It would take a capital investment of $47.3 million to extend high-speed rural broadband to all Noble REMC service areas that need it, with an additional $52.3 million of operating and maintenance costs over 20 years. But the economic benefit would come to $346 million.
That is according to an analysis conducted by Purdue University agricultural economists, who estimated the costs and benefits of improving high-speed broadband access for seven rural electric cooperatives in various parts of Indiana, and then used those findings to arrive at similar estimates for the entire state.
Their report, “Estimation of the net benefits of Indiana statewide adoption of rural broadband” found every dollar invested in broadband returns close to $4 to the economy, on average. Noble REMC provides power to members in Noble, DeKalb, Allen, Elkhart, LaGrange, Steuben and Whitley counties.
“It’s unusual to see returns that significant,” Wally Tyner, Purdue’s James and Lois Ackerman Professor of Agricultural Economics said in a statement on the study. “The finding of a 4:1 return validates the opportunity that could be created by full broadband deployment in Indiana.”
The seven electric cooperatives the study looked at represent nearly 93,000 Hoosiers living in near “internet darkness,” without access to reliable, high-speed internet services.
“Broadband access would open up a number of economic and social benefits to these underserved areas, much as rural electrification did two generations ago,” the statement said.
The costs savings, new business opportunities and economic stimulus from high-speed broadband expansion would show up in telemedicine and other aspects of modern health care, education, workforce development, farm income and e-commerce.
For example, when it comes to education “it will be possible for teachers to provide more individualized instruction very efficiently,” Tyner said in an email. “. Snow days could be a thing of the past, as instruction could continue via internet those days. Teachers could make more use of automated software that enables students to go at their own pace. And the list goes on and on. Essentially, teachers will be better able to prepare students for lives and jobs in today’s high tech world.”
The technology will also allow adults to enhance job skills and acquire new ones.
The Federal Communications Commission defines broadband as internet connectivity at download speeds of at least 25 megabits per second.
The study’s cost estimates were for installation, maintenance and operation of high-speed broadband infrastructure with download speeds of up to 1 gigabit per second.Tyner believes that would be adequate for any future needs.
“High speed rural broadband is what is called a transformative technology,” he said. “We cannot even imagine all the ways it will change business, our personal lives, commerce, etc. That is one reason we believe our study actually underestimates benefits.”
The study was commissioned by Indiana Electric Cooperatives and Tipmont REMC with CoBank financial support, and conducted by the Purdue Center for Regional Development.
Many residents in parts of the state with limited broadband access get their power from rural electric cooperatives and have been pushing them to help bridge the digital divide.
“The societal benefits are clearly much larger than the total costs, but it would be difficult for the co-op to recoup all those benefits,” Tyner said. “The same was true of rural electrification which we started in 1936. Rural areas would not have been electrified without federal assistance.
“I think most people would agree that the societal benefits of rural electrification exceed the costs. But the costs of deploying electricity or broadband in low density rural areas are much higher than urban areas. In urban areas, the distance between drops may average 50 feet. In rural areas, it can be tens of miles.”
Some rural electric cooperatives in Indiana that have been looking for ways to improve high-speed broadband access have been considering infrastructure capable of up to 1 Gbps download speeds, which they initially would deploy at up to 100 Mbps or 200 Mbps, Tyner said.
Early last month, Indiana Gov. Eric Holcomb announced it was time for the state to start bridging the digital divide with $100 million from a new funding source.
The initiative for this would be part of a Next Level Connections program funded with a 35 percent increase in toll rates for heavy vehicles on the Indiana Toll Road, which would generate $1 billion.
The Indiana Finance Authority was to amend its agreement with the Indiana Toll Road Concession Co., which operates the Indiana Toll Road, to allow the increase starting this month.
Funding from the program also would move up the completion of major highway projects, grow the state’s systems of trails, create more nonstop international flights, and support creation of a fourth water port at Lawrenceburg as well as expansion of rail projects in northwest Indiana.
The Office of Community and Rural Affairs overseen by Lt. Gov. Suzanne Crouch recently established a pilot program to help rural communities in the state develop broadband readiness plans.
The plans, developed with a maximum grant of $50,000, will assess current broadband conditions and needs and share the findings with community members. The plans also will create a long-term vision to meet broadband needs and identify ways to work toward fulfilling that vision.
When the first communities in the program were announced, funding support for the creation of a broadband readiness plan had been added to the Community Development Block Grant Planning Grants program. None of the communities were in northeast Indiana.
“In the future, we would hope the communities participating in the (broadband readiness) planning would utilize some of the funding from Next Level Connections,” Jodi Golden, OCRA’s executive director, said in a phone interview.
The Next Level Connections program is new enough that information was not immediately available on how it would affect specific areas of the state, including northeast Indiana, or whether it could fund several broadband infrastructure projects simultaneously.
“The program’s still really in the works,” Rachel Hoffmeyer, the governor’s press secretary, said in a phone interview. “We’re still working with providers, communities and other groups to design the final grant program.”
The thinking of rural electric cooperatives has been that their main need for assistance would be offsetting the cost of high-speed broadband infrastructure deployment, Scott Bowers, Indiana Electric Cooperatives’ government relations vice president, said in a phone interview.
“The cost to solve the problem is significantly high,” he said. “What is made available needs to be affordable as well. What we’ve currently got is low-quality service offerings in rural areas at a high price. This investment by the state should help spur the expansion of broadband and high speed internet into rural Indiana. I think you could very realistically see a significant portion of the state that is unserved or underserved have increased access to high-speed internet. I know that’s the goal of the administration.”
According to the Federal Communications Commission, broadband is available to about 40 percent of the residents in Noble and DeKalb, the two counties that make up the bulk of Noble REMC membership, said Ron Raypole, its president and CEO, in an email. “We are hearing concerns from our members, and have taken it upon ourselves to investigate our role, if any, in providing broadband to our service area. The situation we’re in with broadband greatly parallels what we did more than 80 years ago when we brought electricity to rural areas when the larger utilities wouldn’t invest in such infrastructure.”
Rural electric cooperatives across the state were excited to hear about the new financial opportunity and Next Level Connections support from the Governor’s office.
“It’s a step forward in helping rural communities with the large financial commitment that is needed to make broadband a reality, but we’re uncertain of its potential impact,” Raypole said. “To provide broadband to Noble REMC consumers, it would be an investment of tens of millions of dollars. When you spread $100 million across 38 Indiana cooperatives — plus other utilities or businesses vying for financial assistance — it may not be enough, but it’s a good start.”
Raypole considers the investment required for bridging the digital divide a big obstacle to overcome and said he hopes to see more local and federal assistance like Next Level Connections announced in the coming months and years.
The study estimated the state would see a 20-year economic benefit of $12 billion from bridging the rural digital divide.