Soon, Michigan will be awash with cash to boost broadband coverage.
The Bipartisan Infrastructure Law, signed by President Joe Biden in November 2021, allocates at least $100 million to expand broadband and internet coverage in Michigan. In addition, Gov. Gretchen Whitmer’s office recently announced the state will spend $5.2 million from the federal CARES Act to conduct an audit identifying gaps in high-speed internet access throughout the state.
It is apparent that Michigan residents deserve access to reliable high-speed internet. However, as the state decides how and where to bolster broadband infrastructure, it is critical that they prioritize providing quality broadband service to consumers without wasting taxpayer money through municipal or government-run broadband.
The pandemic has showcased that access to high-speed internet is continuing to become increasingly important as many continue to rely on broadband to stay connected to work, school, telehealth or other crucial facets of daily life.
It’s estimated that 8.9% of Michigan residents live in an area that does not provide acceptable internet speed due to a lack of broadband infrastructure, leaving over $2.5 billion in projected potential economic benefit that is lost among those disconnected from the internet within the state.
To be fair, many small cities across the country are getting the same pitch from biased municipal broadband consultants: If you want faster or more reliable internet, then you should build and operate the network yourself. It might sound promising, but the reality is that these networks have been proven to be expensive and ineffective.
According to a report from the University of Pennsylvania, of the 20 municipal broadband projects in the U.S. they studied, only two earned enough to cover their project costs during the useful life of the networks, with the other 18 being absolute failures.
Existing municipal broadband networks within Michigan are suffering a similar fate. Marshall, for example, launched its own municipal fiber broadband network called FiberNet, which cost $3.1 million in loans from other city accounts. Concerns have been raised about Marshall’s municipal broadband network as the city continuously missed payments on their broadband loans, sparking fear that the network will not be financially viable enough to offset the operating costs, potentially leaving taxpayers on the hook.
For perspective, broadband services from private providers are also available in Marshall. Companies like WOW and AT&T both offer the same speeds as FiberNet, but at lower prices for consumers.
A better solution to close the digital divide in Michigan and help broadband consumers would be to bolster competition. Many private broadband service providers are able to expand or upgrade their services where there is demand, without burdening taxpayers like municipal broadband networks do.
According to a Phoenix Center study, prices in markets with a municipal provider are higher than those in markets without one; therefore having private broadband providers available in an area is even more beneficial for consumers as competition will help keep prices low.
In rural areas or places where demand for broadband services are limited, local regulators could consider issuing vouchers to subsidize service to those who qualify.
Additionally, innovative solutions like Starlink, which aims to provide low-cost satellite broadband internet access across the globe, should be encouraged. This would ensure that all Michigan residents could get connected to reliable internet, without the need for a costly or unreliable municipal broadband network.
As more funding is being allocated to broadband infrastructure, state and local regulators must recognize that municipal broadband networks are generally ineffective and financially irresponsible.
In order to close the digital divide in Michigan and help broadband consumers throughout all parts of the state, we must embrace private competition and only subsidize networks in unserved areas through competitive bidding.
Originally published here