Author: Elizabeth Hicks

Biden’s broadband plan may hurt providers, consumers

It is no secret that access to reliable, high-speed internet is more important now than ever before, especially given how we spent this past year. We now rely heavily on virtual connections for school, work and perhaps a few never-ending Netflix marathons in an attempt to stay sane throughout lockdowns.

With a more online life, it’s not surprising that broadband usage increased 40% over the last year. Many suspect this level of demand for broadband will continue, but there are millions of individuals across the country who do not yet have access, including 368,000 rural Michigan households.

It’s estimated that there is over $2.5 billion in potential economic benefit that is lost among Michigan residents disconnected from the internet, making it clear that we need to find a solution to end this digital divide.

President Joe Biden recently proposed $100 billion to expand broadband through the American Jobs Plan. While this may seem like a worthy infrastructural investment to some, the fine print of the plan proposes lackluster solutions that create a stormy future for Michigan consumers.

A glaring issue is the prioritization of government-run broadband networks with “less pressure to turn profits and with a commitment to serving entire communities.” It’s well documented that these networks are ineffective 𑁋 a Phoenix Center study found that prices in markets with a municipal provider are higher than those in markets without one.

Michigan allows municipal broadband networks only in unserved or underserved areas and if their benefits outweigh the costs. However, local governments have been giving municipal networks advantages over private providers by providing subsidies and privileged regulatory treatment to showcase the illusion of compliance.

This happened recently in Marshall, and the results were dreadful. According to a report released by the Taxpayers Protection Alliance highlighting failed government-run broadband networks, Marshall’s fiber broadband network, called FiberNet, cost $3.1 million and serves only a fraction of its population. It’s worth noting that private broadband services are also available in Marshall.

Another key issue with Biden’s plan is that it exclusively prioritizes building out fiber broadband. While fiber may be a great option for some, it’s not always practical for rural communities due to the high costs and installation process required. Rural households can be located miles apart, and with fiber installation costing as high as $27,000/per mile, the estimated demand from rural communities often does not offset the costs of building fiber networks in those areas.

Innovative solutions like Elon Musk’s Starlink project, which aims to provide low-cost satellite broadband internet access across the globe, should be encouraged. By the end of this year, there will be over 1,000 satellites providing internet to more than 10,000 customers worldwide through Starlink. This is an exciting development because satellite networks are often cheaper, more efficient and can provide faster speeds to rural households than fiber.

The final major issue with Biden’s plan is that it vows to get America to 100% broadband coverage, but this doesn’t take into account all consumer preferences. According to Pew Research, 15% of Americans rely on smartphones and don’t have broadband services. Although it’s not certain as to why, one potential reason is the frequency of free Wi-Fi available in many public spaces which may result in some households opting out of paying for broadband.

To help Michigan live up to its full economic potential, it’s crucial that we get the 368,000 rural households access to high speed internet quickly. The state should embrace private internet service providers, practice technology neutrality by not favoring one broadband type over another and encourage more innovations that benefit consumers.

Originally published here.

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