By Jochai Ben-Avie | Read the original article on Impact Entrepreneur
From small towns to big cities, affordable, high-speed internet is critical in today’s world. Families depend on it. Communities increasingly live or die by how reliable their internet is. As the pandemic made clear, broadband is now a lifeline, not a luxury. Yet, one in three Americans doesn’t have internet at speeds fast enough to use Zoom.
Consider Macon County, Alabama — a majority Black, rural Appalachian community where 28% of households live below the poverty line. Until recently, 40% of residents in the County didn’t have internet at broadband speeds. For those who did — costs were high, with 56% reporting cutting spending on food and other essentials to pay their broadband bill. This, unfortunately, is a familiar picture across the US where many rural areas still struggle to get even basic connectivity.
While Joe Turnham, the Director of the Macon County Economic Development Authority has many priorities in his work to stimulate local industry, he understood early on that broadband was foundational for all of them. Says Turnham, “I knew pretty quickly we may go out of business here if we didn’t address the broadband issue. I had great sites that couldn’t get 100 Mbps up and down, and you can’t build a future like that.”
The market alone will not close the digital divide
Despite being an essential utility, building out the nation’s internet infrastructure has been largely left to market forces with highly uneven results: 40 million Americans are still waiting to be connected.
Large traditional internet service providers have not and will not invest in communities where the economics don’t fit their business models. And sparse, rural populations and low-income areas rarely provide the profit margins they demand.
This has resulted in historically marginalized people being disproportionately excluded. A Markup investigation found that major ISPs frequently offer the worst deals in low-income, historically redlined neighborhoods. And Pew data shows you’re far more likely to be without internet if you’re Black or Hispanic, live in a rural area, or earn a low income.
The invisible hand of the market is not going to fix this. But just because the economics are hard, it doesn’t mean it can’t be done. Broadband is the path to so many of life’s essentials: jobs, education, healthcare, government services. A full two-thirds of the UN’s targets for the Sustainable Development Goals are directly related to digital technology. If we’re to create a fairer, healthier, more prosperous world, we must find ways to connect everyone.
Building broadband from the community up
We need to change the way we build broadband. Joe Turnham and his colleagues in Alabama demonstrate how it can be done.
Knowing that Macon County couldn’t afford to sit and wait for a big brand name ISP, Turnham reached out to local leaders and organizations that shared an interest in bringing high-speed internet to the community. The group assessed what resources existed and how they could be creatively leveraged.
The result was a coalition of stakeholders raising over $3 million to connect 1,500 homes and businesses across the county. Public grant funding was supplemented with philanthropic dollars from Rural LISC and financing from Connect Humanity. The local utilities board also gave in-kind access to 11,000 poles to reduce deployment costs. This blended capital approach made the economics work for a rural ISP, which stepped in with additional capital to complete the build.
Keeping the benefits local
As a condition of our loan, Connect Humanity required a community benefits agreement, establishing safeguards and reporting requirements to ensure commitments made to the community were met by the ISP. Where networks remain in private hands, such agreements help protect community interests, providing accountability to, for example, ensure rates stay affordable and the ISPs build in the neighborhoods they say they will.
The new fiber network in Macon County is already proving to be a game-changing investment for the community. Last month, auto parts maker Samkee opened a new factory in Tuskegee , part of a $128 million investment that was contingent on high-speed internet being available. Improved connectivity has also enabled a new telehealth facility at Tuskegee University.
Macon County is just one of hundreds of communities across the country showing how broadband can be built differently, finding creative solutions to expand internet access while delivering benefits for residents — whether that’s by reinvesting revenues to help more people get online, providing free service for families of school aged children, or, like Macon County, strategically leveraging networks for economic development. What’s more, these community-focused ISPs frequently provide better , cheaper, faster service than traditional providers.
Blending capital, tailored for community success
That said, these efforts remain the exception, not the rule. The movement of community-focused broadband remains constrained by a lack of mission-oriented capital.
Traditional lenders are often unfamiliar with community broadband business models and rarely offer capital at sizes, rates, and terms that work for the sector. Government grants, while useful, are not going to be enough to close the digital divide, and with byzantine rules and substantial match requirements, they are out of reach of many of the communities that most need them.
This is where impact finance can be transformational. By catalyzing capital tailored to community broadband needs, impact investors can propel these efforts from the margins to the mainstream.
Three years ago, we founded Connect Humanity to show that with the right partnerships and investment structures, it is not only possible to sustainably invest in building broadband in the hardest-to-reach areas of the country, but also profitable.
It’s working. By blending philanthropic and commercial capital, we’ve structured low-cost, flexible investments enabling Macon County and other community broadband partners to put 100,000+ people on the path to high-speed connectivity. Our next priority is raising a fund for Appalachia — one of the least connected regions in the country.
Far more is needed. Greater participation of impact finance is critical to enable the growth of the community-focused ISPs best placed to connect underserved communities. That’s why we’re partnering with other capital providers to help them make community broadband part of their portfolio. We’re ready to talk with anyone who wants to learn more.
It’s time to shift the way broadband is built in America. We can close the digital divide while building local power, wealth, and opportunity. Social investors have an opportunity to drive this change, catalyzing billions in public and private capital for communities long ignored. There’s no time to waste.
