Analysis: Should broadband be part of the Trump infrastructure plan?
A House Energy and Commerce Subcommittee recently reviewed options for completing America's impressive progress in deploying broadband infrastructure. Unlike other issues, there is bipartisan agreement on the importance of putting the 21st century's most valuable technology into the hands of all Americans, and especially those in rural and tribal areas who have the fewest, if any, options for getting online. There's even broad agreement on how to do it.
As the White House and Congress develop an infrastructure plan promised during the campaign, many, including senators, House members and mayors, are urging that broadband be included. While our crumbling 20th-century infrastructure of roads, bridges, water and mass transit clearly need more immediate attention and the bulk of the funding, we agree that broadband should be included, balancing fixes to the past with providing for the future.
As always, the devil will be in the details. On that score, there are valuable lessons from the last large federal infrastructure effort, the 2009 Recovery Act. One of the most valuable results of that effort was one that cost almost nothing - the creation of a National Broadband Plan, which one of us directed. The plan stimulated private providers and new entrants to accelerate investments in next-generation fiber and mobile networks, and raised alarm bells heeded by Congress and the Federal Communications Commission to allocate much more radio spectrum for future technologies. Those well-timed decisions will now provide the foundation for 5G technologies that will jump-start the next wave of disruptive innovation over the next 10 years.
But while some of the direct investments in "shovel-ready" broadband build-out projects were successful, billions in stimulus money was wasted by the Department of Agriculture's Rural Utility Service. Its many sins included funding projects in population centers that already had broadband, poor project management and a failure to properly vet loan applicants, many of whom defaulted. RUS promised to connect 7 million rural Americans. The actual number may be as low as 200,000.
To avoid these and other costly mistakes, here are eight simple ground rules we hope Congress will follow in crafting broadband-related infrastructure incentives:
1. Limit and carefully control direct investment funds. Congress should consider setting aside a modest portion of any new infrastructure fund, say $20 billion, for a one-time rural broadband acceleration program. Carriers would be offered subsidies to build out in rural areas currently without a broadband provider, with the requirement of implementing technologies with sufficient bandwidth to support future growth, perhaps up to 100 Mbps speeds. To avoid problems that plagued the Recovery Act's scattered broadband initiatives, the acceleration program should be managed entirely by one agency, with strict controls to help ensure troubled projects get attention (or cut off) sooner rather than later.
Calculation of specific subsidies should be made on a per-location basis, determining how much is needed to overcome otherwise prohibitive build-out costs.
2. Don't offer ongoing support. To date, efforts to provide universal access to rural broadband infrastructure has suffered from a structural flaw. The FCC provides payments in the form of small ongoing annual subsidies, even in areas when all that was needed was an initial capital investment. As a result, it can take years for providers to recoup their own capital investments, creating incentives to build piecemeal in rural areas, and to make decisions based on what providers believe the government will fund rather than on what consumers want.
Future investments should avoid this error by offering carefully structured one-time subsidies, saving billions in ongoing costs. While some high-cost areas will continue to need both one-time capital and operating support, the emphasis should be on locations for which capital support alone can overcome the need for further government subsidy.
3. Use market mechanisms where possible. After establishing the per-location subsidy needed, the government may find there are more providers willing to build in underserved rural and tribal areas than there are funds to support them. If so, the FCC should run a reverse auction among competing providers to bid down the per-location cost. Commission Chairman Ajit Pai has already proposed such a solution to improve the efficiency of existing universal service programs, with the goal of letting market forces deliver "the best deal available" to maximize limited funds.
4. Extend "Dig Once/Climb Once" policies on government property. Lack of coordination between broadband and other infrastructure projects wastes time and resources. At least two bills circulating in Congress now would expand a "Dig Once" rule, requiring installation of broadband conduit whenever roads are being dug up for any reason, along with a "Climb Once" policy whenever new equipment is being added to existing utility poles. Dig Once alone can reduce the cost of deploying fiber under highways in urban areas up to 33 percent and up to 16 percent in rural areas, according to the Government Accountability Office. A coalition of public policy think tanks recommended at a recent hearing that the policy be expanded to state roads, and to all public rights of way adjoining roads. We agree.
5. Improve government processes that hinder private investment. Direct expenditure of taxpayer or borrowed funds is not the only tool available to accelerate broadband investment. For providers, the costs of dealing with slow and overly bureaucratic local governments can be significant and, at the margins, have already proven decisive in which cities get new private infrastructure investment and which ones do not. Simply providing a single point of contact within a local government can make a big difference in both speed and cost of deployment, along with access to city property and streamlined zoning processes. Best practices should be established at the federal level in the infrastructure bill.
6. Embrace emerging technologies. For the most sparsely populated and geologically challenging parts of the United States, the economics of laying fiber-optic cable are unlikely to make sense any time soon, even with subsidies. So the question becomes not only what alternative broadband technologies are best suited to rural and mountainous regions, but how to encourage providers to deploy them. In many rural areas, for example, fixed wireless technologies have proven themselves capable of providing high-speed, last-mile connections to homes and businesses. Satellite-based solutions have also matured, as have hybrid fiber/copper technologies using existing telephone lines. No matter how the infrastructure bill provides for broadband in these locations, it should do so on a technology-neutral basis to encourage continued development of new options.
7. Address nonfinancial causes of the digital divide. Availability and even price are not the only things holding back broadband adoption. As we have noted, over half of consumers who don't have Internet service at home - largely older and rural Americans and those with less education - say they don't want or need it, even if it were free. Part of that resistance comes from the fact that unconnected Americans don't know how to use a computer or even a smartphone, let alone how to install and maintain networking equipment inside or outside their home. Whatever funding the infrastructure law provides for broadband will be wasted if some of that support isn't directed to providing hands-on education, perhaps through community groups and senior centers, as well as simple interfaces for basic technical service.
8. Use the bully pulpit to encourage digital want-nots. Solving the training and support issues of the least tech-savvy users won't fully answer the relevance problem. Digital want-nots also need to understand the value of getting online. These include the obvious benefits of connecting to family and friends and expanding entertainment options. But there are more fundamental ways emerging technologies, including the Internet of Things and smart homes and communities, can improve quality of life, especially for seniors hoping to age in place in their homes. Many of these benefits were detailed in the National Broadband Plan, but neither the FCC nor the White House used it to promote a vision of tomorrow that would make getting online today irresistible. Public education about why the infrastructure bill is spending money on broadband will be critical to getting value from our investment.
Overall, improving broadband infrastructure will require spending federal funds more wisely, but, more important, providing incentives for private investors to reallocate their own capital in ways that ultimately benefit everyone. In some cases, spending money isn't even required.
Following these basic steps will maximize the value of taxpayer money spent on broadband infrastructure. More to the point, they can multiply government spending through continued private investment, accelerating efforts to close the digital divide and bring the least-connected parts of the country into our growing digital conversation. That's truly a win-win-win.