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Study Sees Little Hope For Rural Internet Users

Federal stimulus to expand broadband not enough, researchers say

By Mark Huffman
ConsumerAffairs.com

December 11, 2009

Analysis of most recent FCC data reveals that about 45 million of the more than 117 million US households have no Internet service. When "no Internet" households are added to those households using dial-up to reach the Internet, the number of non-broadband households approaches 58 million, according to a new market research study from The Insight Research Corporation.

These 58 million non-broadband households represent 49 percent of the households in the US. According to Insight Research's market analysis study projecting the FCC 2008 data to year-end 2009 and taking into account further broadband penetrations, it is estimated that 40 million households will still lack broadband access at the close of 2014.

Major providers of broadband services, such as Verizon, have hesitated to invest in some rural markets because of small customer bases spread out over large areas, which can make infrastructure investment costly. As a result, most rural residents who want broadband have only the alternative of satellite broadband from either Hughesnet or Wild Blue, both of which can be problematic.

"Living in a rural area, I unfortunately signed on (to Hughesnet)," Earl, of Warrenton, Va., told ConsumerAffairs.com. "Tech support that you can't understand. Service kept dropping off, their contract serviceman on site 4 different occasions, personally observed the problem, and could not correct it. Cancelling the non-functional service cost me $300."

Joel, of Ramah, N.M, says Wild Blue isn't the answer either.

"My download speeds have progressively become slower to the point I am giving up," he told ConsumerAfffairs.com. "It now takes several minutes to download ONE song and even then it stops several times, making a download for editing impossible. They promised to take care of the problem but after 5 months nothing has happened unless becoming even slower is the promised change."

If these consumers are hoping the federal stimulus will provide an answer to their broadband problems, the study says they are in for a disappointment. Current federal Stimulus spending of $6.4 billion would allow for an investment of $164 per household to provide broadband access to the non-broadband households, the study finds.

The availability of such a small investment amount per household casts serious doubt that any significant expansion of broadband access will result from this government action, the authors say. This position is further bolstered by the argument that, at the current estimate of $1,500 per household, at least $60 billion would be needed to deploy universal broadband access.

"Certainly the current administration recognizes the direct relationship between extending broadband access to all Americans and the future health of our economy, but the current allocation of funds is just not going to get the job done," said Robert Rosenberg, President, Insight Research. "Our analysis found that a substantial portion of the 49 percent without broadband had no computers in their homes. There is a chicken and egg problem here that needs to be considered by our policy makers."

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