May 23, 2017

Broadband Deployment Recommendations in North Carolina

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Twenty years of light-touch Internet regulation made the United States a global leader in technology, innovation, and broadband use. However, as the saying goes: the future is here—it’s just not evenly distributed yet. According to the FCC’s latest report, about 33 percent of census blocks have only one or two fixed broadband providers offering 10 Mbps speeds. To close the “digital divide” in a financially prudent manner, I recommend the following.

Rely on Private Broadband Investment

Larry Summers, former secretary of the treasury and economic adviser to President Obama, observed that broadband investment is “clearly the responsibility of the private sector.” Public networks are financially risky and often only benefit a small number of residents. Rigorous research in this area is scarce, but a graduate student in the Mercatus Center at George Mason University’s MA Fellowship analyzed 80 municipal broadband projects and found that the largest economic effect of these publicly funded networks is to increase local government employment. Private-sector effects are modest or negative. Further, public networks siphon users from private providers and depress private investment.

Make Broadband Deployment Cheaper and Faster

To incentivize more broadband providers and investment, state and local governments should streamline and expedite the permitting of broadband infrastructure on public property and public rights-of-way. Wireless towers in particular are needed in rural areas to provide Internet access to hard-to-reach subscribers.

Create “Tech Vouchers” for Rural and Older Residents

Rather than building public networks, the legislature should consider offering a direct consumer subsidy—a voucher that rural residents and older North Carolinians can use to purchase discounted broadband or devices—to increase broadband adoption transparently and efficiently. This avoids building duplicative networks that the vast majority of non-adopters are uninterested in using.