Broadband Stimulus: Economic Crisis Drives New Thinking

With $7.1 billion in broadband stimulus funds on the way, the debate continues over how to build out the nation's broadband infrastructure.

by / April 4, 2009
A Better Broadband Stimulus

The economic crisis that's hammering the U.S. has created space for innovative thinking and new ideas. "The age of market fundamentalism, with its ideological belief that markets are always right, that wealth should trickle down and that less government is better, is simply over," said Mark Cooper, research director of the Consumer Federation of America. Furthermore, Cooper said, "Public policy must start from a new understanding of the role of government and the private sector." This new reality has created an opportunity to improve broadband build-out.

For the past six months, a multibillion dollar expenditure battle has waged in Washington, D.C., that will help decide America's communications future. With hundreds of billions of dollars being spent by Congress to stimulate the economy, broadband is finally getting its due. John Windhausen, president of Telepoly Consulting, sums up the rationale: "Big broadband networks promote economic growth and jobs; companies locate businesses in communities that have faster broadband networks; and, in a global economy, local broadband networks help the U.S. attract businesses from overseas."

However, until congressional leaders decided what provisions to include when they reconciled the House and Senate versions of the Economic Stimulus bill, no one really knew exactly how much funding would be made available and through which specific processes and agencies. The compromise plan, we now know, provides $4.4 billion to extend broadband and wireless services to rural, suburban and urban areas through the U.S. Commerce Department's National Telecommunications and Information Administration and $2.8 billion to expand broadband access to rural areas through the Department of Agriculture's Rural Utilities Service. Spurred by this investment, a healthy debate has sprung up over the details of what an "ideal" broadband plan should entail - a debate that will continue to have relevance as decisions are made on exactly how this stimulus money is spent.

As a co-author of one of these broadband proposals, I've focused on trying to solve the "middle-mile problem" - the lack of competitive service providers connecting last-mile networks to the Internet backbone. I've talked with many key policy proposal drafters in Washington, D.C., and several overlapping facets among these proposals point to better ideas that could be incorporated into an ideal long-term broadband infrastructure build-out. At its heart, however, is a dawning understanding that the days of Internet connectivity being a luxury item are long behind us. Today's debates center on what it means to live in a 21st-century society and work in a modern economy.


Is Broadband a Luxury?

We live in a civil society - a place where primary education is free to all, anyone can enjoy a walk through public parks or on sidewalks and freely drive on streets. Libraries in the U.S. loan books for free - literature that can be read on a spring day in parks or beneath the streetlights of Main Street on a warm summer's evening. You don't have to tip the firefighters or pay for police protection. In a civil society, public safety is freely available to everyone.

Americans enjoy myriad services and resources that they don't pay for each time they use them. Yet each of these key facets of contemporary society is part of a new social contract, adopted only after years of battle and turmoil to overcome a status quo (e.g., private fire protection and educational services, or for-fee libraries and parks). Eventually, however, some newfound service models are deemed to provide such an enormous benefit to the population that society is willing to invest in ideas that "lift all boats." As a society, each of us is

better off when certain basic services are freely available to all.

At the dawn of the digital era, during this first decade of the 21st century, the most important new commodity is Internet access. A growing canon of research has documented the enormous benefits for those who have broadband access (and the detriments faced by those without it). Connectivity is the currency of the Information Age, much like the computer era integrated machines (from laptops to PDAs, and cell phones to iPods) into our daily regimens, the Industrial Revolution brought manufactured goods to public life and the agrarian revolution helped alleviate famine. A new social contract that includes Internet connectivity for all is not a particularly expensive endeavor - free broadband for everyone would cost a tiny fraction of the Wall Street bailout and would be cheaper than one year of the Iraq war.

Many politicians, from municipal representatives to President Barack Obama, actively support broadband build-outs. And the January debate about the economic stimulus package made nationwide Internet infrastructure development a key component of the intervention. A multifaceted solution is needed. For instance, fuel-efficiency and car-safety standards have helped shape the national transportation grid, but the U.S. had to make a major public investment in the infrastructure. Broadband poses a similar challenge and opportunity.

