Our economy and future prosperity depend on broadband, and recent developments show us how to get there.
Universal access to broadband is the goal, but not at the expense of millions in wasted taxpayer dollars, critical government services, and government’s credit rating. To connect more Americans to the booming global digital economy, we must look to solutions that reduce the regulatory burdens to deploying broadband.
Poor planning, mismanagement, and a lack of subscribers have cost taxpayers millions. For example, taxpayers in Marietta, Ga., have lost $24 million on their failed broadband network. LUS Fiber, a government-owned network in Lafayette, La., lost $45,000 per day last year.# And the broadband network owned by Wilson, N.C., could become obsolete before taxpayers are able to repay the $28 million in 25-year bonds they spent to build it.
Since most of these networks have been built using taxpayer-backed debt, these losses have jeopardized local governments’ bond ratings and increased individual taxes. To make up for these losses, governments are building networks by siphoning funds from important priorities like public safety, education, and transportation.
Recently, the ratings agency Fitch downgraded the bond rating of Chattanooga, Tenn., due in part to the cost of the broadband network they own. This has led creditors to demand higher interest rates, which leads to higher property taxes on homeowners.
Taxpayers cannot afford to waste time and resources on the failing efforts of government-owned broadband networks. With the digital economy expanding the way it is, there is no reason to ignore regulatory reforms as a solution to address customers’ broadband needs.
Federal Communications Commissioner Ajit Pai recently said, “[W]e need to eliminate regulatory barriers to innovation and investment at all levels of government. . . We cannot apply 20th century approaches to our 21st century challenges.”# And Pai is correct.
Current government regulations that haven’t changed much since the 1980s hamper investment in broadband networks. These legacy regulations, especially those at the state and local level regulating the construction of wireless towers, the fees for utility pole attachments, the fees on video franchises, and the management of rights of way, among others, were written without the economics of broadband in mind, and dramatically increase the costs for providers who aim to serve customers. Just as it makes no sense to have a requirement that each new car sold should come with a buggy whip, it makes no sense to subject broadband to a rule written during the rotary phone era.
Government needs to do a better job of reforming its regulations. After Congress last reformed the primary law governing telecommunications regulations, a flood of investment took place that helped give rise to the modern Internet and broadband as we know it today. There is no reason to believe that further reforms to government regulations won’t provide the incentives to provide next-generation services such as telemedicine, distance learning, and telecommuting.
By lowering or eliminating regulatory barriers, government would drive investment in America’s broadband infrastructure, which will spur innovation, create jobs, and grow the economy while helping to achieve the goal of broadband for all Americans.
Government-owned broadband networks cannot do the job without jeopardizing critical government services and finances, leaving taxpayers on the hook. Only through regulatory reform for all providers can we efficiently and effectively achieve greater access to broadband and economic opportunity for all Americans.
John Stephenson is director of the Communications and Technology Task Force at the American Legislative Exchange Council.