Posted by on July 21, 2020 8:15 am
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By Johnny Kampis, Taxpayers Protection Alliance

 

As the race for broadband funds from the CARES Act heats up, policy experts and taxpayer advocates hope the money ends up in the right place to help close the digital divide.

 

The relief package, passed and signed into law in March, included $150 billion in relief funds to state and local governments to combat the effects of the COVID-19 pandemic.  Many governments are using a sizable portion of those funds to expand broadband access.  

 

As might be expected, interested parties are lining up to grab their share of taxpayer money.

 

“It’s a feeding frenzy when the federal government is handing out grants,” Brent Skorup, a senior research fellow at the Mercatus Center at George Mason University, told the Taxpayers Protection Alliance (TPA).

 

In Mississippi, nearly 20 electric cooperatives banded together to pursue the earmarked broadband money. The group submitted a proposal to the Mississippi Senate Technology and Energy committees on May 13 to ask for $150 million to serve unserved and underserved residents. That includes $75 million from the CARES Act and $75 million in matching state funds. The proposed project would install fiber passing 45,000 underserved Mississippi households.

 

“This is by no means a done deal, but we’re excited about the possibility of getting this funding,” Pontotoc Electric Power Authority Director Frankie Moorman told the Pontotoc Progress.

 

The Wyoming Legislature created the Wyoming Broadband Advisory Committee to see how CARES Act funding can best be utilized, with a priority to serve homes with kids who may have to learn from their residences in the Fall.

 

Early discussions show why many Americans continue to be unserved. For example, the 30-acre hamlet of Aladdin in Crook County, Wyoming, may prove to be fiscally unfeasible to serve. Jason Hendricks, chief regulatory officer for Range Companies and former president of the Wyoming Telecommunications Association, said the distance and dearth of potential customers would lead to a “double digit number of years before we could get recovery of those costs,” even with a matching state grant, the Sundance Times reported.

 

Even areas that might be fiscally feasible may not work out, he noted. The 33 residents of the Crook County town of Beulah didn’t seem particularly interested in broadband. “We didn’t get hardly any responses and the ones that we did weren’t overly positive,” Hendricks said.

 

Jeffrey Westling, a fellow in technology and innovation policy at R Street Institute, told TPA that apathy is not uncommon. He said for various reasons – cost, existing cell phone data plans, lack of internet savvy – some people won’t subscribe to high-speed internet in their homes even if governments spend a lot of money to run fiber to them. That inevitably leads to taxpayer waste.

 

“We focus so much on access, but they don’t think about how funds translate to adoption of the service,” Westling said. “We need to look at it holistically and understand why people do or do not adopt broadband service.”

 

Nebraska will set aside $40 million from the CARES Act to create the Nebraska Remote Access Broadband Grant program. These funds will be available to communities with populations between 1,000 and 5,000 so they can partner with private providers to build fiber-to-the-home networks in their towns.  

 

Brad Moline, CEO of ALLO Communication that services much of Nebraska, said in an op-ed in the Lincoln Journal-Star that many rural markets don’t support “an investment model with purely private capital.”

 

“Building broadband infrastructure is incredibly expensive, and public investment will ultimately be needed for many of these smaller rural markets,” he wrote. “[This] program achieves an appropriate balance between private investment and government support and will spur economic development in these communities.”

 

Skorup said that the federal government has a history of wasting stimulus money allocated for broadband, especially the package doled out through the American Recovery and Reinvestment Act of 2009 during the Obama Administration. That money helped kickstart many of the failed projects documented in TPA’s Broadband Boondoggles.

 

“Hopefully, state and federal governments have learned from that and will fund more promising projects than 10 years ago,” Skorup said.

 

 


Johnny Kampis is a senior fellow and investigative reporter for the Taxpayers Protection Alliance.