Economic Gardening Instead of Big Business Hunting

50 billion dollars; that is how much communities and states spend each year wooing businesses from outside their area, according to Dr. Glenda Humiston, USDA Rural Development State Director for California. Speaking at last week’s Western Telecom Alliance Convention, Humiston likened this jockeying for out-of-town businesses as a zero-sum game that has limited benefit in spurring local economic growth. Research from the Federal Reserve Bank of Minneapolis supports this idea that when cities, states and regions compete with subsidies, there are no winners.

Humiston said that a more productive approach is, “Economic gardening which nurtures the local economy.”  The Central Valley Next-Generation Broadband Infrastructure Project (CVNGBIP) is an example of economic gardening, as they are building upon the local infrastructure through regional partnerships that will strengthen existing businesses and institutions. The CVNGBIP is a partnership between existing consortiums, CVIN and CENIC, which  were successful in their application for an NTIA grant as part of the ARRA program.

CVIN is an organization of independent California telecommunications’ companies that came together to share costs for things such as System 7 signaling. For years, they have been looking at reducing middle-mile transport costs by interconnecting their disparate fiber networks. The goal of CENIC, the Corporation for Education Network Initiatives in California, is to serve all of the California public educational institutions, including K12.

Combined, these two entities have over 4,600 miles of fiber throughout California. Through the addition of 1,371 miles of new fiber, these entities realized that they could serve 1,973 communities over 39,530 square miles consisting of a population of 4.077,365. The CVNGBIP web site suggest that  49% of the households and 15% communities in this region do not have access to broadband.

Humiston pointed out that California, with its geography and relatively large sizes of its counties, does not receive the same Federal support for its rural areas as other areas of the United States.  This funding disparity is due to USDA rules with define persistent poverty levels based on county boundaries.  She illustrated this with a map comparing California with the region consisting of Virginia, the Carolinas and Georgia. The contrast was stark as California, with its 158k square miles and 58 counties, has only 30 USDA field service centers compared with 400 counties and 200+ field service offices for the aforementioned east coast region.

In this context, CVNGBIP is an exception, as the majority of the cash funding is coming from NTIA grant money (70%), with the remainder of cash investment coming from CPUC CASF Fund (10%) and the CVIN partners.  Still the success of this project hinges on relationships at the municipal and local business level. David Nelson, who is the CEO of CVNGBIP, has been busy working with these entities educating them and working with them to tie together anchor tenants, such as schools, libraries and first responders, as well as businesses of all sizes.

Some of the applications they anticipate for the network include:

  • Wholesale bandwidth to various entities
  • Wireless backhaul
  • Commercial services for last mile providers
  • SIP Trunking – for customers such as insurance & banking companies
  • Potentially leasing dark fiber to other entities

Additionally, as part of their grant application, they will be building a wireless last mile network that will pass 12k unserved homes in the southern most portion of the Central Valley.

Dana Baker of GVNW reinforced the approach taken by CVNGBIP, as he suggested that independent communications service providers need to, “Look at the assets that they have in the community; things like recreation, libraries, emergency services, utilities, housing, schools, service, medical services.” He went on to say that operators need to, “Step it up a notch and create opportunities for youth to stay in our areas,” and that, “successful economic development is a regional effort.”

Dr Humiston echoed this view when she said that the USDA is, “Facilitating more and more regional funding.”   She cited a USDA authored report, Jobs, Economic Development and Sustainable Communities, as a blueprint for rural economic development that the state of California adopted under Republican Governor Schwarzenger and remains in place under the current Democrat Governor, Jerry Brown. She emphasized the importance of healthy rural economies, by calling it, “A food security issue.”

Baker of GVNW said that WTA will continue this economic development conversation at future events and provided a couple of resources that will spark additional ideas.

Warren Miler Freedom Foundation

Center for Rural Entrepreneurship

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