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High-speed internet shortage a big concern in rural Nebraska

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Posted at 11:11 AM, Nov 10, 2019
and last updated 2019-11-10 12:11:48-05

LINCOLN, Neb. (AP) — Nebraska’s rural areas are struggling with a major shortage of high-speed internet, and people who live there are likely paying more for service than their urban counterparts, according to a new report commissioned by state lawmakers.

The report by the Rural Broadband Task Force says just 63% of rural Nebraskans have access to fixed, high-speed broadband service capable of handling downloads at 25 megabytes per second or faster. That’s the speed typically recommended to watch high-definition movies, use video-chatting services and download large data files.

Most other rural areas have internet access, but at much lower speeds and with fewer providers to compete and drive down prices. And some remote corners of Nebraska still have no fixed service, forcing residents to use expensive, satellite-based internet or their cellphones.

“There’s no real business case for putting broadband out in some of those areas,” said Sen. Curt Friesen, a task force member and chairman of the Legislature’s Transportation and Telecommunications Committee. “It’s going to be a challenge to get service there.”

Friesen said it’s natural that rural consumers would pay more than urban residents because of the difficulty in extending coverage to those areas, but he argued state officials should try to minimize the difference.

Nationally, households in zip codes with the lowest population density paid an average of 37% more for broadband service than those in the most populated areas, and that trend appears to hold true in Nebraska, according to the report. Friesen said he has encountered rural constituents whose broadband bills appear to be substantially higher than their city-dwelling counterparts for comparable service.

Lawmakers have scheduled a hearing Dec. 4 to consider whether they should introduce legislation in the 2020 session to try to address the problem, but Friesen said he doesn’t yet know what the Legislature should do.

Friesen said the service is critical for rural areas already struggling to retain young residents, many of whom need broadband to work remotely. Farmers also increasingly use high-speed internet to monitor their crops and operate machinery. Beyond work uses, most people now expect high-speed internet to stream movies and television shows.

Lawmakers requested the 31-page report after creating a task force in 2018 to study the affordability and accessibility of internet service statewide.

The report says current maps of broadband service likely overstate the amount of coverage available in Nebraska, meaning the problem is more widespread than it appears. It also suggested the Nebraska Public Service Commission could withhold state funding from providers that aren’t adequately serving their coverage area and award the money to others.

The commission subsidizes rural broadband providers out of Nebraska’s universal service fund, which holds money from a state fee tacked onto consumers’ phone bills. The fund was created to encourage telecom companies to offer service in remote areas with relatively few paying customers.

But former state Sen. Paul Schumacher said the fund creates a perverse incentive for internet providers to work as slowly as possible. If companies finished the job quickly, Schumacher said state officials would probably question whether the subsidy was still necessary.

“It’s a terribly inefficient system that isn’t well thought through,” said Schumacher, who co-founded one of Nebraska’s first internet companies. “The whole thing is messed up, and it won’t get better as long as it’s highly profitable for phone companies to continue collecting subsidies.”

Schumacher, of Columbus, said it would make more sense to have Nebraska’s publicly owned power companies offer broadband service, but telecom lobbyists have blocked the idea.

One small but growing Nebraska provider said companies must overcome major hurdles before they can offer high-speed service in rural areas.

The first is a lack of workers who are trained to install and maintain service, said Madeline Baltzer, director of operations for Geneva Broadband, which serves Geneva and parts of rural central Nebraska.

The shortage makes it more difficult to respond to requests from customers who are unhappy with the service they’re getting from other companies. Baltzer said she has fielded calls from other providers’ customers who complain about not having service for up to three weeks at a time.

“There’s only so much we can do,” Baltzer said. “Our growth isn’t necessarily limited by how many customers we can serve. It’s limited by staffing.”

Newer companies also must spend hundreds of thousands or even millions of dollars on the equipment required to provide service. Larger, more established companies usually put their resources into bigger and more competitive markets in Lincoln and Omaha.

“No one really wants to borrow or spend that much money for a few hundred households,” Baltzer said.

Baltzer’s father and the company’s owner, Greg Baltzer, said his business grew out of necessity because his original startup software company didn’t have the high-speed internet he needed, and the city’s main provider at the time didn’t have plans to upgrade its offerings.

“At that point, I didn’t have a lot of options,” he said.

Baltzer said the state should do more to encourage partnerships between internet service providers and the state’s public power districts, which operate Nebraska’s electric transmission lines.

Nebraska Public Service Commission Chairwoman Mary Ridder said the problem boils down to a lack of money.

Ridder, who lives on a ranch outside Callaway in central Nebraska, said it’s important for all areas of the state to have high-speed internet access, even though rural areas may have to be subsidized.

“It’s important for people’s businesses, their careers and their education,” Ridder said. “It’s important for the farms that contribute to our state economy. The healthier that agriculture and rural areas are, the healthier the whole state will be.”