Years after the introduction of the Internet, it seems amazing that some citizens of the Old Dominion do not have access to broadband, but that's the way it is.
For-profit companies ignore mountainous areas or poor flatlands because they claim it costs too much to pay the installation costs. For several years, governments have promised to fill the gap. Indeed, Barack Obama identified the problem in last year's campaign and promised solutions which could cost $7.2 billion in stimulus package money.
But as The Washington Post points out today, even government involvement is dicey. It looks at two small Southwestern communities -- Lebanon and Rose Hill -- and shows just how different their broadband experience has been.
In Lebanon, a small burg where the tobacco fields end and the coalfields begin, Rep. Rick Boucher and Gov. Mark Warner put together a $2.3 million grant package to wire the area. It was wise move because defense contractor Northrup Grumman and software maker CGI swooped in to take advantage of the new, nearly instantaneous communications and created 700 jobs paying about $50,000 a year.
Poor Rose Hill had a different story. Boucher brought grants worth $700,000 in part for the multi-billion settlement with four tobacco companies in 1996 and other sources to wire Rose Hill. But only three homes have signed up for the service which costs about $50 a month.
It is stories like these that make the U.S. a Johnny-Come-Lately in broadband. Among advanced industrial nations it comes in pathetic 15th place, down from 13th place a few years earlier. South Korea, Japan and some European countries are farther ahead.
Some argue that it is easier to wire the crowded neighborhoods of Tokyo or Seoul and there's truth in that. But the lame performance hurts the U.S. as it struggles through recession and tries to make a tech comeback amidst tough global competition.
Part of the problem is the easy-profit, next-quarter thinking of the big U.S. communications firms. It is much easier for Comcast or Verizon to wire concentrated downtowns or rich suburbs faster since they can jack up their prices and go for a triple play of broadband, digital phone and cable television all in one expensive monthly price of about $200. Doing so gets them a faster and fatter return on equity and makes them look better on Wall Street.
That sure was the case in Philadelphia a few years ago when I wrote a story about the problem for a national business magazine. Inner ghetto areas were left behind as rich, white neighborhoods got wired. One African-American small business owner told me that he wanted broadband for his business but doesn't want to also have to pay hefty fees for HBO, Starz and ESPN which he doesn't watch when he is working.
Philadelphia's government bravely launched a $15 million broadband project and Earthlink won the contract. But it was a bad play since Earthlink was hit hard by its exposure to antiquated DSL technology and got in such financial trouble it dropped Philly. Some private investors got the project for a song and few residents have signed up for broadband.
In Southwest, other anomalies come into play. Lebanon has a high high school graduate rate and is the locus of a coalfield economic development authority. These people were highly annoyed with me some years back when I did a piece on the coalfields that didn't paint the rosy picture they wanted. I noted that coal is dirty, dangerous and cyclical. Locals have trouble getting adequate health care given their isolation. One hospital in Clintwood, the only one for miles around, shut down abruptly because the Ohio company that owned it went out of business.
Still, Lebanon had an edge over Rose Hill which has a much lower education rate, the Post reports.
The jobs that Lebanon got are good deals because too many times, the only new employment people find is with call centers that shut down as fast as they set up.
The problems also raise questions about Virginia's tobacco commission which decides how to divvy up the oodles of bucks the state gets from the tobacco settlement. Years ago I wrote about how the first act of the highly-politicized commission was not to pay for health care or infrastructure or educate kids not to smoke. No. They gave thousands away to holders of tobacco quotas, some of whom lived in Brooklyn, Las Vegas or the Gold Coast of Chicago and had very little to do with Virginia. This was done on the theory that they were going to lose money. Go figure.
Anyway, the tale of two towns in the mountains shows the problems of providing broadband in poor or isolated areas. It's amazing since it is already 2009 and most of us take broadband for granted.
Peter Galuszka
