The extended debate on a New York budget bill has made waves in the broadband industry.

A language change in the bill restricted project eligibility in the state’s Municipal Infrastructure Program to only unserved and underserved locations.  Previously, program rules did not limit eligibility to un- and underserved but instead allowed municipal operators to expand to all households within a project area — which sometimes required building through served areas.

Fortunately, thanks in part to the efforts of county leaders, state legislators, and the New York State Association of Counties the restrictive language has been removed from the bill.  

At face value, prohibiting any overbuilding of existing broadband infrastructure as part of grant funding seems like a good idea. However, the new language would have significantly limited the number of grant applicants that could apply. This, in turn, would have reduced the competitive internet service providers (ISPs) operating in New York and prevented the growth of nonprofit and cooperative networks in the state. 

The most effective broadband grant programs must allow for project areas to include 10% — or even better, 20% — of served households. Here’s why: 

1. It’s impossible to build a network only serving un- and underserved households.

At first glance, it seems logical to prevent projects from building into areas that already have broadband access. However, in rural areas, municipal ISPs often need to build infrastructure through served areas to access unserved and underserved households. Why? Because large incumbents have built networks that prioritize only the dense areas, not universal access, which has created coverage gaps in low-density areas. 

While incumbent ISPs have long been promising (and struggling) to build off their existing infrastructure to cover unserved pockets, community-centric ISPs have been trying to close the gap by building through served areas and providing service to all households along their networks. 

2. Allowing a small percentage of overbuild leads to more competitive grant applications, which can benefit small or non-incumbent ISPs.

If small, non-incumbent ISPs cannot use grant funds to overbuild any served areas, then competition will be restricted to only ISPs that are adjacent to the infrastructure gaps. In most instances, adjacent ISPs are incumbent providers that created the gaps in the first place. 

Grant programs that allow portions of proposed project areas to include served households make it possible for non-adjacent ISPs to produce competitive applications. The goal of broadband grant programs should be to foster a competitive process and encourage multiple applicants, not to restrict it. 

What happens when you bring in a competitive ISP to close the gaps in rural areas?

Outside of the practicalities of overbuilding existing infrastructure to cover un and underserved populations, there are also positive impacts on consumers when competitive ISPs are chosen to close connectivity gaps. When competitive ISPs are given a foothold, communities will likely experience the following: 

  • Lower prices: More competition drives down prices for consumers that historically could only engage with large incumbents.
  • Better customer service: Competitive ISPs are more responsive to the needs of their customers and are often highly rated in comparison to large incumbents. 
  • Long-term technology investment: Competitive markets often see more technological upgrades over time, as ISPs in competition with each other need to continue to work to retain customers. 

The quick actions from municipal and community leaders who are tuned into the needs of local ISPs helped forge a strong response in New York state, but we should expect anti-competitive legislation to continue to show up across the country. If passed, more rural communities will be left behind during this once-in-a-lifetime funding moment for digital connectivity.  

Competitive ISPs and the communities they serve must continue to advocate for grant programs that will help rural ISPs close the digital divide. 

Have questions about your state? Our experts are here to walk you through your community’s path to connectivity. 

At the Center on Rural Innovation, we are working with rural communities across the country to help position them to thrive in the 21st-century tech economy. To learn more about our work in this space, be sure to sign up for our newsletter.