Rural Broadband

USDA Rural 

Development: 

Bringing Broadband 

to Rural America
USDA Rural Development is committed to fulfilling the President 

and Congress’ goal of bringing affordable broadband to all rural 

Americans. This is a high priority. Broadband is a transformative 

technology. It allows rural communities to dramatically enhance the 

quality of health care and education. It gives every rural business 

access to regional, national, and international markets. It reduces 

barriers of time and distance, levels the playing field, and makes 

rural communities better places to live, work, and raise a family.

Rural America is diverse and so is the broadband program. USDA 

Rural Development tailors solutions to the needs of individual 

communities. We have financed technologies including fiber to the 

home, DSL, wireless, broadband over power lines, and hybrid fiber/

coax systems. We are eager to work with startup companies as well as 

established providers and stand ready to consider innovative financing 

arrangements. Our mission is to increase economic opportunity and 

improve the quality of life in rural America. Broadband is essential 

to both of these goals, and we will not rest until the job is done.

Thomas Dorr

Under Secretary

Broadband is a High Priority

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As an agency of the U.S. Department of Agriculture, Rural Development 

is focused on improving the quality of life for rural Americans. In essence, 

Rural Development provides individuals, communities, and businesses 

with the financial assistance needed to address the unique needs of rural 

America. It offers programs in housing, utilities, business development, 

and community facilities/public safety. By improving the quality of life in 

rural America, it no longer is a sacrifice for the next generation to return 

home and raise their families in a safe and comforting environment. 

Rural Development provides increased economic opportunities so people 

who choose to live in small towns can compete on a global level. 

PROGRAM HISTORY

USDA Rural Development’s involvement with broadband began in 2000 

with a broadband pilot program, established with the help of a $100 

million loan program authorized by the President of the United States and 

Congress. The program provided loan funds to rural communities with 

up to 20,000 residents. During the first year, Rural Development approved 

12 loans for the entire $100 million. In addition, an extra $80 million was 

provided by the Agriculture Appropriations Act of 2002, and a total of 

16 loans were approved during the second year of the pilot program.

In total, the pilot program delivered 28 loans with $180 million 

based in 20 States. The pilot program was successful because it 

allowed the agency to quickly implement a program and get an 

idea of what the needs and interests were for broadband. 

The program has, and will continue, to facilitate deployment of broadband 

in rural areas. Currently, 40 percent of the projects financed under this 

program are successfully completed. However, the pilot approach did 

Rural Broadband
not include the risk-mitigating rules that are in place today with regard 

to equity and loan security. As a result, approximately 30 percent of the 

pilot loans defaulted. Rural Development continues to work with these 

borrowers to negotiate financial arrangements to repay the loans. Rural 

Development used the experience as a learning tool by applying those 

valuable lessons learned to the Broadband Loan Program that exists today.

CURRENT PROGRAM

The current USDA Rural Development Broadband Program was established 

by the 2002 Farm Bill. The program is designed to facilitate the delivery 

of broadband services to rural America, ensuring that the organization is 

making sound lending decisions and positively investing taxpayer dollars. 

Since its inception, the program has approved 70 loans in 40 states, 

totaling over $1.22 billion. The broadband loans serve 1,263 communities 

with a total of 582,000 household subscribers. Approximately 40 

percent of these communities were unserved at the time of the loan 

approval, and an additional 15 percent had only one provider.

Moreover, the current portfolio of active projects serves 987 communities 

with 38 loans in progress, 15 in initial start-up phase, and 5 loans rescinded. 

There are eight completed projects in Kansas, Louisiana, Michigan, 

North Dakota, Nebraska, South Dakota, Texas, and Washington.

The program is committed to bringing solutions to rural America and works 

hard to ensure that approved loans are likely to result in new service to 

rural residents and businesses. As of April 2007, the program received and 

reviewed nearly 200 applications. More than 100 were returned because 

applicants were unable to generate the minimum equity required to support 

the project and/or had incomplete or unsubstantiated business plans. 

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Rural Broadband

The broadband 

loans serve 

a total 1,263 

communities 

of 582,000 

household 

subscribers.
Over time, the number of returned applications has decreased as USDA 

Rural Development provided tools and assistance to loan applicants. 

 Number of Applications vs. Size of Loan

Demand to participate in the program is high, with pending 

fund requests currently at $981 million. Compared with previous 

years, fewer applications are being filed, but the requests that 

come in are for multicommunity or larger regional projects. 

