Some public and private stakeholders argue that financial matters such as return on investment (ROI) must be heavily considered when expanding broadband to unserved populations. But does digital equity, the idea that everyone should have access to the technology our society increasingly depends upon, reduce the importance of these financial aspects?
Industry analyst Craig Settles, who has conducted needs assessments for communities interested in broadband since 2006, said a lack of a guaranteed ROI should not stop broadband expansion. One must figure out how to pay for the people who can’t pay, as well as think beyond the basic necessity of reliable broadband infrastructure.
“There has to be an understanding that after I have built the network … then comes all of the other pushes for equity,” Settles said. “And that concept, whether it is a statewide policy or it’s in pockets within a particular state, there has to be a push for the full digital equity package.”
Settles gave several examples of equity issues: children who lack the right devices at home for learning; teachers who need digital training so that they can prepare students for the future; and an aging baby boomer population that may not have the equipment or skills to understand, much less take advantage of, telehealth.
“We love to talk about our technology and ‘God, we’re doing all this great stuff in the world’ and so forth, but the underlying digital core beyond the network has to be addressed,” he said.
Settles has the advantage of being a researcher whose primary goal is to analyze and assist when called upon. The importance of ROI is seen as more pressing for the companies that invest in broadband infrastructure. But government, too, has to be conscious about the bottom line.
Nebraska CIO Ed Toner said that for any type of service to take hold, there must be a return on investment. In regard to broadband, Toner believes the private sector can solve the problem. The business case just has to be there.
“You've really got to line up your business ahead of time,” Toner said. “It’s 100 percent a cost-benefit analysis.”
Delaware CIO James Collins believes the question about ROI and broadband depends on the definition of the term. In a strict economic sense, broadband expansion doesn’t appear tenable without a guaranteed ROI. The argument for broadband becomes stronger when it’s based on multiple positive returns.
“[I]f you look at a broader definition of return on investment — quality of life, economic development, education, health care, small businesses — broadband expansion is absolutely worth the investment,” Collins said.
Like Collins, Fiber Broadband Association President and CEO Lisa Youngers views broadband’s ROI as multifaceted. She even thinks it’s variable. For her, ROI is based on the specific goals of a community. For instance, Youngers has heard about goals related to disaster recovery in Florida and monitoring the homeless population in Las Vegas.
Jojo Myers Campos, state broadband development manager for Nevada, said financial calculations are essential for any broadband service provider, though she has seen a shift in how some providers approach rural broadband projects in her state.
“[T]hey know going in that their break-even and their rate of return is going to be much longer, much prolonged,” Campos said. “But they do that knowing it. We used to not have hardly any provider that would consider the rural areas because it was so much money out of pocket and so little coming back on a short rate of return.”
Wireless Internet Service Providers Association President and CEO Claude Aiken represents many providers that fit Campos’ description. Aiken said historically the discussion about ROI and broadband was obvious: Nothing’s likely to happen in more remote areas due to a lack of a clear profit in sight. Today’s narrative is more complex.
“There are certain areas of the country that without government intervention you wouldn’t see broadband deployment,” Aiken said. “That assumption has been kind of turned on its head by folks who are our members — folks who have been deploying broadband using fixed wireless technology.”
Collins suggested governments must help broadband expansion be profitable for businesses. In Delaware, the approach has been to take money the state would have put toward the network and use that to subsidize the private sector so that the math for broadband projects can work. U.S. Telecom Association President and CEO Jonathan Spalter describes such public-private partnering as part of a “sacred pact that has evolved between broadband providers and government.”
“Ensuring return on investment is critical to any business,” Spalter said. “The opportunity for broadband providers to work hand in glove with government in closing the digital divide helps defray some of the economic challenges that are associated with this important mission.”
Campos sees government’s role as a “tiered process.” The federal government should provide resources and opportunities, and states should help cities, towns and counties tap into federal offerings. There is no “be-all, end-all solution,” though.
“Part of my job is to identify what resources these counties and cities can take advantage of, and sometimes, honestly, it’s got to be a super creative approach,” Campos said. “It is got to be what I call cranial gymnastics.”
Toner cautions against too much government involvement, however, as “everything slows down” when government is in the picture. Toner mentioned several different technological solutions to the broadband issue (fiber, microwave, white space and satellite), giving credit to the private sector for advancing the number of available options.
“So we’ve got all of these different inventions, and to be honest with you, I don’t think they would even exist if the government got involved in this,” he said. “Because they would have put the funding to one thing, and we would have done the same thing.”
Certain stakeholders believe the answer to the broadband expansion puzzle is tied to one type of technology, though. When asked whether she believes broadband should be thought of as a utility, Youngers said fiber is actually the key additional piece of infrastructure, pointing to a cost study that says 90 percent of U.S. households can be covered by 2029 with a $70 billion investment in fiber. Spalter agrees with Youngers that wired infrastructure is the key to making broadband a reality everywhere. He doesn’t see a compelling alternative.
“Satellite is not going to help rural communities become part of our 5G future,” Spalter said, adding that the “future of wireless in America is built on the strength and ubiquity of wired infrastructure.”
State leaders don’t seem as convinced about wires being the ultimate answer. Campos would love to see fiber everywhere, but that’s “not logical” in all of rural Nevada. She said multiple solutions are necessary to keep prices down for some citizens.
“The wireless connections today are so good,” Campos said. “They [residents] can still get a robust wireless connection for so much cheaper than if it was a fiber base.”
Aiken said WISPA companies have gone into places where other providers have refused to go without government subsidies. Some WISPA companies are willing to forego traditional profit margins and will even provide free services to schools, libraries, police and fire departments.
“Part of that has to do with the community-oriented nature,” Aiken said. “A lot of our members started out of frustration about the lack of broadband in their communities, whether it’s putting their own life savings on the line or going into credit card debt to buy their first radios and hanging them up on whatever tall infrastructure they could get on.”
Toner acknowledges that fiber must be connected to towers for other ideas to work, but fiber is not necessarily the answer from “tower to the consumer.” The flat geography of Nebraska allows for line-of-sight microwave signals. The state’s microwave network is called the Nebraska Regional Interoperability Network.
“And I can tell you, we, for years, we monitored it, and that network is a reliable network,” Toner said. “Many of the counties have taken advantage of that.”
Collins never stated a preference for any technology, but he did say the issue of broadband is so important that Delaware is “throwing everything we can at it.” The implication is that to serve the unserved, one must be committed to a vision and do whatever can be practically done.
Campos echoed this sentiment and drew a line in the sand.
“Sometimes what we create as a norm should not be a norm,” she said. “A lot of these places get so used to not having connectivity … that they just accept it as a norm.”
“Are you focusing on digital inclusion, or are you about digital exclusion?” Campos added. “You’re only one or the other. There’s no riding the fence.”