Articles

Broadband Stimulus: New Thinking During a Time of Economic Crisis

There's no shortage of ideas for how the U.S. should build out broadband infrastructure.

by / March 2, 2009
Broadband Barriers Photo by Paul Nicholson. Creative Commons Attribution-Noncommercial 2.0 Generic

The economic crisis that's hammering the U.S. has opened up 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 build out of broadband.
    
For the past six months, a multibillion dollar expenditure battle has been waged in Washington, D.C., that will help decide the future of American communications. 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 of the 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 or Critical Infrastructure?

We live in a civil society -- a place where primary education is freely available to all, where anyone can enjoy a walk through public parks or on sidewalks and freely drive on streets. Libraries in the U.S. loan out 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 firemen 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 and every 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 (like 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 that accrue to 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 regimes, 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 also would be much less expensive than of one year of the Iraq war.
 
Many politicians, from municipal representatives to President Barack Obama, are actively supporting 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 today's national transportation grid, but the U.S. had to make a major public investment in the infrastructure itself. Broadband poses a similar challenge and opportunity.

My colleague at the new America Foundation, Benjamin Lennett, 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, which seeks to create a national broadband superhighway that would provide fiber capacity to cities, towns and rural areas across the U.S. At its core, the idea is very simple: Each time we rip up, repave or build a road, we should also lay fiber infrastructure along that route that 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 are providing free connectivity to participants. For example, residents of Philadelphia and St. Cloud, Fla., already receive free broadband. Groups like Tribal Digital Village and the 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 the lives of everyone. Therefore, the question is, does this new administration have the gumption to create a "broadband Apollo project" to maximize the potential and possibility of the Information Age?

Ideas for 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 brought forward. Debbie Goldman, a research economist for the Communications Workers of America, said that the No. 1 goal should be to find areas of agreement among key stakeholders. For her own part, Goldman sees the key as a focus on creating jobs. "If we're going to talk about creating jobs and maintaining jobs, we've got to be technology neutral and we've got to be neutral in terms of where this money goes," said Goldman. "We have to make sure it's going to companies and organizations that know how to spend the money, operate networks 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 that 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 cooperative and municipal that have been springing up all around this country," said Bowen. "These are the networks that are 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 of the key problems 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 pointed out that 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," said Lennett. "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 are going to limit who can benefit, that goes against the whole point of public investment."

Derek Turner, research director for 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 that are discriminatory." In addition, many public-interest groups want to see a package that is specifically targeted to intervene in unserved and underserved U.S. regions. The thinking is that the most bang-for-the-buck will take place "where the investment equation is such that no broadband investment would probably take place there absent some sort of grant infusion from the government," explained Turner. "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." 

Side-by-Side Comparisons: Influential Broadband Stimulus Interventions

I interviewed authors of three influential broadband build-out plans: Benjamin Lennett, senior program associate of the New America Foundation; Robert Atkinson, president and founder of the Information Technology and Innovation Foundation; and John Windhausen, president of Telepoly Consulting. 

Building a 21st Century Broadband Superhighway: A Concrete Build-out Plan to Bring High-Speed Fiber to Every Community, by the New America Foundation
Available online at: www.newamerica.net/publications/policy/building_21st_century_broadband_superhighway

Most Important Facets: This plan focuses on simultaneously repairing one public good (roads) while creating another (national broadband). It also seeks to create a Digital Excellence Fund to finance ongoing build-out and maintenance of the network, as well as programs to increase digital literacy.

Cost: $1.2 billion to $3.6 billion

Problems addressed:  Decisions made in Washington, D.C., over

the past several years -- including the "Brand X" Supreme Court ruling and the scheduled removal of several AT&T/SBC merger conditions -- have resulted in more difficulty for rural broadband access. The lack of fiber middle-mile infrastructure has impaired deployment of competitive broadband networks. This remains one of the most immediate and cost-effective last-mile solutions for communities that have minimal access to broadband and must rely primarily upon dial-up Internet connections. The Department of Transportation is also interested in employing wireless communications to create an intelligent transportation system which would better manage traffic flow and improve general transportation safety; it would need a national (roadside) fiber infrastructure to operate.

How will this plan help municipalities and local communities?: This plan encourages competition by lowering prices and increasing connection speeds, and would also make the deployment and operation of municipal and community networks much easier. The plan to bury fiber under existing roads has the potential to greatly increase access to middle-mile broadband connectivity, which continues to burden smaller, independent Internet service providers. Communities that are already connected would have multiple service provider options, not to mention several pathways -- these choices would lead to more reliable networks in general. 

