The $53,000 Connection: The High Cost of High-Speed Internet for Everyone

Officials doling out billions of dollars for broadband in rural America are struggling to decide when a new hookup costs too much

By Ryan Tracy of The WSJ. Excerpts:

"Nebraska’s Winnebago Tribe has long been stuck with sluggish internet service. The federal government plans to fix that by crisscrossing the reservation with fiber-optic cable—at an average cost of $53,000 for each household and workplace connected.

That amount exceeds the assessed value of some of the homes getting hookups, property records show. While most connections will cost far less, the expense to reach some remote communities has triggered concerns over the ultimate price tag for ensuring every rural home, business, school and workplace in America has the same internet that city dwellers enjoy.

“The problem is, money is not infinite,” said Blair Levin, a senior communications policy official in the Clinton and Obama administrations"

"The U.S. has committed more than $60 billion for what the Biden administration calls the “Internet for All” program, the latest in a series of sometimes troubled efforts to bring high-speed internet to rural areas. 

Providing fiber-optic cable is the industry standard, but alternative options such as satellite service are cheaper, if less reliable."

"In Montana, laying fiber-optic cable to some remote locations could cost more than $300,000 per connection, said Misty Ann Giles, director of Montana’s Department of Administration. Building to those places would empty the state’s coffers, she said: “That’s when we might not reach everyone.”"

"Part of the project involves drilling horizontally under the Missouri River to connect land the tribe wants to develop near its WinnaVegas Casino. The tribe is also starting an internet company to run the network, creating jobs and competing with an existing provider known for slow customer service.  

In total, the roughly $35.2 million grant will connect 658 homes, businesses and other buildings via about 235 miles of fiber, all of it buried underground for improved reliability." (35.2 million divided by 658 is about 53,000 per home)

At least four active federal programs are funding fiber broadband projects, each with distinct rules. The Wall Street Journal reviewed these programs and found not only high-cost projects but also wide differences in how much taxpayers are paying for each new connection.

The highest-cost program on a per-location basis was the Commerce Department’s Tribal Broadband Connectivity Program, which funded the Winnebago project. It provided an average of about $13,300 nationally for each location connected, a term that encompasses homes, businesses and institutions such as schools and hospitals. 

The U.S. Department of Agriculture’s ReConnect program is averaging about $9,000 per location. 

By contrast, programs at the Treasury Department and Federal Communications Commission averaged about $3,300 and $1,750, respectively, per location reached, the data show."

"In the mountains of western Montana, broadband provider Blackfoot Communications is building two federally funded fiber networks."

"There were no competing bidders—USDA simply reviewed and approved Blackfoot’s application."