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The Reverse Donut

A lot of rural areas are going to get fiber over the next five years. This is due to the various large federal grant programs like ReConnect and RDOF. New rural broadband is also coming from the numerous electric cooperatives that have decided to build broadband in the areas where they serve rural electric customers. This is all great news because once a rural area has fiber it ought to be ready for the rest of this century.

These new fiber networks are going to revive and transform many of these areas. People who want to work from home will move to existing rural homes and build new homes. It doesn't take a lot of high-paying jobs to revive a rural economy. Rural communities are also hoping that fiber can slow the drain of people migrating to cities to find work.

However, nothing this transformational is without consequences. I'm already starting to see some of the consequences of what happens when rural areas get fiber, but the towns in a county don't. I've been referring to this phenomenon as the reverse donut, where all of the rural areas around a county seat or mid-sized rural town have fiber but the town doesn't. Today, most rural America has better broadband in towns than in rural areas, and maps of broadband in most counties look like only the donut holes have broadband.

Every broadband grant program in the country is aimed at rural areas that have little or no broadband, and that's how it should be. But I've worked in dozens of counties where everybody just assumes that broadband in towns is okay, particularly if a cable company serves a town.

In many cases, this is not true. Small rural towns often don't have the same quality of broadband as larger towns. DSL in smaller towns is often of the oldest vintage and delivers speeds under 5 Mbps. Small town cable systems often underperform. Such systems might have been built in the 1970s and have been largely neglected since then. Aging and deteriorated coaxial cable performs even more poorly than old telephone copper since the network acts as a huge radio antenna and attracts spectral interference through any open cable splice point. It's also not unusual in smaller communities to find neighborhoods that don't have cable broadband. The houses might have been built at a time when the local cable company didn't have the money to construct new cables.

When my firm helps communities to do speed tests, it's not unusual to find a significant percentage of cable subscribers in small towns with download speed far under 100 Mbps, and in some of the worst cases, under 10 Mbps. It's a big mistake to think that cable company technology translates to good speeds because when the network is poorly maintained, this is often not true. It does no good for a cable company to jam new technology upgrades on top of bad copper.

There are going to be some predictable consequences of communities with the reverse broadband donut. New housing construction is likely to occur outside town instead of inside of in town. That means that over time that the demand for government services will shift. Most counties have geared services like law enforcement, school transportation, trash services, and numerous other government services and programs around serving the county seat. Over time property values in towns will dip compared to newer homes with fiber in rural areas.

This is not to say that any of these changes are bad — but having better broadband in rural areas instead of towns will definitely change communities over time. I talk to people in rural county seats all of the time, and many of them are incredulous that there is no grant money to help them get better broadband. The good news is that it's often possible to build a profitable fiber network in small towns without any need for grants. But that is not going to happen unless towns take a proactive approach to attract an ISP willing to invest in their community or even decide to build their own fiber network.

It's my belief that a county or community is not done the job until everybody has great broadband. Counties that will be getting rural fiber are lucky if their towns already have good broadband. But many counties will look up in a few years and see the consequences of having the reverse donut.

By Doug Dawson, President at CCG Consulting – Dawson has worked in the telecom industry since 1978 and has both a consulting and operational background. He and CCG specialize in helping clients launch new broadband markets, develop new products, and finance new ventures. Visit Page

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