Nearly 200 apply to expand broadband in rural Iowa

After receiving 178 applications from companies to expand rural broadband access in Iowa, the state is hoping to bring coverage to as many Iowans as possible in the largest state-assisted broadband program to date.

The push is the latest of the Empower Rural Iowa grant program, which has given millions of dollars to providers in past years to build broadband infrastructure in hard-to-serve places.

The applications for the $100 million in state funding cover a large swath of the state, Iowa’s deputy Chief Information Officer Matt Behrens said.

“There’s a wide distribution of locations, and so we’re looking at areas all over the state,” he said. “It’s really exciting to see a broad and diverse pool.”

Details of the applications are not yet public, but Behrens said his office is planning to publish them in the next couple of weeks. The office will evaluate the applications over the next month and anticipates awarding funding in early September.

Providers applied to build broadband infrastructure in places the state deemed to be lacking broadband access. A map laid out by the Office of the Chief Information Officer in July denotes the areas eligible for state funding.

The Iowa Legislature appropriated the money in May, the sixth and largest broadband program of its type in Iowa. The funding was a priority that Gov. Kim Reynolds issued in her Condition of the State address in January.

“The nearly 200 applications as well as the size and scope of these projects reflect the demand and need for quality accessible broadband throughout Iowa,” Reynolds said in an Aug. 3 statement. “This effort will open new doors for Iowa communities large and small, resulting in one of the most significant broadband build-outs in the entire country.”

The combined requests total $292 million, almost three times what the state is providing in grants. Behrens said the state is looking at federal funding sources also.

The bipartisan infrastructure bill being considered in the U.S. Senate contains $65 billion to increase connectivity nationwide, adding on to money in the American Rescue Plan earlier this year. Other programs from the Department of Agriculture and the National Telecommunications and Information Administration could be tapped as well.

Behrens said how and when those dollars can be brought to the table isn’t clear yet, but the timing is good for a broadband push.

“There’s a lot of federal programs, so it’s a really rich time to be looking at federal money,” he said.

Providers hope for a piece of the pie

South Slope Cooperative, a communications company based in North Liberty, has received state money for projects before and is hoping to be approved this time.

The company applied to expand its services in parts of rural Solon and Tiffin, Chief Executive Officer Chuck Deisbeck said.

Deisbeck estimated that between two applications, South Slope is looking to cover a few hundred people with fiber internet. South Slope proposes to provide up to a gigabit of internet speed, and fiber allows the company to adjust that higher as bandwidth requirements eventually increase.

“The bandwidth requirements used to double every couple years, now they’re tripling sometimes as much in 12 to 16 months,” he said. “You’ve got to be able to have a robust network that can be what we call future-proof.”

Sharon Telephone Company, based in Hills, is applying for a grant to cover areas east of Hills and in rural Lone Tree, as well as between Lone Tree and Iowa City.

The $3 million proposed project is expected to cover 250 residents, said Sharon Telephone’s general manager Scott Havel.

The company would not be able to build out to these areas if it weren’t for public funding, Havel said. Even if the company gets the expected 45 percent of the cost covered by the state, he expects it to be eight years before that area starts turning a profit.

Despite the slow payback, he said the project ultimately makes long-term business sense and helps rural Johnson County grow, attracting people and businesses.

“It raises property values, it brings more people into the market … to be able to bring a business in or move in,” he said. “And that helps us, too, as a business.”

Companies manage cost

As they hope for federal assistance, internet companies are facing the same economic squeeze that other construction companies are seeing, Deisbeck said. Supply chain issues are causing long waits — up to a year — for fiber cable. Rising prices for chips, electronics and other materials are compounding what already is an expensive feat of building internet in rural areas.

Labor shortages also are hitting the companies, and some are finding it hard to staff projects, he said.

“These projects are coming to a grinding halt in some cases,” he said. “It’s going to be a slow process for a lot of companies if they don’t have access to the material or the labor.”

Companies have until 2025 to complete their proposed projects to receive the funding. Companies will get the public funds only upon completion, so some will need to secure private financing ahead of time, Deisbeck said.

Behrens said in a previous round of funding last year, the state offered companies half the money up front, and the reporting and use of the money became complicated and hard to track. The decision to hold back funds until the end of a project was to make sure the money is used correctly.

“Striking the right balance in this program means making sure that projects are completed as designed and as they were set forth in the application that was provided to the office,” he said.

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