My colleague Benjamin Lennett of the New America Foundation and I have been working on one proposal, Building a 21st Century Broadband Superhighway: A Concrete Build-out Plan to Bring High-Speed Fiber to Every Community, to create a national broadband superhighway that would provide fiber capacity to cities, towns and rural areas across the U.S. Its core idea is very simple: Each time we rip up, repave or build a road, we should also lay fiber infrastructure along that route anyone can use. Over the next five years, this initiative would create a web of connectivity - a critical new infrastructure for the digital age.

Communities, Internet service providers and municipalities are engaging in demand-side aggregation, but affordable Internet access is lacking - a bottleneck that our proposal solves. Thousands of networks around the globe provide free connectivity to participants. For example, residents of Philadelphia and St. Cloud, Fla., already receive free broadband. Groups like the Tribal Digital Village and CUWiN Foundation have been building free networks to serve local communities for years. There are opportunities in the U.S. to implement broadband solutions that dramatically improve everyone's lives. Therefore, the question is: Does this new administration have the gumption to create a "broadband Apollo project" to maximize the potential of the Information Age?


Building Better Broadband

"In the broadband space, for us it is clear that the cozy duopoly of telcos and cable companies has failed to deliver adequate service at reasonable charges as required by the Communications Act," Cooper said during a recent forum at the New America Foundation. "The stimulus package provides an ideal opportunity to try a different approach."

The challenge, then, is finding overlapping areas among the numerous proposals that are being presented. Debbie Goldman, a research economist for the Communications Workers of America, said the No. 1 goal should be to find areas of agreement among key stakeholders. Goldman sees the key as a focus on creating jobs. "If we're going to talk about creating and maintaining jobs, we've got to be technology-neutral and neutral in terms of where this money goes," Goldman said. "We have to make sure it's going to companies and organizations that know how to spend the money, operate and build networks, and can do it fast." To facilitate this, the Communications Workers of America supports targeted tax credits for new investment. And it's not alone.

Robert Atkinson, president and founder of the Information Technology and Innovation Foundation, a Washington, D.C.-based think tank,

agrees with the Communications Workers of America's assessment. "We think there should be rural tax credits [and] a speed tax credit," Atkinson said.

Wally Bowen, founder and executive director of the Ashville, N.C.-based Mountain Area Information Network, believes the most efficacious intervention would be community-based. "It makes far more sense to direct broadband infrastructure funding to local networks - the local and regional nonprofits, telephone and utility cooperatives and municipalities that have been springing up all around this country," Bowen said. "These are the networks most likely to have 'shovel-ready' broadband projects, [and] they are more easily held accountable for the taxpayer dollars that are in the stimulus package [because] local network operators live in the communities they serve."

Lennett, a senior program associate of the New America Foundation, said one key problem is perspective. "We are not viewing broadband as infrastructure, we're still viewing it as basic connectivity or a luxury," he explained. The broadband stimulus bill, in its current form, is a one-off intervention. Lennett said this sort of intervention may garner political hay, but the problem is really that "we continue to focus on short-term Band-Aid approaches without having any sense of where we need to go and building in policy mechanisms and recommendations that are going to be focused on long-term approaches ... that will handle the demands of the future."

A key feature of the many proposals that would future-proof broadband networks is ensuring that they remain open to innovation and competition. "Requiring openness for public money is absolutely critical," Lennett said. "The whole point of public subsidization and public investment is that you're trying to benefit as many people as possible. ... If you encourage closed networks that limit who can benefit, that goes against the whole point of public investment."

Derek Turner, research director of the media reform group Free Press, makes the case succinctly: "We don't want to be using federal dollars to fund networks that are closed and discriminatory." In addition, many public-interest groups want to see a package that's specifically targeted to intervene in unserved and underserved U.S. regions. The thinking is that the most bang-for-the-buck will occur "where the investment equation is such that no broadband investment would probably take place there absent some sort of grant infusion from the government," Turner explained. "It's also the best use of money from an economic efficiency standpoint because a lot of these areas have pent-up demand, and you're able to maximize consumer surplus by putting your money there rather than in an area that's already served."

Sascha D. Meinrath Contributing Writer