(UR) Minnesota — Over two dozen rural towns in southern Minnesota, fed up with waiting for corporate high-speed Internet to reach them, have taken it upon themselves to build a fiber optic network of their own — and they’re doing it entirely without federal funding.
Last July, POLITICO highlighted the disaster that became of a federal program, signed into life by President Obama in 2009, designed to bring high-speed Internet to rural communities. That program was plagued by mishandling of funds by the department overseeing it, the Rural Utilities Service (RUS).
“A POLITCO investigation has found that roughly half of the nearly 300 projects RUS approved as part of the 2009 Recovery Act have not yet drawn down the full amounts they were awarded,” the news agency writes. “More than 40 of the projects RUS initially approved never got started at all, raising questions about how RUS screened its applicants and made its decisions in the first place.”
The problem rural communities face is that before they can have access to high-speed Internet, the infrastructure first has to be built — and the cost of such endeavors is high. And because of the low-density populations of these sprawling communities, those with the means to invest are hesitant, due to what they perceive will be a poor return.
But residents in southern Minnesota, it seems, have found a way to work around this issue. There, 27 small towns in four counties formed a cooperative — RS Fiber — that will, if everything goes to plan, be providing its members high-speed, fiber optic Internet by 2021.
To achieve this, the community created an entirely new financing model. The towns issued resident-approved bonds that covered nearly half cost of the first phase of the project, around $16 million, which in turn made local banks feel safe enough to give loans to cover the rest.
“That’s a win-win,” Chris Mitchell, of the Institute for Local Self-Reliance, recently told YES! Magazine. “It’s a model in which local governments can take on the risk if they’re willing, and local banks can get a very reasonable return.”
To sweeten the deal, the local governments agreed to be repaid last if the project’s financial projections aren’t met. This, of course, is risky for the taxpayers in those towns, but it’s a gamble that may already be paying off for the local economy.
In January, the Minnesota College of Osteopathic Medicine — citing RS Fiber’s burgeoning high-speed infrastructure as one of the determining factors — finalized plans to set up a medical school in the area.
And this could be a hint of much more to come for the rural Minnesota community. There’s certainly a precedent.
Cedar Falls, Iowa, thanks to early investments by the city in broadband infrastructure, now has Internet speeds nearly 100 times faster than the national average — which caught the eye of the technology sector.
As YES! Magazine explains:
“This distinction as a ‘Gigabit City’ has helped turn Cedar Falls, population 40,500, into a Midwestern tech hub with unemployment below 3 percent. The early bet on broadband has helped the city attract and retain high-tech firms like Spinutech, a web design and digital marketing company, and host events like Product Camp Iowa, a conference for entrepreneurs and startup leaders.”
Access to high-speed Internet has become crucial to the economic health and development of communities, which is why cities all over the country have been investing in broadband infrastructure. It’s a tougher go for rural areas, however, as small farm towns lack available funding.
But increasingly, these communities are in need of faster Internet as more and more farming machinery is incorporating “smart” technology.
Now, towns in rural areas have been given an example of how to go about getting it. RS Fiber was recently given anaward for its efforts by the National Association of Telecommunications Officers and Advisers, and was even the subject of an April 2016 case study. In it, the authors outline just how meaningful what’s happening in southern Minnesota really is:
“RS Fiber offers a working model for any rural region looking to establish a new fiber-optic cooperative to deliver high quality Internet access to every household.”
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