July | August 2017


 

 

 

 

 

 

Bridging the Digital Divide: State Broadband Policy in the United States

By Austin Coleman, CSG Graduate Fellow
Although many of the Internet’s technological underpinnings were invented in the United States, the U.S. continues to lag behind other developed countries in terms of broadband adoption and connection speeds.
 
The National Broadband Plan on the Federal Communications Commission’s site broadband.gov describes broadband as the foundation for economic growth, job creation, global competitiveness and a better way of life.
 
“It is enabling entire new industries and unlocking vast new possibilities for existing ones,” the plan says. “It is changing how we educate children, deliver health care, manage energy, ensure public safety, engage government, and access, organize and disseminate knowledge.”
 
Cloud services provider Akamai Technologies ranks the U.S. 19th in average connection speed and 23rd in broadband adoption based on the Federal Communication Commission’s previous definition of broadband as 4 megabits per second.
 
The rate of broadband expansion varies widely by state, with connections available for 63 percent of the population in West Virginia and 97 percent in Delaware. Average connection speeds also vary, with Delaware and Virginia’s 18-plus megabits per second more than doubling the transfer rates in Alaska, Arizona, Kentucky and New Mexico. In an international context, the transfer rates in Delaware and Virginia are similar to Hong Kong, Sweden and Japan, which are ranked among the top five nations in terms of average download speed. The country’s slowest Internet connection rates are more in the neighborhood of Slovakia, Russia, Poland and Hungary.
 
Given this discrepancy, and the fact that no state’s average speed meets or exceeds the FCC’s new 25 megabits per second definition of broadband, some states have chosen to adopt policies aimed at improving the proliferation and quality of broadband Internet service.
 
These policies have taken several forms, including the creation of an outreach office in Utah intended to promote the development of broadband infrastructure for the purpose of economic development. The Massachusetts Broadband Institute has a similar role.
 
Massachusetts, Minnesota, New York, Vermont and West Virginia have introduced subsidies for Internet Service Providers to offset the costs associated with introducing higher Internet speeds.
 
Massachusetts has created a state-owned, middle-mile network to bring broadband to underserved regions; Kentucky has planned a similar network to service all 120 counties. Middle-mile networks provide a key portion of the expensive fiber optic infrastructure that contributes to the broadband market’s high cost of entry.
 
Massachusetts Rep. Stephen Kulik said this level of investment is necessary.
 
“Private telecommunications companies will not serve rural communities with broadband and companies will not make the investment because it will not pay for itself” due to low population density relative to urban areas, Kulik said.
 
The Massachusetts network and the planned Kentucky network have been established as public-private partnerships. The private partner runs day-to-day operations and provides most of the capital, while the state retains ownership of the underlying infrastructure. The entities renting access to the middle-mile network provide service to end-users such as residents and businesses.
 
The Massachusetts network—MassBroadband 123—was created by the Broadband Act signed by Gov. Deval Patrick in 2008. MassBroadband 123 allows providers to make use of its fiber optic infrastructure to provide service in 123 communities in western and north-central Massachusetts. More than 1,200 community anchor institutions use the service, including libraries, schools, emergency response agencies and public housing.
 
About half of the overall cost of Massachusetts’ middle-mile network was borne by the state, with the other half coming from the 2009 American Recovery and Reinvestment Act.
 
Brian Noyes, senior communications manager at the Massachusetts Technology Collaborative, said a middle-mile network creates a foundation for expansion that can be used by local governments, private companies or cooperatives. The Wired West Cooperative is trying to raise its down payment in order to meet the required 40 percent threshold for state funding under the Broadband Act. Wired West seeks to bring broadband Internet service to 32 unserved or underserved rural towns in western Massachusetts.
 
Kentucky’s low rates of Internet adoption and low average speed were the primary motivation behind that state’s broadband initiative. Rep. Dean Schamore said policymakers understand the need in the state.
 
 “We are moving to a digital age where we need access to the Internet,” Schamore said.
 
The planned Kentucky network, KentuckyWired, will comprise more than 3,000 miles of fiber optic cables. All 120 Kentucky counties will be connected to the network, which will be open access, allowing commercial or community broadband providers to offer last-mile service to residential and commercial customers. Much like MassBroadband 123, the first priority for KentuckyWired will be extending service to the commonwealth’s underserved and economically distressed Appalachian region.
 
Pamela Trautner, director of communications at the Kentucky Finance and Education Cabinet, said one major company “… was unwilling to invest in a network that was high capacity, high speed.” This opened the door for the KentuckyWired program, which relies heavily on a group of private partners led by Macquarie Capital of Australia. These corporations will finance, design, construct and operate the network for 30 years following the project’s completion, with the state providing funding through a bond issue. Trautner said the goal was for Macquarie to “provide the capital and assume the risk” for the project.
 
Broadband providers counter that since 1996 the industry has spent $1.4 trillion building and improving service. Pete Meadows, director of external affairs at AT&T, explains that his company spent $21.4 billion in 2014 alone, and has accepted $428 million in Connect America funds from the Federal Communications Commission to expand broadband to rural communities. 
 
According to the FCC, this funding will “enable AT&T to deliver broadband at speeds of at least 10 Mbps for downloads and 1 Mbps uploads to over 1.1 million homes and businesses in its rural service areas where the cost of broadband deployment might otherwise be prohibitive.” 
 
Incumbent broadband providers, however, have expressed concern about state-led plans like MassBroadband 123 and KentuckyWired. According to Meadows, “it’s not that industry doesn’t want anyone else to create or build their own network. It’s just that if there is already a provider in place, it is not a good use of taxpayer money. It would be wiser to work with the provider who is currently serving the area.”
 
Meadows encourages cities seeking a broadband provider or an increase in service “to look at your own processes for encouraging investment. This includes zoning, permitting and otherwise easing the process for companies to build out the network.”
 
MassBroadband 123 and KentuckyWired have not been in place long enough to yield any long-term data. But the programs have similar goals—to facilitate access to broadband Internet service for citizens, businesses and anchor institutions.
 
“Access to high-speed and high-quality Internet is no longer a luxury; it’s a necessity in the 21st century economy,” Kentucky Gov. Steve Beshear said in a press release dated Jan. 22, 2014. “Businesses and schools demand it. Our communities that lack reliable high-speed access will lag behind in economic development, distance learning and advanced health technologies, and that’s unacceptable.” 
 
 
 

 

 

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