Earlier this month, the Treasury Department approved a $110 million investment plan “to strengthen or expand broadband infrastructure throughout the state.” The funds will flow through the Maine Connectivity Authority (MCA), a state agency created last year to manage and distribute millions in broadband spending. According to state and federal government officials, the funding will be focused on rural and remote areas.
This tranche of funds will come from the federal government’s Capital Projects Fund, set up through the American Rescue Plan Act (ARPA), a nearly $2 trillion bill passed by Congress and signed by the President. Biden in March 2021. According to a press release from Governor Mills, this award represents 84% of Maine’s total $128.2 million allocation through the Capital Projects Fund.
The administration refers to this latest infusion of cash as a supplement to the Mills Maine Jobs and Recovery Plan, a nearly $1 billion supplementary spending bill passed by the Legislature in July 2021. , in which $21 million was spent on broadband. This money also came to Maine as a result of ARPA. Another $100 million more from the Federal Infrastructure Investment and Jobs Act signed by President Biden in late 2021 will come to Maine specifically for broadband in “unserved” areas.
While Mills and Biden proclaim the wisdom of such massive spending, many economists argue that they are precisely the reason Americans are experiencing the highest rate of sustained inflation in four decades. Leaving aside inflation concerns, is this even the best use of spending on expanding Internet access?
In February, Mills promised that “anyone in Maine who wants to get online will be able to do so by the end of 2024.” This was done without any meaningful cost-benefit metrics, and the way it was executed is much more like a blank cheque.
Administration officials say the new injection of $110 million from the Capital Projects Fund will connect about 22,500 households, at a cost of nearly $4,900 per connection. If a private Internet Service Provider (ISP) were weighing the decision to invest in new infrastructure (assuming homes are not already served by a wired connection), they would likely be looking at how many potential customers they could reach. sign up for a monthly subscription. . For example, assuming that 100% of newly connected households (an absurdly high take-up rate) opted for $70 per month Internet service, it would take an ISP nearly six years to recoup its initial investment, not including costs. network maintenance during this period.
Mills’ press release also boasted of a similar initiative in 2020 to spend $5.6 million in federal coronavirus relief funds “to build permanent internet infrastructure for more than 730 students in rural parts of the country. Maine”. While few might object to helping struggling rural students during government-ordered school closures, this program alone costs more than $7,500 per connection. Unfortunately, this amounts to another lackluster state-driven solution to a state-created problem.
Proponents of increased public spending on broadband will blame ISPs for the lack of connection options in some rural communities. But according to NCTA, a telecommunications industry association, private companies have invested $300 billion in network infrastructure since 2000, $172 billion over the past decade. This led to a 98% reduction in the price per megabit of data, from $28.13 in 2000 to just $0.64 in 2020. relatively low price. Claims that brand new quasi-public entities can provide this service better than the private sector show a deep misunderstanding of the industry and the economy as a whole.
The Federal Communications Commission (FCC) defines a census block as having to be “served” by adequate service speed at 25 megabits per second (Mbps) download and 3 Mbps upload, also known as 25/3 service. But MCA and its partner agency, ConnectMaine, in conjunction with the Mills administration, recently moved the goalposts via agency regulations to say that a Maine household is considered “underserved” if it is not don’t have access to wired Service 50/10. Note that this does not account for wireless systems such as small cell, satellite, and TV white space. The state considers a household to be “unserved” if it does not have access to 25/3 wireline service.
State broadband bureaucrats have continually pushed to distort the issue by outlining their own much higher and unrealistic bars for adequate internet service speeds. WMTW reported in November 2021 that the state considered a whopping 84% of Maine households to be “underserved” or “unserved.” Spread out, only around 14% of households are truly unserved, meaning they do not have access to 25/3 service. ConnectMaine decided to move the goal post to 50/10, so they could say another 70% of homes are “underserved”. Expect Mills’ Maine Connectivity Authority to go even further; they seek to fund projects in locations without access to symmetric 100/100 service.
Here’s how it’s done: The administration further narrows the definition of “broadband,” uses the inflated “underserved” number to justify more massive spending, but then allows the vast majority of funds to build duplicate networks. . These projects are duplicative because they are parallel to services already available, not about expanding access to truly unserved homes. This has happened (or been attempted) in Maine communities such as Hampden, Knox County, Leeds, Southport, and southwestern Waldo County.
Essentially, the administration’s policy blindly assumes that every camp or lakehouse that doesn’t have a gold-rate residential service connection not only needs that speed, but needs a government-owned entity to build a new wired fiber optic access. tip for them.
It’s totally useless. For almost all residential consumers, symmetrical 100 Mbps service is overkill. Zoom, the online video conferencing service, recommends 3.8 Mbps download and 3 Mbps upload for 1080p high-definition video calls. Patients using a telehealth service would need comparable bandwidth.
Just like MCA, the Federal ARPA Capital projects A fund exists to build infrastructure; it’s all in the name. It does not exist to determine access versus affordability, nor does it seek to meet consumer needs through innovative technology or targeted household assistance. This dominant philosophy alone makes its “investments” more useless.
Whatever the problem, the solution for Biden, Mills and their broadband bureaucrats is to pump money into local public or quasi-public entities to build new, often duplicate, fiber-optic infrastructure. All this guarantees mismanagement and waste of public funds. Stories abound across the country of public broadband districts that got into too much debt to provide a service few wanted to buy, even though it was funded by “cheap” municipal tax bonds.
Both Governor Mills and President Biden need to take a long look at themselves in the mirror. Does their “spend first, ask questions later” philosophy really pay off? A report by the federal Government Accountability Office (GAO) released in May 2022 accounted for more than 100 different general programs, administered by 15 different agencies, which spent $44 billion from 2015 to 2020 to fund broadband development.
The GAO called the funding program “overlapping and fragmented,” noting that millions of Americans still don’t have access to 25/3 service: 17% in rural America, compared to just 1% of those living in areas urban. Remember, these are federal expenditures only. Set aside the millions of state taxpayer-funded bonds issued each year for the same purpose.
So what is a better solution for Mainers? The state should wind up the MCA and redirect its budget to a program that provides needy households with technology-neutral vouchers to help them afford faster internet speeds. Instead of ConnectME’s distortions, private sector and federal government data would be used to understand the true extent of the infrastructure gap and avoid costly overbuilding where the FCC has already funded projects.
This bold solution would eliminate the massive bureaucracy that marked the Mills administration’s approach to closing the “digital divide” while saving taxpayers from taking on the debt of flawed and unnecessary public networks.
For a service as critical as internet access, why should Mainers allow it to be co-opted and mismanaged by the same entities that have driven up the price of other services, such as education and health care? , in recent decades? The government is not very good at many things, but it can always be counted on to waste huge amounts of other people’s money.
Consumers would be much better served by a healthier economic environment allowing private ISPs to innovate and compete for the provision of Internet services than by wasteful government spending on wasteful infrastructure.
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