Tuesday, October 11, 2011

The Need for Better Oversight in the Rural Broadband Battle

Omnicity, a Southern Indiana rural broadband provider, filed for Chapter 11 bankruptcy last week. Just two years ago, with the governor at the official press conference, the company announced plans for expansion in Ohio while promising job opportunities. At the time, Omnicity provided rural broadband access to more than 30 Indiana counties with plans to be one of the primary sources of connectivity in the country. What happened?

The problem was bad business – the company secured loans they were unable to repay. The most infuriating part, however, is that these were government loans that now have little chance of being repaid. Was the company in solid fiscal shape before acquiring the loans? Was the government, so caught up in the idea of economic development via rural broadband expansion, blinded by the reality that Omnicity wasn’t financially viable?

Omnicity’s bankruptcy filing is a prime example of why government should reconsider involving itself in rural broadband expansion. If the need is there, people will buy the product. But all the effort – as well as the political grandstanding – is for naught if the demand isn’t strong enough. And if those in rural communities are in such dire need of broadband access, perhaps they need to consider whether they’re living in the right place.

To be sure, Omnicity isn’t the only company trying to recognize the potential in a relatively open, untapped market. But companies need to grow the right way. If the government insists on being involved, they need to do their homework.

What do you think?

Labels: Economy, Omnicity, Rural Broadband