THE FIBER FAD

Are public dollars for broadband buildouts too good to be true?

By Craig Manning

Millions of dollars in federal funding is currently making its way to northern Michigan to aid in the buildout of fiber-optic broadband internet infrastructure throughout the region.

From the American Rescue Plan Act to the U.S. Department of Agriculture, numerous sources are delivering the money that could finally bring universal high-speed internet access to the area.

As an historic moment, these fiber internet investments mirror what the government did with electricity back in the 1930s. But are the investments good for northern Michigan, or are they inadvertently steering the region away from the kinds of local operators and stakeholders that are best positioned to provide stable, long-term solutions to the area’s connectivity challenges?

To find out the answer, the TCBN delved into the multiple prongs of northern Michigan’s in-progress broadband rollout.

First, a history lesson: On May 1, 1935, in the midst of the Great Depression, President Franklin D. Roosevelt created the Rural Electric Administration as part of The New Deal. The agency, formed by executive order, was intended to promote the proliferation of electricity to farmers and rural residents across the United States. The following year, Congress passed the Rural Electrification Act, which officially created the federal loan program that enabled rural communities to pay for the development of electrical infrastructure.

In the years that followed, many rural communities got electricity for the first time, including much of northern Michigan. At the time, Traverse City proper already had electricity – thanks to Traverse City Light & Power (TCLP), which had gotten its start in 1912 – but most of the outlying areas were still in the dark.

The literal light bulb moment for the region hit in 1938, with the establishment of the Cherryland Electric Cooperative. Thanks to a $372,000 Rural Electrification Act loan – equal to more than $7.7 million cans have any kind of high-speed broadband internet connection at home – even if those connections aren’t fiber. Both of those statistics leave considerable room for providers to build out networks and close the gaps, and a recent surge in funding is making that possibility of universal broadband access that much more likely.

What are some of those funding sources? Northern Michigan locals are already seeing some of them in action. Last year, for instance, Leelanau County’s Board of Com- town corridor, and a Phase 2 expansion that will bring the network to the rest of TCLP’s customers – will ultimately make fiber internet service an option for more than 11,000 customers. in 2023 dollars – Cherryland was able to get started on infrastructure. And on May 25, 1939, the cooperative energized its first 302 miles of power line, bringing electricity to dozens of rural northern Michigan farms, homes and other properties.

There are other funding sources that could soon be making their mark on the local fiber internet map. In addition to ARPA funds, money is just beginning to flow from the 2021 Infrastructure Investment & Jobs Act (IIJA), a bipartisan federal funding bill that specifically identified broadband as a top priority. That bill makes $1.2 trillion in funds available for infrastructure projects throughout the country, but only about 10 percent of the money has actually been directed so far.

What is playing out now in regards to fiber internet buildouts in rural parts of the country has been called a modern equivalent of the Rural Electrification Act. According to a 2022 report conducted by the Fiber Broadband Association (FBA), only about 43% of American households currently have access to fiber internet. And per a 2021 Pew Research Center report, only 77% of Ameri- missioners voted to allocate $3.2 million of the county’s $4.2 million American Rescue Plan Act (ARPA) dollars to build out a new fiber network. Once completed, the network will bring high-speed broadband internet access to nearly 8,000 unserved or underserved households in the county, mostly in Leelanau, Kasson and Solon townships.

In Traverse City, meanwhile, TCLP is in the midst of a citywide fiber buildout that was made possible thanks in part to a $14.69 million loan from the United States Department of Agriculture (USDA). The first two phases of the TCLP Fiber project –an initial buildout that targeted the down-

Specifically, a $42.5 billion program within the IIJA that is intended to bridge the country’s gaps in high-speed internet service – called the Broadband Equity, Access, and Deployment (BEAD) program – has yet to start moving. According to a December 2022 report from Fortune magazine, that money is still tied up due to the fact that “releasing the funding requires finalized maps from the Federal Communications Commission (FCC) that illustrate the areas and communities without highspeed internet access.”

The FCC unveiled drafts of those maps late last year, describing them as “the best picture available to date of where broadband is and is not available across the country.” Older FCC broadband maps collected data at the census block level, which meant that if even one home in a census block had broadband access, the entire block would show up as having access.

That flawed approach to broadband mapping led to big misconceptions about America’s digital divide. Chris Scharrer, who serves as county broadband manager for Leelanau County’s fiber project, has said that older broadband maps for Leelanau showed the county being “98% serviceable.” That number proved to be a massive overestimate, hence the ARPA-funded buildout aimed at bringing fiber to thousands of Leelanau homes.

In general, newer broadband maps will be significantly more granular, which will in turn help the FCC decide where to allocate money for broadband projects.

In June 2021, Governor Gretchen Whitmer issued an executive directive that officially formed the Michigan High-Speed Internet Office (MIHI). Since then, the office has been working on mapping the location of high-speed internet infrastructure in each of Michigan’s 83 counties. Those maps will be used to help shape the final drafts of the FCC maps, and will therefore be critical in maximizing funds awarded to Michigan through the federal government.

Additionally, MIHI has its own grant program – called ROBIN (Realizing Opportunity with Broadband Infrastructure Networks) – which is seeded by money from the federal Coronavirus Capital Projects Fund. ROBIN grants are intended to bring high-speed internet access to unserved locations throughout the state. The application process for the grants officially went live on January 13, and the state will accept applications through March 14, 2023.

All these public dollars could theoretically help make lightning-fast internet speeds the rule rather than the exception in rural areas like northern Michigan. Right now, only small parts of the region – including the heart of the City of Traverse City and the northern half of Old Mission Peninsula – actually have access to fiber broadband speeds (or download speeds of 1,000 megabits per second). Other areas – particularly more rural parts of Leelanau, Kalkaska or Benzie counties – are dealing with much slower speeds.

Proponents of state and federal funding for broadband say public dollars are the key to unlocking better internet service to support robust business development, remote work possibilities, online education and improved quality of life in rural parts of the country. Building out local broadband resources by any means necessary certainly sounds like good news, especially in the wake of the COVID-19 pandemic, which underlined how important it is for everyone to have reliable, fast internet access at home.

Still, there are skeptics who say that state and federal funding for fiber and broadband might not necessarily result in the most stable, sustainable or complete networks. Christopher Varenhorst is one such skeptic.

Varenhorst is the founder and president of Eclipse Communications, a Benzo- nia-based communications company working to build a fiber-to-the-home high-speed broadband network in Benzie County.

Since late 2019, Eclipse has invested more than a half a million dollars in putting the first pieces of its fiber network in place. In November, those investments led to one of the first big milestones for the buildout: the completion of Eclipse’s fiber backbone, which will serve as the foundation for the network.

As someone who has been working to bring fiber to Benzie County for more than a decade, Varenhorst is familiar with the significant costs associated with such a buildout – and with the huge challenges that rural areas especially pose to fiber development.

“It’s a very expensive realm to work in,” Varenhorst said of rural broadband. “Any given rural county is going to be in the $20 to $30 million range to completely deploy with fiber. And I mean fiber for everyone, not just hopping, skipping, and jumping between more densely populated areas – which is kind of how it’s been for four decades now in the entire greater broadband sphere.”

On the one hand, Varenhorst admits that big public funding campaigns have the potential to move the needle on bringing fiber to rural areas – simply by subsidizing the cost of these often prohibitively expensive projects. On the other hand, though, he’s worried that public money incentivizes outside players to come into markets they