How cities can avoid wasting federal broadband funds

Two federal acts passed in 2021 increased broadband funding to states by more than $20 billion. That’s on top of the now $38 billion that the Federal Communications Commission (FCC) can spend. And, if Congress passes the federal infrastructure bill, another $65 billion would head to states and cities with the goal of providing high-speed internet to nearly all Americans.  

The FCC estimates it would cost $80 billion to deliver broadband internet to everyone. All this spending would put us there. Unfortunately, much of the incoming funding risks being misspent by being too much, distributed too quickly and not properly targeted.   

But there are steps that states and municipalities can take to effectively use the broadband funding they get. A new report from the Mackinac Center for Public Policy lays out four guidelines to best use this money. 

Pave the way for progress: The first thing to do is for cities, counties, townships, boroughs and any other municipality to look at the barriers they have in place that might block current internet service providers. This includes looking at pole access rules, allowing fifth-generation (5G) and small-cell installation points, creating fair rules for crossing government rights-of-way, and keeping taxes low on technology that allows people to connect to networks. Local governments should review their regulations, and states should step in and lower the regulatory barriers everywhere. 

Leverage the private sector and competition: Most residents have affordable high-speed internet that is getting better and cheaper, at the cost they pay for the speed they get. What drives this are relatively flexible rules, which allow more companies and greater competition. If there isn’t local competition, government entities should remove any barriers preventing it. If there is limited or no high-speed internet access in an area, government should use the private sector to provide it, if possible. Internet service providers, unlike government entities, have experience running these networks. Public officials should leverage them, through a fair competitive-bidding process, if necessary, to expand high-speed internet access.  

Avoid one-size-fits-all solutions: The areas in the United States lacking access to broadband internet are usually in under-populated rural or mountainous areas. It’s expensive to expand wired broadband connections to people who live there. But there’s good news on the horizon. The 5G mobile network is expanding rapidly, and the right device can reach this network and provide internet speeds of 50 mbps to 1 gbps. This can go to a cell phone or a router that connects to computers and other devices. It’s a game-changer for people desperate for high-speed internet. But it requires government entities to not go all-in on just one type of technology. What matters is that people have access to fast internet — not necessarily how they get it. Technologies yet to be developed may provide new means for people to connect to broadband speeds, and governments should not favor one type of technology over another. 

Don’t run networks — subsidize individuals: Instead of examining the obstacles they may have put in place, using the private sector and getting up to speed on what solutions will work, many cities will go all-in on their own government-owned networks. Nearly all of these attempts have resulted in financial failure. If all the above guidelines fail and there are still residents who cannot afford high-speed internet, it’s better for towns and cities that take federal broadband funding to give targeted vouchers to their residents. This encourages private providers to expand, doesn’t put them in competition with a government monopoly, and puts no taxpayers on the hook for failure. 

An unprecedented amount of money is heading toward states and cities for broadband. If local government officials want to serve their residents in the best way possible — and serve the rest of U.S. taxpayers by preventing waste — they have a path forward. They should clear away needless regulations, foster competition, lower barriers to private investment and resist zeroing in on only one type of technological solution. That’s the right way to connect America. 

Jarrett Skorup is the director of marketing and communications at the Mackinac Center for Public Policy, a research and educational institute located in Midland, Mich. Follow him on Twitter @JarrettSkorup.