Closing the Digital Divide
In 2017, the Federal Communications Commission estimated it would take $40 billion to close the digital divide by bringing a fiber network to 98% of America, mostly in rural areas. That large figure had been bandied about for nearly a decade in Washington, D.C. without any real effort to get the funding passed. All the while, if you attended any type of conference involving agricultural or rural issues in that time, you were certain to hear discussions about the lack of rural broadband ad nauseam.
Now, with the passage of the $1.2 trillion infrastructure package, it appears the dam has finally broken. The money has been allocated and is already resulting in immediate projects that have been in the makings for years. After years of acknowledging that rural America was falling behind its urban counterparts in so many ways, it took a pandemic-level event to finally convince policymakers something needed to be done.
Broadband Funding
The $1.2 trillion legislation passed the Senate 69-30. That very nontypical bipartisan vote these days came about in large part because every state, both red and blue, has substantial infrastructure maintenance and project backlogs. Many Republican senators voted for the measure because their states have woefully inadequate broadband, and the bill provided funding for every state.
There has been a lot of talk about topline numbers in the infrastructure bill, but not much coverage breaking down the funding contained in the bill. As for broadband investment, the numbers look like this. For starters, every state received $100 million for broadband projects, largely discretionary. That was part of an overall package allocating $65 billion for broadband investment. Of that money, $42 billion will be used to deploy broadband where it doesn’t currently exist. This will be equivalent to the “last mile” slogan that was used during the rural electrification push in the 1930s, although there isn’t an equivalently catchy phrase for today’s efforts.
Additional funding includes $14.2 billion for a permanent $30 per month subsidy for low-income households to receive broadband. Another $2.75 billion was allocated toward “digital equity” by ending the practice of carriers avoiding providing service in areas they won’t make money, also known as redlining. That is supposed to be aimed at racial minority areas, but it sounds more like rural areas.
Broadband Helping Dealerships
It is probably obvious how ubiquitous rural broadband will help dealers, but let’s put a finer point on it. A few years ago, WEDA conducted a survey of dealers to find out if the lack of rural broadband was affecting their dealerships and customers. No one was surprised the survey showed it was because it reduced the availability of remote diagnostic capabilities, among other things. In another recent survey, we asked the same question again. The same percentage of respondents, around 79%, still said that expanded rural broadband would improve the use of remote diagnostic capabilities.
Another question we asked in the survey highlights why remote diagnostics are so important. We asked dealers what percentage of parts are sold out the door. In other words, parts sold that are not installed by the dealership. What we found was the average dealership sells 56% of its parts out the door. Another way to look at that is dealers are constantly struggling with technician capacity to serve their customers and it seems that every dealership is at full capacity right now.
These statistics taken together show that if dealers want to be able to service more customers and increase customer uptime, which is the goal of every dealership, they need to hire a lot more technicians or become more efficient with the technicians they have. One obvious way to that is by using remote diagnostics more frequently rather than sending technicians out on service calls.
Having rural broadband available at every farm will rapidly increase the availability of remote diagnostics and hopefully go a long way toward increasing productivity in the dealership and ultimately increasing uptime for customers.
While it’s highly doubtful that legislators had this effect on their minds when considering their votes for the infrastructure bill, it certainly is one positive consequence that will come out of it. Agriculture has long surpassed mechanization as the primary driver of increased productivity. For the past two decades, the industry has been in the technological phase of growth, all while lacking the digital infrastructure to really realize those productivity gains.
With the tightening labor market, inflation and a host of other factors happening today, it can truly be said that it’s better late than never to finally close the digital divide.
Article Written By Eric Wareham
Eric Wareham is vice president of government affairs for the Western Equipment Dealers Association. He is a graduate of the Willamette University College of Law and Augusta State University. Eric may be reached by writing to ewareham@westerneda.com.
