The $1 trillion infrastructure bill signed by President Biden in November is a once-in-a-generation opportunity to transform the economy, but the bill isn’t just about revitalizing the nation’s roads, bridges, waterways and public transit. More than $60 billion is earmarked to improve Internet services for rural areas, low-income families, and businesses of all sizes across the country.
Expanding broadband services is critical to the U.S.’s continued economic recovery, as well as its global competitiveness. The infrastructure bill offers a significant opportunity to bring broadband capabilities to many corners of the country where it would otherwise be too costly. This will help modernize our farms, schools, healthcare facilities and homes—enabling more Americans to learn, stay healthy and participate in the increasingly digitally enabled global workplace.
The bill also offers a critical opportunity for the U.S. telecommunications industry to supplement its growth and enter new markets. Funding amounts to nearly what the entire industry spends on capital investments in an entire year, accelerating access to new customers and stimulating additional employment in a critical sector of the economy.
We Can’t Just Throw Billions of Dollars at the Problem
With an investment pool of $65 billion, broadband providers need to be good stewards of taxpayer money—finding innovative, cost-efficient ways of expanding coverage as quickly and efficiently as possible. Unfortunately, previous federal broadband programs haven’t always delivered on these promises. For example, funded by the American Recovery and Reinvestment Act of 2009, the Broadband Technology Opportunities Program (BTOP) and the Broadband Initiatives Program (BIP) provided nearly $7 billion in funding for rural broadband projects in the years after the 2008 financial crisis.
However, much of the funding from these two programs was allocated to companies focused on building out network infrastructure between carriers rather than on the final mile in connectivity or consumers themselves. As a result, and despite the relatively high price tag, the two programs failed to make a meaningful dent in the connectivity gap. A study commissioned by the National Telecommunications and Information Association (NTIA) found that counties where at least one BTOP grant was bestowed saw broadband penetration improve by just two percentage points. Not exactly a lot of value for taxpayers’ money. Accusations of favoritism and an inefficient process for granting awards soured many people on the programs, and they wound down with little fanfare.
A New Opportunity to Allocate Funds the Right Way
This time needs to be different. With a price tag nearly 10 times that of the 2009 programs, the industry has a real opportunity to bridge the connectivity gap, create millions of jobs, and spur growth and innovation. However, taxpayer money has to be spent wisely. We need to find ways to provide broadband access to as many people that need it as efficiently as possible.
Here are three ways that federal agencies, state and local governments, broadband providers and consumers can work together to enable good governance over this latest broadband initiative:
1. Identify and push local solutions
Unlike previous rural broadband projects that were managed by a federal agency, funding from the 2021 Infrastructure Investment and Jobs Act will be funneled through the states. From there, local entities such as state legislatures or a public utility commission will determine how best to roll out broadband initiatives. This structure is similar to how federal highway and transportation dollars are allocated to projects—giving authorities who have local context the flexibility to fund projects that make the most sense from a regional perspective.
With multiple broadband infrastructure solutions from satellite to legacy cable competing for projects, it’s going to be up to state and local agencies, telecoms, and the public to work together to figure out the best solution for a particular area. While trenching new fiber lines may work in areas of flat, soft ground like Kansas, remote communities in the Arizona mountains may need to rely on wireless solutions such as 4G or 5G. Likewise, it may make sense to rely on legacy cable infrastructure in underserved urban or industrial neighborhoods, but communities in the Dakotas may be better served by satellite connectivity.
If we want the most value for our money, it’s important that a one-size-fits-all approach is scrapped in favor of finding local solutions.
2. Focus on the last mile
One of the main complaints about BTOP and BIP was that too much money went to the middle mile rather than focusing on expanding last-mile connectivity to the consumer. This slowed adoption and delayed the actualization of benefits. As a result, the public perception of the programs eroded fairly quickly.
This time the industry needs to move swiftly to deliver value to consumers quickly by focusing on the last mile. Regulators should streamline permitting, cut red tape in a responsible way, and fast track projects that make the most sense. If the goal of the program is to connect underserved Americans, the focus should be on solutions that do that as quickly and efficiently as possible without putting the environment or people’s health at risk. One of the biggest challenges is going to be identifying where broadband access is most needed. Knowing where we can make the most impact will help us spend taxpayer money in places where it is not needed.
3. Create regional consortiums to pool resources
States can also use the economics of scale to create efficiencies. Neighboring states should pool their resources in regional consortiums and come up with ways to streamline bidding and permitting by consolidating processes and compliance. Again, there’s precedence for this in the transportation world. States in the Pacific Northwest, the Great Lakes region and in New England work together to address regional transportation issues that go across state borders. States can do this for broadband infrastructure as a way to deliver regional connectivity solutions (a constellation satellite network or a regional 5G network for example) that work for that particular region.
A Once-in-a-Generation Opportunity
Given government austerity, tight budgets, and political polarization, it’s safe to say this opportunity won’t likely come around again for a while.
Allocating $65 billion to improve Internet services can certainly help bridge the connectivity gap, spur innovation and growth and make the U.S. more competitive globally. State and local governments, broadband providers and the public should work together to identify and push local solutions that work in a particular region, move quickly by focusing on building out the last mile and pool resources to create cost effective, agile solutions with an economy of scale.
We can’t afford to do this incorrectly.
Dan Hays is a principal with PricewaterhouseCooper’s technology, media, and telecommunications industry group.