The Digital Road to Recovery: A Stimulus Plan to Create Jobs, Boost Productivity and Revitalize America by the Information Technology and Innovation Foundation.
Available online at: www.itif.org/index.php?id=212

Most Important Facets: This plan includes grants and tax credits, but the tax credits are conditional upon providing connectivity to unserved areas, or increasing network speeds in areas that already have service. It doesn't favor one kind of broadband provider over another.

Cost:  $30 billion, but "the actual amount of stimulus needed may be more or less than $30
billion."

Problems addressed: "The goal of our plan is to get as much broadband investment in 2009 and early 2010 as possible."

How will this plan help municipalities and local communities?: The plan, by focusing on broadband investment, places a premium on deploying networks in unconnected communities and increasing connection speeds in communities that already have service. 

A Blueprint for Big Broadband -- EDUCAUSE.

Available online at: http://net.educause.edu/ir/library/pdf/EPO0801.pdf

Most Important Facets: This plan focuses on building 100 megabits per second connections to every U.S. home and business, and also on the creation of a Universal Broadband Fund to cover the upfront construction costs associated with a large-scale deployment -- in which the big ticket items would be the initial digging of trenches to lay fiber or deploying wireless antennas. The plan postulates that after these expenditures, the ongoing maintenance of the network wouldn't require annual subsidization.

Cost: EDUCAUSE proposes that the federal government provide $32 billion in matching grants -- approximately one third of the $97 billion that nationwide broadband deployment is estimated to cost. 

Problems addressed: This plan would stimulate investment in broadband from both public and private monies. The plan also focuses on the social benefits of such a network-- telemedicine, public safety communications, e-government, distance learning, etc. 

How will this plan help municipalities and local communities?:
The EDUCAUSE proposal allows municipalities to bid directly for funds from the Universal Broadband Fund. The only requirements are that the bid winner must serve everyone in the area, charge affordable rates and build an open network.
   
Additional broadband stimulus plans mentioned by these authors include: Down Payment on Our Digital Future, by Free Press, available at

mous benefits that accrue to 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 regimes, 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 also would be much less expensive than of one year of the Iraq war.
 
Many politicians, from municipal representatives to President Barack Obama, are actively supporting 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 today's national transportation grid, but the U.S. had to make a major public investment in the infrastructure itself. Broadband poses a similar challenge and opportunity.

My colleague at the new America Foundation, Benjamin Lennett, 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, which seeks to create a national broadband superhighway that would provide fiber capacity to cities, towns and rural areas across the U.S. At its core, the idea is very simple: Each time we rip up, repave or build a road, we should also lay fiber infrastructure along that route that 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 are providing free connectivity to participants. For example, residents of Philadelphia and St. Cloud, Fla., already receive free broadband. Groups like Tribal Digital Village and the 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 the lives of everyone. Therefore, the question is, does this new administration have the gumption to create a "broadband Apollo project" to maximize the potential and possibility of the Information Age?

Ideas for 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 brought forward. Debbie Goldman, a research economist for the Communications Workers of America, said that the No. 1 goal should be to find areas of agreement among key stakeholders. For her own part, Goldman sees the key as a focus on creating jobs. "If we're going to talk about creating jobs and maintaining jobs, we've got to be technology neutral and we've got to be neutral in terms of where this money goes," said Goldman. "We have to make sure it's going to companies and organizations that know how to spend the money, operate networks 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 that 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 cooperative and municipal that have been springing up all around this country," said Bowen. "These are the networks that are 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 of the key problems 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 pointed out that 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," said Lennett. "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 are going to limit who can benefit, that goes against the whole point of public investment."

Derek Turner, research director for 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 that are discriminatory." In addition, many public-interest groups want to see a package that is specifically targeted to intervene in unserved and underserved U.S. regions. The thinking is that the most bang-for-the-buck will take place "where the investment equation is such that no broadband investment would probably take place there absent some sort of grant infusion from the government," explained Turner. "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." 

Side-by-Side Comparisons: Influential Broadband Stimulus Interventions

I interviewed authors of three influential broadband build-out plans: Benjamin Lennett, senior program associate of the New America Foundation; Robert Atkinson, president and founder of the Information Technology and Innovation Foundation; and John Windhausen, president of Telepoly Consulting. 

