Free Government Money: Broadband Edition

As part of the America Reinvestment and Recovery Act of 2009, congress has set aside $7.2 billion for Obama’s national broadband plan. It should come as no surprise that numerous municipalities and telecommunications companies have applied for a piece of the pie. In light of the continuing climb in the unemployment rate (which reached 10.2% in October), the Obama administration has decided to try to put the broadband stimulus money in the hands of developers ASAP, and has announced that the rest of the broadband funds will be awarded in one more round, instead of two more as was previously planned.

Matt Lasar at Ars Technica outlines some of the overly-ambitious – and unbelievably expensive – grant requests that can be found on the BroadbandUSA Applications Database. Among the bank-breaking proposals include a $240 million request to build an under-the-sea fiber network to connect the most remote parts of Alaska, and a request for $35 million to provide gigabit-speed (yes, gigabit!) connectivity in Hawaii.

I’ve perused the BroadbandUSA database myself, and I found plenty more requests for astronomical amounts of taxpayer money. Some of the more excessive proposals:

  • $70 million to bring last-mile Fiber-to-the-home connections to residents of southeast Iowa.
  • $56 million for “world-class” fiber gigabit service plus wireless for Vermont residents.
  • $125 million for “state-of-the-art” access for rural Mississippi counties.
  • $60 million to increase the speeds of available internet in the dense urban landscape known as “western Texas” (the same desert that served as the setting for No Country for Old Men, a region with a population density of about 10 people per square mile).
  • $500 million for Echostar and ViaSat to bring satellite internet to 20 targeted states. It seems that if your next business venture requires a $500 million government handout in order to become profitable, the project probably wasn’t going to create much value in the first place.
  • $275,000 to create several youth-oriented public internet radio stations for public housing communities in Pennsylvania.

While the dollar amount of the last one on this list is dwarfed by most of the other proposals, the request illustrates the wishful thinking of public broadcasting aficionados. Youth-oriented children’s radio programming may have a positive impact on youngsters growing up in public housing, I don’t know. But public radio only serves the public interest insofar as there are people who actually tune in. If National Public Radio and their frequent pleas for money pledge drives are any indication, the demand for public radio is pretty weak. Unless the government wants to sit children down and force them to listen, this sounds like $275k will be going straight down the drain.

Just as there are trade-offs involved in all policy decisions, there are also trade-offs to consider when determining where to live. High-speed internet access is best-suited for communities with large enough populations such that high demand makes the large capital investments of building new networks an attractive investment. Smaller, outstate communities generally have to wait for the price of technology to come down before next-generation connections arrive in their locale. This is neither some kind of strange phenomenon, nor ploy by capitalists to keep the good life away from rural populations; it’s just the economics of the high-tech sector. Government cannot turn Mason City, Iowa into San Jose, California without causing a huge dead-weight loss to the taxpayers.