Funding for High-Speed Broadband Networks in Stimulus Bill May Fall Short

Both the House and Senate “stimulus” bills propose funding for high-speed broadband networks. Is such funding necessary?  Absolutely. In fact, the funding may fall far short of what the country really needs.

I recently published a report sponsored by The Century Foundation to make the point that broadband networks provide the foundation for our future. By providing high-speed connections to the Internet, broadband connections improve business productivity, reduce healthcare costs (e.g. through telemedicine), expand educational opportunities (e.g. through distance learning), generate innovate on-line services and applications, reduce pollution (e.g. through telecommuting) and enhance our national security.

The problem is that we do not have enough broadband capacity to provide these services to all Americans. The prior Administration largely deregulated broadband services, relied on the private sector to build them, and resisted calls to adopt a national broadband policy. As a result, most Americans, especially low-income people, rural residents, and minorities, do not have access to high-speed broadband Internet connections today.

Admittedly, the cost of digging trenches and putting up wireless antennas is expensive, especially to build the so-called “last mile” connection to the home. The private sector simply cannot raise the capital in today’s restricted financial markets to make these investments. Their commercial caution is our societal loss.

Sweden, Japan, Korea, Australia and the European Union have all decided to invest several billion dollars in their broadband infrastructure to expand access to rural and underserved areas. As a result, the U.S. has fallen behind its international rivals in most international broadband rankings.

The U.S. now has an important opportunity to provide the “seed” capital needed to catch up to, and perhaps leapfrog, the competition. Providing a significant government investment in the construction of these networks will generate thousands of jobs, directly through the construction and maintenance of these networks and indirectly through the resulting economic growth. Furthermore, an upfront investment would not lock the Government into long-term subsidies. The U.S. government would not own these networks; it would just provide the initial capital and turn the network over to the private sector or, in some cases, municipalities. Funding can be awarded through a competitive grant process to encourage efficiency and avoid duplication. Recipients of funding should be required to demonstrate how the funds were used and should maintain open networks and affordable rates, so that all Americans may use these networks for lawful purposes.

The Senate ($9 billion) and House ($6 billion) both propose modest amounts of funding, but much more may be needed.  According to some estimates, it will cost $100 billion to bring high-speed broadband to every home and business. Providing less than one-tenth of that amount (as in the current bills) will likely start, but not finish, the process. Congress should instead appropriate $33 Billion to make sure that broadband networks are built to every community and meet the needs of ALL Americans.