Expert: Democrats’ broadband plan underestimates costs, overestimates demand

Johnny Kampis

November 10, 2017

An expert on broadband policy says Democrats’ ambitious $40 billion plan to extend broadband to all Americans would not only cost twice as much as estimated, but also overestimates consumer demand. 

Will Rinehart, director of technology and innovation policy at American Action Forum, said the plan, which was released by Democratic leadership in the House and Senate earlier this fall, also relies on current (and probably soon to be antiquated) technology rather than being forward thinking. 

“These numbers are based on the assumption that either fiber or cable will be the last mile technology,” Rinehart writes. “However, advances in fixed wireless, satellite, and telephone-based technologies could provide a cheaper upgrade path.”

Rinehart notes that in rural communities and less dense urban areas, telephone networks are receiving upgrades to allow faster internet, allowing future gigabit speeds over twisted pair copper or coaxial wiring.

Other technologies may also service the last mile, from fixed wireless that beams internet signals from nearby cell phone towers to pushing broadband along power lines. These methods could be much cheaper than the expensive process of connecting homes and businesses with fiber.

The universal high-speed internet plan also errs in its cost estimates, Rinehart writes, in not actually covering every American with that $40 billion budget. Paul de Sa, chief of the Office of Strategic Planning and Policy Analysis at the Federal Communications Commission, estimated that $40 billion would cover the vast majority of U.S. citizens – 98 percent to be exact – but the problem is capturing the last 2 percent. Reaching some of this country’s hardest-to-reach citizens with speeds of 25 megabits per second down and 3 mbps up would actually double the cost of deployment, from $40 billion to $80 billion, de Sa wrote.

That $80 billion also assumes there is no waste, fraud, or abuse in the awarding or completion of the contracts.  Not serving those residents leaves 6.5 million Americans out of the Democrats’ broadband plan. 

Rinehart also points to a 2015 study from Cornell University’s Community and Regional Development Institute that found broadband only benefits local economic growth if there is widespread adoption. Availability isn’t enough.

“These results suggest that government policies dealing with rural broadband may need to have a more explicit focus on actually adopting (and effectively using) the technology. The traditional focus of these programs on simply providing infrastructure may not be enough to encourage true economic growth,” wrote authors Brian Whitacre, Robert Gallardo and Sharon Stover.

Those sentiments go hand-in-hand with a 2016 state-commissioned survey of broadband access in Tennessee. The study by the Tennessee Department of Economic and Community Development found that less than a quarter of residents pay for broadband services, even though 87 percent can access them. This implies that cost is a bigger driving factor in adoption than availability, with residents preferring to save money by buying slower speeds.