Elizabeth Stelle: Why is rural broadband so challenging? Government red tape, mostly.

Tom Soper via Flickr Tom Soper via Flickr

Politicians celebrate taxpayer funds pouring into Pennsylvania to “bridge the digital divide.” Last month, U.S. Sen. Bob Casey (D-PA) praised the approval of $204.1 million to expand internet access across Pennsylvania.

But for Jim Kail, this government-funded broadband project is nothing to celebrate.

“It is designed to fail,” says Kail, president and CEO at Laurel Highland Total Communications, Inc. (LHTC). “I will put money on it now. When we look back at this program in five or so years, it’s not going to be good.”

These projects, Kail asserts, overemphasize facility construction and neglect long-term sustainability. Sadly, the buildouts lack recurring revenues to sustain service. As a result, planners tend to “build bridges to nowhere,” according to Kail.

Kail isn’t opposed to all government funding. He notes how the Universal Service Fund enabled small companies to deploy services in rural areas nationwide.

Instead, he objects to government waste.

For example, the Rural Digital Opportunity Fund, a federal program intended to expand rural internet, awarded $9.2 billion in projects in 2019. However, reporting found that nearly one-third of those projects defaulted.

Government red tape is often to blame.

Broadband companies endure an alphabet soup of regulatory agencies, such as the Federal Communications Commission and the Pennsylvania Public Utility Commission (PUC). These agencies dictate everything from accessing utility poles to monitoring internet speeds — and they often do these things poorly.

For example, PUC requires about two years to access a pole owned by another utility company, or a company can “fast-track” the process, which takes about six months.

Yet, the biggest impediment to affordable broadband is the Pennsylvania Department of Labor & Industry (L&I) — specifically, its interpretation of Pennsylvania’s prevailing wage law.

Broadband relies on “teledata” line workers. However, L&I mandates that these projects pay a prevailing wage for “electric linemen.”

This seemingly innocuous job misclassification is costly. The prevailing wage for electric line workers — about $90 per hour — is nearly twice that of teledata line workers, who make about $55 per hour in other states.

L&I’s misclassification drives up the overall cost of broadband deployment by more than 50 percent. These inflated costs make it difficult for smaller companies to compete, meaning rural communities get the short end of the fiber-optic stick.

Even progressive states, such as Massachusetts and New York, adopted job classifications delineating teledata and electrical line workers while still offering a competitive market wage.

Rather than address this red tape, lawmakers throw money at the problem.

In addition to the aforementioned $200 million, Pennsylvania has received more than $1 billion in Broadband Equity, Access, and Deployment funds and $45 million through the Multi-Purpose Community Facilities Program.

But this hefty investment—combined with the prevailing wage — inflate costs and discourages smaller businesses from extending internet to rural Pennsylvania.

These rural areas had been Kail’s bread and butter. For years, LHTC built broadband facilities in places like Ligonier Borough — all without government funding. However, government-inflated costs have discouraged Kail from bidding on further projects in Ligonier.

Rather than seek additional government grants, Pennsylvania lawmakers should pass legislation that frees small providers to build reliable rural services.

Senate Bill (SB) 188, introduced by state Sen. John DiSanto, would require legislative review of regulations with an estimated economic impact exceeding $1 million. Unfortunately, this bill and several others remain stalled in the state House.

But reform doesn’t need to come from just the legislature; Gov. Josh Shapiro could easily stop this regulatory runaround.

We know Shapiro can do this because he’s done it before. When I-95 collapsed, the governor fast-tracked permitting and other regulations that would have prolonged reconstruction. What would have traditionally been a months-long project, “mired in a slog of reviews, permits, and delays,” took only twelve days to complete.

Broadband is just as worthy of similar relief, especially if the governor genuinely values rural Pennsylvanians’ access to affordable, high-speed internet.

If we want to advance in the digital economy, we cannot rely on decades-old laws and outdated regulations. Instead, lawmakers must enact meaningful regulatory reform that reduces the economic barriers and broadens competition among providers.

Until then, bridging the digital divide will remain another broken promise by Shapiro and his fellow lawmakers.

Elizabeth Stelle is the Director of Policy Analysis of the Commonwealth Foundation, Pennsylvania’s free-market think tank. X: @ElizabethBryan

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3 thoughts on “Elizabeth Stelle: Why is rural broadband so challenging? Government red tape, mostly.”

  1. Isn’t interesting that the FCC decided not to award Elon Musk’s Starlink any subsidy to expand broadband service in rural areas in the United States, while Starlink is the method that’s being used in Ukraine to fight a war and simultaneously deliver to its civilian population. Do you think that their might be some politics involved, or could it be true that delivering broadband to rural Kentucky is beyond the capability of a company that is doing it effectively in the most dangerous war zone in the world. HMMMMMM,

    1. Or it is because he turned off Starlink during a Ukrainian offensive and that he could easily do it on a whim in the U.S.

      1. That story has been shown bit to be correct. As noted in other places including Snopes, Musk objected immediately and Isaacson (the author whose book on Musk contained the allegation) would clarify soon after, the claim that Musk had ordered Starlink coverage in Crimea “turned off” wasn’t entirely accurate. (Both CNN and The Washington Post subsequently corrected their reports.) Musk responded to the allegations on X (formerly Twitter) in a series of messages in which he claimed the following: (1) Starlink was never activated in the region in the first place, and therefore he never deactivated it, and (2) the Ukrainian government had asked him to activate Starlink “all the way to Sevastopol,” the largest city in Crimea, and he refused to do that to avoid escalating the conflict. One unanswered question was why Starlink access hadn’t been activated in Crimea. During an All-In Summit appearance on Sept. 11, 2023, Musk returned to the topic and stated that Starlink could not operate in Russia-occupied Ukraine because U.S. sanctions forbade it without special permission. Moreover, Musk said, Ukraine didn’t give SpaceX any “advance warning or heads up.” He said he got urgent calls from the Ukrainian government in the middle of the night saying that he needed to turn on Starlink access in Crimea. Comparing the situation to the Japanese attack on Pearl Harbor in 1941, Musk claimed that the Ukrainian government was asking SpaceX to “proactively take part in a major act of war.” He said that SpaceX was supporting Ukraine, but the Ukrainian government was not in charge of U.S people or companies, adding “that’s not how it works.” He added that although he’s not U.S. President Joe Biden’s biggest fan, if he had received a presidential directive to turn on Starlink connectivity in Crimea, he would have done so, because he does “regard the president as the chief executive officer of the country.” But no such requests came through, he said.

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