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4 Keys to Getting Rural Broadband Right

It’s not just about the dollars but about spending the money effectively. The focus should be on reducing costs for the private companies that provide most of the investment, rather than propping up sickly projects.

Four drums of orange broadband cable sitting in a rural field with sheep grazing near them.
Last month, California began constructing a 10,000-mile open-access broadband network, a project aimed at bringing high-speed connectivity to all Golden State households. This large project is primarily funded by the state, but also received support from two federal laws enacted last year: the American Rescue Plan Act and the Infrastructure Investment and Jobs Act. These bills designated tens of billions of dollars for rural broadband expansion. There has never been this much federal money pushed out so quickly for broadband projects, and other states and counties are planning their own programs.

Yet past public investments in broadband haven’t been encouraging. As a federal auditor remarked on a much smaller federal broadband program a few years ago, “We are left with a program that spent $3 billion and we really don’t know what became of it.” State policymakers need to make sure that history is not repeated and that government funding is invested in high-quality programs instead of merely propping up sickly broadband projects with regular subsidies or monopolies.

In our estimation, the main villain for states and Internet service providers is complexity. The Government Accountability Office recently reported that there are more than 100 federal broadband programs at more than a dozen agencies. The GAO declared bluntly: “The U.S. broadband efforts are not guided by a national strategy with clear roles, goals, objectives, and performance measures.” Yet new federal subsidies are flowing, and there are already signs of weak programs and excessive costs, including one project spending more than $200,000 per household.

Another risk is that the influx of new federal funds distracts federal and state officials from the fact that the lion’s share of broadband investment is from private companies. Even before the pandemic and new federal spending, the industry reported nearly $80 billion in capital expenditures annually, and around 130,000 rural households were getting high-speed broadband for the first time every month.

State officials’ focus should be on reducing costs to private providers, not creating and monitoring new programs. In new research, we provide four options for state and local governments to do just that.

First, consider using federal dollars to instead create a rural broadband voucher program. Broadband vouchers put a pot of money — a stream of income to providers — at every rural household address. A voucher program is simple to implement and self-enforcing: no service, no payment.

Second, require audits of new broadband programs. The prospect of later review would prevent wasteful gold-plating, overpromises and other distortions as federal dollars flow from cities, counties and states to providers. Preventing waste at the outset preserves funds to serve more customers.

Third, rather than investing in risky county- and city-operated networks, governments should build passive infrastructure like conduit, utility poles and fiber-optic cabinets. Directly providing Internet service as a public utility, as many cities have learned the hard way, is not like providing sewer, water or electricity — there is no permanent, captive customer base. If public or public-private investments are needed to expand coverage, officials should focus on the long-lasting, low-maintenance infrastructure that most providers need in order to expand access.

Fourth, prepare to purchase broadband easements. As providers expand coverage and new providers start stringing fiber optics across the nation, some projects will run into easement disagreements and litigation with private landowners. State and county officials should plan and budget for that eventuality.

State and county leaders have a once-in-a-lifetime opportunity to help bring high-speed connectivity to all households. However, the federal and state subsidies will fail to meet coverage goals if officials continue to create complex, opaque programs that mostly enrich a small number of providers and consultants. If subsidy programs fail or remain inscrutable to auditors and companies, state officials squander not only taxpayer money but the trust Americans have in their public institutions. As they consider new programs, state broadband officials should prioritize simple programs, clear processes and measurable goals.

Brent Skorup is a senior research fellow at the Mercatus Center at George Mason University. He served on the Federal Communications Commission’s Broadband Deployment Advisory Committee from 2017 to 2021. Patricia Patnode is a research assistant at the Mercatus Center. They are co-authors of the new study What Should States and Cities Do with the New Broadband Money from DC?

Governing's opinion columns reflect the views of their authors and not necessarily those of Governing's editors or management.
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