You can spend hours reading about the lack of broadband in rural America. Here are two recent examples from the FCC and The Verge. But while AT&T CEO John Stankey told Wall St. analysts that he doesn’t think there is any way to extend fiber to rural areas at all, FOA has worked with dozens of groups wanting to build rural broadband and documented several DIY FTTH systems in the FOA Guide. We have also documented in the FOA Newsletter (June 2021) ways that make rural broadband more feasible using new technologies like remote OLTs for GPON networks.
As we continue to research rural broadband strategies and technologies, we continue to work on other projects. One of those projects involves assisting EPRI (the Electric Power Research Institute, the electrical utilities “Bell Labs” or “Telcordia”) with their strategic plans for fiber optics in their networks. It occurred to us that installing rural fiber networks was similar to the development of rural electrical networks in America a century ago.
So we began researching the electrification of rural America. In our research, we found a most interesting article called “Rural Electrification” by Robert T. Beall, an economist at the US Department of Agriculture in the 1940 USDA Yearbook of Agriculture on the USDA website. Reading this (and we highly recommend you read it too), it becomes obvious that rural electrification and rural broadband build-out have many similarities.
According to the Beall article, in 1925 only 3.2% of America’s 6.3 million farms had electricity. Ten years later, it had only grown to 10.9%, in part due to the depression but also due to the inherent problem with rural areas, economics. Beall’s article quotes a report on the problem.
After a careful study of the rural electrification problem, the Mississippi Valley Committee reported, in October 1934, that—several reasons might be advanced to explain why only 10 percent of the Nation’s farms purchase electricity. These are the lack of interest by operating companies in rural electrification, high cost of line construction because of the unnecessarily expensive type of line used, onerous restrictions covering rural line extensions, and high rates.
Beall then comments: Inasmuch as the private utility companies own and control well over 90 percent of the electric-power industry in the United States, the extension of lines into rural areas prior to 1935 depended primarily on the willingness of these companies to serve farmers. Sound familiar? But the industry felt no responsibility to find out whether construction in rural areas might not be simpler and less expensive than that in urban centers and therefore require less capital investment per farm.
Then Beall notes that by 1940, 25% of rural farms now had electricity. What happened to cause such massive growth in the span of only 5 years? During the Depression, rural electrification was specifically included in the emergency Relief Appropriation act of 1935 and President Roosevelt created the Rural Electrification Administration (REA) by Executive Order No. 7037 on May 11, 1935.
The effect of government incentives was felt rapidly. By 1940 about 25% of rural America had electrical service. Much of the expansion was done by a new type of utility, nonprofit cooperatives, created by farmers who discovered that they could organize and get assistance in building their own rural electrical companies when large for-profit companies would not consider them.
As has already been indicated, the principal type of borrower of R.E.A. funds is the cooperative, nonprofit association of rural residents organized for the specific purpose of constructing and operating a rural electric system. Although this type of organization for the distribution of electric power in rural areas has been widely used in certain foreign countries, notably Denmark, Sweden, and Finland, it was almost unknown in the United States until the establishment of the Government’s rural-electrification program.
Coops also learned how to lower costs for building networks by simplifying aerial cable systems and using long-span construction. Some of their techniques allowed building networks at less than half the cost of traditional urban/suburban networks.