves, a worker feeds a small cable into the ground.

It’s a relatively simple job. The work itself doesn’t take long or draw much attention. But the fiber-optic cable this crew is burying is potentially transformative for the businesses and residents here. It gives them a long-desired high-speed gateway into the digital economy.

Work like this is happening across Missouri as private internet companies expand their networks into rural communities.

The crew here is working for Chariton Valley, a telecommunications cooperative in northeast Missouri.

Before Chariton Valley sends a crew out to bury new fiber optics, the company surveys local residents to ensure there is enough demand to support the investment.

Its philosophy is: “If you want internet, show interest in it. When we reach a certain number of customers, we’ll build it,” said Kirby Underberg, CEO and general manager of Chariton Valley.

Often, the interest is there.

Over the next five years, Chariton Valley is committed to spending $42 million to ensure each of its customers has access to high-speed broadband. The cooperative is also investing $25 million to expand high-speed service into other parts of rural Missouri that lack any access to broadband.

Chariton Valley, like many other rural internet providers, relies on funding from the federal government to help offset some of the costs of this work.

The government support is timely, as broadband has now become nearly essential to the economies of all communities, no matter how small.

“It creates an opportunity for someone to be rural or urban and compete in the urban space, no matter where you are,” said Underberg. “We’re seeing where we’re putting in fiber, businesses are now looking at rural again to come in because of the connections.”

It’s something Missouri’s rural areas desperately need. For businesses, fast internet is becoming as high a priority as electric, water and other basic necessities. Broadband also increases access to educational opportunities and health care services as well as benefiting sectors like manufacturing, transportation and agriculture.

However, the effort to expand broadband to rural Missouri has come with significant obstacles, such as low population density in many areas and the expense of burying cable.

“Of course, all businesses have limited capital to deploy into building anything, whether it be a warehouse or a broadband network,” said Richard Telthorst, president of the Missouri Telecommunications Industry Association.

Missouri’s landscape itself can be another big challenge.

“We have very rocky, hilly terrain that we have to either bury cable through or figure out a way to saw through rock,” said Kelly Bosserman, president of Peace Valley Telephone Co., a family telecommunications business that serves a sparsely populated area in southern Missouri.

All of these challenges contribute to the state’s low ranking for high-speed internet access. Missouri is currently 42nd in the nation according to the Missouri 2030 Dashboard, which uses Federal Communications Commission (FCC) data.

In some ways, the rural broadband problem in Missouri mirrors issues found in most other states where high-speed internet access is plentiful in urban areas but becomes scarce in less-populated regions.

Data shows that rural areas fare worse in Missouri than in most other states. A 2016 FCC report showed that 61 percent of rural Missourians lacked access to high-speed broadband, well above the national average of 39 percent.

Businesses are working to address this problem by investing in their networks and expanding into more rural parts of Missouri. AT&T, one of the state’s largest carriers, poured nearly $1.8 billion into its Missouri networks from 2014 through 2016. Those investments supported new wireless high-speed internet connections and the expansion of AT&T’s fiber footprint. And the company continues to explore new ways to deliver broadband to rural residents, including millimeter wave signals guided by power lines as part of its Project AirGig, 5G trials and fixed wireless internet service.

AT&T is also building out FirstNet, a secure wireless broadband communications network for Missouri’s public safety community.

“These continued investments bring Missouri residents and businesses a host of new opportunities,” said John Sondag, president of AT&T Missouri.

Alongside private investment, federal programs — like the Universal Service Fund used by Chariton Valley — are helping incentivize internet expansion in the state.

Eight small rural companies in Missouri are receiving capital through the Alternative Connect America Cost Model, an FCC program that is investing around $5 billion across the nation for broadband development in high-cost rural areas.

Peace Valley is using this program and plans to begin laying cable this year.

But the FCC’s subsidy programs aren’t just for small carriers. Missouri’s larger telecommunications companies are using a program called the Connect America Fund to provide access to more than a quarter-million rural Missourians over six years.

By the end of 2017, CenturyLink had already used the program to bring broadband access to 60,000 new rural Missouri customers. The company plans to more than double that number, said Doug Galloway, CenturyLink’s southern region director of governmental affairs.

Galloway said the project has pluses for both rural and urban communities.

“It typically will benefit those people who live in the rural, sparsely populated areas,” he said. “But in order to get to those areas many times, we have to increase the capacity of our facilities that are within city limits. So it’s going to have a direct benefit to those who are unserved in high-cost areas, but it’s also going to have an indirect benefit to the communities that already have broadband. In many places they’ll get higher speeds.”

While the federal programs are helping, industry officials say they are funded below what is needed to truly solve the rural broadband problem in Missouri and other states. Telthorst said his organization is working with Missouri’s congressional delegation to build the case for greater investment in the FCC’s rural broadband incentives.

One recent victory is the FCC decision to launch another round of Connect America Fund incentives this year, which could lead to another $2 billion becoming available for broadband expansion.

The state is lending a hand too. In 2017, Gov. Eric Greitens launched a $45 million program to bring broadband infrastructure to Missouri’s public schools. So far, 12 school districts have applied for the funding. This January, the governor also announced another initiative focused on getting broadband to rural communities. The state is lending a hand too. In 2017 Gov. Eric Greitens launched a $45 million program to bring broadband infrastructure to Missouri’s public schools. So far, 12 school districts have applied for the funding. This January, he announced a new initiative focused on getting broadband to rural communities.

While federal and state incentives are helping to drive expansion, Telthorst cautioned that Missouri can’t be overly reliant on the government to solve the problem here.

“Anything the state can do to help increase working capital for the industry would really be great,” Telthorst said. “Having said that, we all realize that state government also has limited resources, so I think it’s important to explore whatever partnerships and innovative programs that are out there that we can think of.”

Chariton Valley is embracing this path. Underberg said his cooperative is working directly with city leaders to try to build partnerships that will lead to broadband expansion. In these conversations he stresses the economic development benefit that cities can experience once broadband is available.

“We’re partnering with anyone and everyone we can,” Underberg said.

When it comes to high-speed internet infrastructure, it’s true that Missouri still has some catching up to do. But industry leaders say the state is on the right track.

“Just like the railroads being built across the state in the 19th century and what that did to really make that economy more robust, broadband networks are doing the same thing for our economy in the 21st century,” said Telthorst.