In this Policy Spotlight series, Mercatus scholars provide a high-level overview of their positions on key issues facing our nation’s policymakers.
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—the smallest geographic area of measurement used by the Census—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
As Larry Summers, former secretary of the treasury and economic adviser to President Obama, said, 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 Mercatus researcher analyzed 80 “muni broadband” projects and found that the largest economic effect of these publicly funded networks is to increase local government employment. Private-sector employment 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 to enter the market and invest, state and local governments should streamline and expedite 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, state legislatures should consider offering a direct consumer subsidy—a voucher that rural residents and older Americans 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 nonadopters are uninterested in using.