Therefore, the average size of loans requested is increasing. 

80

70

60

50

40

30

20

10

0

2003 2004 2005 2006

76

11.3

39

18.7

37

14

33

44

•Number of Applications •Average Size of Loans (Millions)
The following are two examples of how broadband positively affected rural 

communities in Michigan and Kansas. Broadband technology brought much 

needed growth and opportunity for businesses, residents, and students.

Air Advantage

February 2003

Two Broadband Loans – $1,528,000

Two Community Connect Grants – $433,708

Air Advantage, founded in 2002, provides high-speed wireless Internet 

service to Michigan’s “thumb” area. Scott Zimmer, president of Air 

Advantage, worked with schools and saw the need for students to have 

broadband access. Zimmer investigated how to make it happen. USDA 

Rural Development came to the rescue and assisted Air Advantage 

with two Community Connect Grants and two Broadband Loans. Air 

Advantage now serves 3,500 customers in four counties in Michigan, with 

another 1,000 customers projected under the second Broadband Loan. 

The 300 miles of wireless backbone and 2,500 square miles of coverage 

have improved the lives of many rural Michigan residents. One 

facility that benefited from the broadband technology is the Columbia 

Township Library. What was once a one-room schoolhouse converted 

into a library in 1965 is now a brand new library that offers a host of 

services to local residents. Since 2005, the library computer lab has 

averaged more than 350 users (out of 605 area residents) per month. 

In addition, the increased use of the library and computer lab has 

given the facility an opportunity to offer community programs, such 

as a young reader program and community outreach programs.

Another successful result of the broadband technology involves the 

implementation of a distance learning program with seven school 

districts. This project has connected the schools via wireless broadband 

technologies and has allowed them to share teacher resources, giving 

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TECHNOLOGIES/TYPES 

OF ORGANIZATIONS

As the Rural Development 

Broadband Program is 

“technology neutral,” a 

variety of technologies 

have been deployed 

by its borrowers. In 

addition, USDA Rural 

Development makes loans 

to diverse organizations.

Types of Business Models

Technologies Approved

Types of Organizations

Start-up Companies – 29%Other Telecom Companies – 25%

Existing Program

Borowers – 46%

Fiber to the

Home – 37% Hybrid/Fiber

Coax – 17%

DSL – 22%

Broadband Over

Power Line

(BPL) – 1%

Fixed

Wireless – 23%

Corporations – 56%

LLC's– 32%

Cooperatives – 8%

Municipalities or

Public Utility – 3%

Tribal

Authority –

1%

Success Across Rural America

 
students more educational opportunities. The distance learning program 

would not be available without the equipment obtained through the 

Distance Learning and Telemedicine Grant Program from USDA Rural 

Development. Some key offerings that have come about because of this 

program are foreign language and Advanced Placement courses that 

were not offered to students previously. Distance learning makes these 

courses available to all Huron County students because one teacher in 

one district can provide instruction to students in multiple districts.

There are more than 50 students in Huron County enrolled in college-level 

courses while attending high school. These dual enrollment options are 

available because of the distance learning equipment. This program prepares 

the student for college, eliminates the need for driving up to 60 miles for 

this instruction, and permits the student to participate in these courses. 

Thanks to Air Advantage and USDA Rural Development, the citizens 

of rural Michigan now have extensive opportunities to grow and 

thrive in their community.

Nex-Tech

November 2004

Two Broadband Loans – $6,574,000

Nex-Tech, a subsidiary of Rural Telephone, a leader in the 

telecommunications industry, has brought broadband, video, and voice 

services to towns throughout rural Kansas and has changed the future 

of these towns indefinitely. The Broadband Loans through USDA Rural 

Development allowed Nex-Tech to bring high-speed data connections 

to communities that had little or no connectivity. As a result of these 

long- and short-term economic benefits, these towns flourished.

Broadband technology allowed businesses to grow and expand, which 

provided a catalyst to hire and train more workers from the area. Prior to 

“I could write a 

book about all 

of the wonderful 

things Rural 

Development 

has done for 

our company 

and our

communities.”

– Scott Zimmer
Nex-Tech, these businesses were using a slow dial-up connection that was 

not an efficient means of meeting business demands. The future development 

of these businesses relied on broadband becoming available, and some 

companies were even considering relocating if they did not get access.

