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Published in Economic Development

Panel: Rural broadband development should mirror electric grid build-out

BY Sunday, October 25, 2020 07:17pm

Michigan and the nation need the same kind of concerted effort to deploy broadband internet access as 90 years ago when America set out to electrify rural areas following the Great Depression, economic developers say.

The COVID-19 pandemic has heightened the need to fix a lack of affordable high-speed internet access in some markets of the state that economic developers say is critical for both businesses and households.

Eliminating the so-called “digital divide” must become as important as extending electrical and telephone service into rural markets in the 1930s, Birgit Klohs, CEO of The Right Place Inc. in Grand Rapids, said during a recent virtual panel discussion at the Michigan Economic Developers Association’s annual conference.

The issue has become increasingly important during the pandemic as companies conduct business virtually and students learn remotely, Klohs said. The pandemic brought greater awareness to the issue and how in some areas the digital divide “is more like the Grand Canyon,” Klohs said.

“Our children shouldn’t be sitting in cars in the parking lot of a restaurant to get Wi-Fi so they can do their homework. I think that’s just Third World,” Klohs said.

“If you look at why companies locate somewhere, it’s talent, it’s infrastructure and then it’s incentives. And in infrastructure, broadband has to be a utility,” Klohs said. “Somehow this country needs to embrace what we did in the ’30s, which was the electrification of America. You had electricity in the big cities but when you went out to a rural community you still had kerosene. But we made the commitment — it needs to be the same commitment.”

The Right Place has been working with Kent County to deploy Wi-Fi hotspots where needed “so that the kids can learn and somebody can work from home,” Klohs said.

No ifs, ands or buts

Matt McCauley, CEO of Traverse City-based Networks Northwest that covers a 10-county region, described broadband access as a “huge issue for Michigan,” particularly in the northern Lower Peninsula.

“We were banging the drums on the issue for many, many years in northern Michigan. Now our gear that we have to hit is one of immediate urgency,” said McCauley, who also likens the issue to the lack of electricity and phone service in rural communities decades ago.

“Access to the internet must now be seen as a basic utility — no ifs, ands or buts, in my view,” he said. “We’ve had a number of different programs over the years on loans and things like that. The private sector has done a lot, but it has admitted that it cannot reach those hardest to reach because there is not a profit to be had. … The electrification and the phone reach was picked up by the public sector to ensure that Americans across the country remained connected.”

In some rural communities, broadband technology is available “but the cost is a challenge just based on the technology that they have,” he said.

Disproportionality, economic potential

The lack of access contributes to the pandemic disproportionately affecting some rural areas economically, McCauley said.

The digital divide adds to what economists call a “K-shaped” economic recovery, with some communities’ economies moving upward and some downward, he said. That will result in some people having less access to education, work and even health care through an ability to access telemedicine, McCauley said.

“This next year, you are going to see disproportionality and recovery based on the broadband infrastructure, and that needs to be absolutely critical for our communities, the state and the nation as a whole,” he said.

Gaps in high-speed internet service are primarily in the central northern Lower Peninsula and Upper Peninsula, plus counties in southern Michigan, according to the advocacy group Connected Nation’s Michigan chapter.

In early October, the state awarded $12.7 million in grants for projects to improve rural broadband internet access.

In West Michigan, an initiative in Barry County received $1.1 million through the Connecting Michigan Communities program to expand broadband access. A project in Berrien and Cass counties received $410,422, while a Calhoun County project received $276,000.

A four-county project in Calhoun, Eaton, Ingham and Jackson counties was awarded $782,699.

The state said at the time that 1.2 million Michigan households lack a permanent fixed broadband connection at home, resulting in a $1.8 billion to $2.7 billion potential economic benefit left unrealized among disconnected households. The projects funded this month would extend broadband access to 10,900 households, businesses and other organizations.

The state plans to award a second round of grants totaling $5.3 million, and a state budget that took effect Oct. 1 includes another $14.3 million in grant funding for a third round of projects in 2021.

Tony Stamas, president and CEO of the Midland Business Alliance, said broadband access has become “absolutely essential” in economic development and recruiting and retaining businesses and talent.

Stamas said the Midland Business Alliance worked with a company in western Midland County to get a hard broadband connection so it could expand and sell more products online.

“For everybody, that’s going to be at the top of the list. That’s just going to grow as a focus in helping our business community and attracting business here by saying, ‘We have the network, we have the resources,’” Stamas said. “We have people that can work from their homes around the world who are going to need to have the connection.”

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