Building a 21st Century Broadband Superhighway: A Concrete Build-out Plan to Bring High-Speed Fiber to Every Community, by the New America Foundation
Available online at: www.newamerica.net/publications/policy/building_21st_century_broadband_superhighway

Most Important Facets: This plan focuses on simultaneously repairing one public good (roads) while creating another (national broadband). It also seeks to create a Digital Excellence Fund to finance ongoing build-out and maintenance of the network, as well as programs to increase digital literacy.

Cost: $1.2 billion to $3.6 billion

Problems addressed:  Decisions made in Washington, D.C., over the past several years -- including the "Brand X" Supreme Court ruling and the scheduled removal of several AT&T/SBC merger conditions -- have resulted in more difficulty for rural broadband access. The lack of fiber middle-mile infrastructure has impaired deployment of competitive broadband networks. This remains one of the most immediate and cost-effective last-mile solutions for communities that have minimal access to broadband and must rely primarily upon dial-up Internet connections. The Department of Transportation is also interested in employing wireless communications to create an intelligent transportation system which would better manage traffic flow and improve general transportation safety; it would need a national (roadside) fiber infrastructure to operate.

How will this plan help municipalities and local communities?: This plan encourages competition by lowering prices and increasing connection speeds, and would also make the deployment and operation of municipal and community networks much easier. The plan to bury fiber under existing roads has the potential to greatly increase access to middle-mile broadband connectivity, which continues to burden smaller, independent Internet service providers. Communities that are already connected would have multiple service provider options, not to mention several pathways -- these choices would lead to more reliable networks in general. 

The Digital Road to Recovery: A Stimulus Plan to Create Jobs, Boost Productivity and Revitalize America by the Information Technology and Innovation Foundation.
Available online at: www.itif.org/index.php?id=212

Most Important Facets: This plan includes grants and tax credits, but the tax credits are conditional upon providing connectivity to unserved areas, or increasing network speeds in areas that already have service. It doesn't favor one kind of broadband provider over another.

Cost:  $30 billion, but "the actual amount of stimulus needed may be more or less than $30
billion."

Problems addressed: "The goal of our plan is to get as much broadband investment in 2009 and early 2010 as possible."

How will this plan help municipalities and local communities?: The plan, by focusing on broadband investment, places a premium on deploying networks in unconnected communities and increasing connection speeds in communities that already have service. 

A Blueprint for Big Broadband -- EDUCAUSE.

Available online at: http://net.educause.edu/ir/library/pdf/EPO0801.pdf

Most Important Facets: This plan focuses on building 100 megabits per second connections to every U.S. home and business, and also on the creation of a Universal Broadband Fund to cover the upfront construction costs associated with a large-scale deployment -- in which the big ticket items would be the initial digging of trenches to lay fiber or deploying wireless antennas. The plan postulates that after these expenditures, the ongoing maintenance of the network wouldn't require annual subsidization.

Cost: EDUCAUSE proposes that the federal government provide $32 billion in matching grants -- approximately one third of the $97 billion that nationwide broadband deployment is estimated to cost. 

Problems addressed: This plan would stimulate investment in broadband from both public and private monies. The plan also focuses on the social benefits of such a network-- telemedicine, public safety communications, e-government, distance learning, etc. 

How will this plan help municipalities and local communities?:
The EDUCAUSE proposal allows municipalities to bid directly for funds from the Universal Broadband Fund. The only requirements are that the bid winner must serve everyone in the area, charge affordable rates and build an open network.
   
Additional broadband stimulus plans mentioned by these authors include: Down Payment on Our Digital Future, by Free Press, available at www.freepress.net/files/DownPayment_DigitalFuture.pdf, and TIA Recommends Specific Broadband Incentives for Economic Stimulus Plan by the Telecommunications Industry Association, at www.tiaonline.org/news_events/press_room/press_releases/2008/PR-1211_TIA_Recommends_Specific_Broadband_Incentives_for_E.cfm.   

Mark Cooper of the Consumer Federation of America drove home the importance these broadband build-out plans: "The way they built the roads and the streets of the 20th century, they can build the roads and the streets of the 21st century."  The U.S. today is at a critical juncture in telecommunications history.  As the government contemplates options for economic recovery and the nation's need for next-generation broadband access, one thing is almost certain: Major investments in this critical infrastructure are desperately needed, and many groups have developed innovative ideas on how best to undertake these interventions.

Sascha Meinrath is the research director of the New America Foundation's Wireless Future Program and coordinates the foundation's Open Technology Initiative. He is a regular contributor to Digital Communities.

Photo by Paul Nicholson. Creative Commons Attribution-Noncommercial 2.0 Generic

Sascha D. Meinrath Contributing Writer