by James A. Bacon
Last week Governor Ralph Northam announced $18.3 million in Virginia Telecommunication Initiative grants to support 12 projects across the state. Leveraging $35 million in local and private matching funds, the projects will connect about 36,000 households, including thousands of businesses and “community anchor” institutions — an average state subsidy of roughly $500 per household on average.
Promoting rural broadband is a rare example of widespread bipartisan agreement in Virginia. Rural areas and small towns need high-bandwidth Internet access to compete for talent and corporate investment. That said, low-density human settlement patterns are expensive to serve with broadband, and the state has limited funds, about $35 million a year, to devote to this purpose.
Not all government-funded projects are created equal. Among the 39 applications submitted, some offer a better Return on Investment (ROI) than others. What’s the story behind these 12 winners? The governor’s press release doesn’t provide information beyond the size of the awards. But a number of local news stories provide additional details.
Articles about four projects (three successful, one unsuccessful) were published today:
Halifax County. The Mecklenburg Electric Cooperative’s EMPOWER subsidiary won a $710,514 grant to expand the fiber optic network in Halifax County. In November MEC completed the first part of its county network, a 5.5-mile section running through the Clays Mill and Crystal Hill areas. The grant will pay for a second phase, extending high-speed broadband to five rural communities. “Once complete,” reports SoVaNow.com, “the network will offer high-speed internet access to 2,215 potential customers in the five areas of the county” — a net gain of about 1,715. That works out to a state subsidy of about $414 per potential subscriber, assuming every potential subscriber signs up for the service.
Internet speeds will range from 50 megabytes per second (Mbps) up to 300 gigabytes for large industrial and business users. The monthly rate for a base package is $69.95.
Surry County. Surry County will receive a $2,225,000 grant, to be matched by $2.2 million in local funds, according to the Smithfield Times, will help provide broadband to more than 1,200 homes. County officials put up an equal $2.2 million in local funds. That amounts to an average subsidy of more than $1,875 per home — assuming, again, that every household signs up for the service. If the locality’s subsidy is including, the cost is about $3,750 per household.
Bath County. Bath County will get $2.2 million to run fiber installation past more than 400 residences and more than 100 businesses in Bath County, according to The Recorder. (This project was not noted in the list of projects in the governor’s announcement.) That works out to approximately $4,400 per customer (households + businesses).
Orange County. Orange County submitted a fiber-installation project that did not get funded. Broadband Authority Chairman and county Supervisor Jim White updated Orange Town Council: “This project is a major initiative for the county because reliable, affordable broadband is not a viable option for many of our citizens,” he said. “We’ve been waiting 20 years, but the major players just aren’t interested in meeting our need. There are huge sections of the county that don’t have high-speed internet.”
Reports the Orange County Review: “This is a very expensive project and we don’t have a huge pile of money.” The $2.6 million proposed project would have connected more than 900 homes in five parts of the county. The implied subsidy would have been nearly $2,900 per household.
Bacon’s bottom line: From this limited set of data, it looks like the cost-per-household bounces all over the place — from $414 per subscriber in Halifax County to ten times that amount, $4,400 per customer in Bath County. (That assumes that the data I have scraped from small-town newspapers is accurate, and that I’m not comparing apples to oranges — or in the case of Orange County, apples to pears.) Bath County ($4,400 per customer) got funding while Orange County ($2,900 per household) did not. Why would that be? Are business connections weighed more heavily than households?
One more item to think about. It’s one thing to run fiber past a house. It’s another for the resident to pay — as much as $70 per month in Halifax County — to get it. Does anyone track the sign-up rate? I’m pretty sure that Verizon, ATT and Comcast do. Do local telephone cooperatives, electric cooperatives and broadband authorities do the same?
I’m sure there is a rational process behind the dispensing of state dollars, but it’s hard to discern from these data points what that might be.
