Time for Europe and the US to End the Rural Broadband Gap

Thoughts about technology that is inclusive, trusted, and creates a more sustainable world

These posts represent my personal views on the future of the digital economy powered by the cloud and artificial intelligence. Unless otherwise indicated, they do not represent the official views of Microsoft.

Last week I wrote about the importance of improving and expanding Internet access for the world’s populations as we start to recover from the pandemic. This week I want to drill down a little deeper on this subject. In particular, I want to focus on Internet access for people living in rural areas in Europe and the United States.

You might ask: why look only at rural Internet in the world’s two richest economies, instead of places where the need is so much greater, such as India and sub-Saharan Africa? It is true that the latter are cruelly underserved, with barely 1% of the entire population having fixed Internet access at even very low speeds, though higher percentages have mobile Internet access. But these regions face very different issues than the developed economies. And as long as we still struggle to ensure good Internet access for rural zones in the rich countries, it’s going to be even more difficult in poor countries. I promise however to return to this important topic in a future post.

So what then is the state of rural Internet access in the EU and the US? Getting statistics on the US is straightforward, though assessing their accuracy is more difficult. Unlike Europe, the US has a single regulatory agency responsible for gathering statistics about network usage, the Federal Communications Commission (FCC). Last year the FCC reported that as of late 2017 some 21 million Americans still lacked broadband Internet, many of them living in rural areas. Here “broadband” is defined by the FCC as a download speed of at least 25 Mbps and an upload speed of at least 3 Mbps. (One Mbps is one million bits per second.) By comparison, although precise figures are hard to come by, urban Americans routinely have 50 Mbps, 100 Mbps, or more. The FCC’s 25 Mbps threshold for broadband is about the same as the reported average Internet access speed in Uzbekistan.

But these statistics, which the FCC presented as an improvement over previous years, were contested by many. Key objections were that the numbers come from unaudited reports submitted by the Internet access providers themselves, and are based on an error-prone methodology likely to overstate access. A Microsoft-sponsored study in 2018 using a different methodology estimated that 19 million Americans in rural areas alone lacked broadband, which is nearly as many as the FCC’s 2019 estimate for the entire country. The Microsoft estimate amounts to about 1 in 3 rural residents in the US. Interestingly, this figure closely matches a new report by a trade association of US broadband providers, which finds that 32% of rural households in the US fall below the 25 Mbps access threshold.

Nevertheless, the news on rural broadband in the US is not all bad. Private industry has launched an array of programs to fill the rural broadband gap. For example, Microsoft is working with network partners to bring broadband to 3 million people in underserved rural areas by 2022 using an innovative technology known as TV white space.

The federal government is also doing its part. Even before the onset of the COVID-19 pandemic, the FCC in early February proposed an ambitious plan to provide $20 billion in new subsidies for rural broadband over the next 10 years. Then in April, the agency proposed an additional $9 billion to subsidize rural 5G over the same period. These subsidy programs are funded by fees added to our telephone bills. Congress is also considering proposals for billions in additional rural broadband subsidies directly from the Federal budget.

In short, while millions of Americans in rural areas still lack Internet speeds adequate for the new era of remote work and living we are now entering, substantial efforts are being made to close this gap. At a minimum, rural broadband in the US, including both wireline and wireless technologies, will receive at least $3 billion in annual subsidies over the coming decade.

How does the status of rural broadband in Europe compare? Like the US, the EU is striving to improve rural Internet access. A decade ago, the European Commission set a goal of achieving fast broadband—defined as 50 Mbps—for all Europeans by 2020. But a 2018 report by the European Court of Auditors forecast that the EU would fall short of this goal in rural areas. The court estimated that at least half the member states would fail to achieve fast broadband access for more than 50% of their rural populations. In another study, the EC estimated as of 2017 that the EU as a whole had achieved only 39% coverage of rural areas at the more basic 30 Mbps level. This would put the EU significantly behind the US.

There is evidence that Europe has for at least the past two decades been investing less in its overall broadband infrastructure than the US. The OECD estimates that from 2003 to 2015 the US on average invested $245 per capita annually in telecom infrastructure compared to $138 per capita for the OECD’s European members.

Nevertheless, the EU like the US understands the importance of improving rural broadband and allocates substantial subsidies for this purpose. During its last 7-year budget cycle from 2014 through 2020 it allocated 15 billion € for broadband subsidies, of which about 7 billion € were earmarked for rural areas. These funds go to the member states, which decide where to spend them.

The next 7-year EU budget, for the 2021-2027 period, is currently being hammered out in tough tripartite negotiations between the European Commission, the Council of Ministers, and the European Parliament. While the EC has reiterated its strong support for rural broadband, it isn’t yet clear how much money will be allocated to fresh subsidies in the next budget.

Now is not the time to falter or lose focus. The necessity of taking a more ambitious approach to broadband in the post-pandemic era became clear in March, when EC Internal Market Commissioner Thierry Breton, formerly the CEO of one of Europe’s largest network operators, was forced to plead with streaming services like Netflix to lower the resolution of their services to ease congestion on European broadband networks, which were severely stressed by the sudden surge in Internet demand caused by the pandemic.

Of course, it’s not just about streaming TV series and games. In the post-pandemic era, Europe like the US will see much greater usage of telemedicine. The ways Europeans work and are educated will be reshaped by the recent experience of telework and distance learning. It’s clear that if Europe’s nations are to maintain globally competitive workforces, they will have to go “all in” on bringing high-speed Internet to their entire populations. The United States shows signs of substantially increasing government funding commitments for rural broadband, and I think European policymakers and citizens alike will agree that it is vital for Europe to do the same.