For example, Osborne Industries, a company that has been in operation 

for more than three decades, was considering leaving the town of 

Osborne due to the lack of broadband availability. Since Nex-Tech’s 

overbuild, Osborne Industries has expanded its product line and is able 

to reach markets throughout the United States, Canada, Europe, and 

Asia. Transitioning to electronic files has made ordering, servicing, and 

accounting more efficient. The company supports 112 employees.

Fiber optics and broadband Internet have played an important role 

in attracting and retaining residents and businesses to the Phillips 

County area. Since the new technology, there has been a slight increase 

in school enrollment across the three school districts in the county. The 

population is estimated to be increasing with new home construction 

on the rise and a variety of businesses that are expanding and relocating 

to the area. For instance, a $54 million ethanol plant that employs 34 

people was built in Phillipsburg after broadband became available.

Numerous improvements have been made with regard to high-speed 

Internet connections, allowing businesses to operate more efficiently 

and allowing executives to work from home through a virtual private 

network (VPN). Nex-Tech and USDA Rural Development understand 

the importance of community development and have a long-term vision 

for rural communities by continuing to grow and expand their advanced 

data services to reach more residents.

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Although the Broadband Program is working as Congress intended with 

$1.22 billion invested to date, changes are being made to improve results. 

Under the current Broadband Program, USDA Rural Development has:

• Reduced processing times from an average of 331 days to 181 days.

• Reallocated 11 employees from other program areas to 

ensure pending applications are reviewed sooner. 

• Improved access to program information by:

 – Creating a new USDA Rural Development Web link on the 

Federal Communications Commission (FCC) rural homepage.

 – Redesigning the program Web site for easier 

navigation and improved usability.

 – Posting weekly information about pending and approved 

broadband loans on the program Web site.

 – Posting a Traditional Borrower listing that allows applicants 

to identify areas that may be ineligible for funding.

In addition, the Program is reviewing its processes and procedures 

to identify improvement or streamlining opportunities.

Program Improvements
USDA Rural Development is committed to improving the Broadband 

Loan Program’s effectiveness. To better meet the needs of rural America, 

Rural Development has proposed a series of improvements to the 

Broadband Program. The proposed rule modifications are designed to:

• Promote deployment to rural areas with little or no service.

• Limit funding in urban areas where a significant share of the 

market is served by incumbent providers.

• Ensure that residents in funded areas get broadband access 

more quickly.

• Clarify and streamline the equity and marketing survey requirements.

• Increase the transparency of the application process.

• Promote a better understanding of all application requirements.

• Ensure that projects funded are keeping pace with increasing 

demand for bandwidth.

ADVOCATE FOR RURAL AMERICA

USDA Rural Development is the advocate for rural America and has been for 

many decades. Its Broadband Program supports that effort with its vision 

for rural communities — to have access to affordable, reliable, advanced 

communications services to provide a healthy, safe, and prosperous 

place to live and work. With the continued support and dedicated efforts 

of USDA Rural Development employees along with the residents of 

the rural communities they assist, this vision is becoming a reality. 

Over the years, USDA Rural Development has established expertise in the 

broadband arena and employed a team-focused approach to improving life 

in rural communities. Currently, the Broadband Program is administered 

by a staff of engineers and loan analysts who understand the industry and 

its unique challenges. Existing USDA Rural Development distribution 

10

Steps Toward Change
systems also support the broadband effort with field representatives and 

offices in all 50 states. The program staff provides financial and engineering 

support to applicants prior to and after filing, while state offices, field 

representatives, and headquarters staff conduct broadband workshops 

frequently to inform potential applicants and community leaders about the 

program and the benefits of broadband. To date, the program has conducted 

23 broadband workshops in addition to many other outreach events. 

LOOKING FORWARD

USDA Rural Development is committed to the future of rural communities, 

ensuring they are great places in which to live, work, and raise families. 

It has made great progress in bringing broadband to rural America, 

but there is much more to do. The organization will continue to refine 

the Broadband Program so that more rural residents and businesses 

can receive the economic and social benefits that broadband creates 

in their communities. In addition, it will continue to rely on the close 

support and dedicated efforts of the residents within those rural 

communities to help facilitate those investments. With this partnership, 

broadband will be an integral part of life in rural communities across 

the country, providing the economic benefits of the city with the 

high quality of life typically found in the heart of rural America. 

Advocate for Rural America
USDA is an equal opportunity provider and employer

May, 2007