Bridging the Digital Divide Through Private Sector Networks

Local governments have tremendous responsibilities to ensure the welfare of their citizens, including education, public safety services like fire and police, and other public services such as sanitation and maintaining roads. As municipal budgets have been stretched even further during the COVID-19 pandemic, this is a time to focus state and local resources in areas that need it the most and allow the private sector to continue its long-term commitment to building and maintaining our country’s broadband networks.

Building and operating a municipal broadband network is a massive undertaking for a local government. A number of cities have tried it and have been left with major liabilities, unfinished systems, credit downgrades, and losses for taxpayers. In some cases, municipalities are building broadband networks in areas already served by the private sector, rather than targeting their deployments to truly unserved areas.

Municipalities must recognize that building a broadband network is only the start of an ongoing and capital-intensive process of upkeep, upgrades, and renewed investment. As technology evolves, so will customer demand. Local governments offering broadband services will need to continue making significant investments, so end users aren’t left with outdated technology.

Each year, private sector network operators spend billions to maintain their networks, guard against ever-evolving and ever-more dangerous cybersecurity threats, and plan for future upgrades to keep up with technology and not leave consumers behind. These tasks are best suited for private operators rather than taxpayer-funded municipalities. One major cyberattack could have serious consequences for a municipality’s budget. Even under the best of circumstances, broadband networks can be a strain on city budgets, meaning fewer resources for essential public services. Additionally, next-generation services like 5G will come from the private sector which have the infrastructure in place for rapid deployment.

Instead, the solution to bridging the digital divide lies in encouraging competition among private sector broadband providers, both wired and wireless. Private sector network operators have invested over $1.7 trillion since 1996 in broadband networks – sums far beyond the reach of local governments.

Competition works. The broadband internet is robustly competitive both between competing companies and between competing ways of accessing the internet. Getting faster broadband to everyone more quickly benefits everyone – and it’s the best way to close the digital divide. Because building out broadband networks is complex, requiring large-scale investments and regulatory issues such as permitting and rights of way, government should encourage competition, avoid regulations that delay or hinder deployments making them more expensive, and not put its hand on the scale in favor of one provider so that government does not deter the kinds of investments that consumers need and the competition that brings innovation.

All this requires pursuing public policies that encourage innovation and promote competition.  Government should not run municipal networks, but it has an indispensable role in getting those policies right. If it does not, investment will not come, and cities and regions that make other choices will inevitably be left behind as newer, faster technologies come to market.  Instead, government policies should promote competition among private sector broadband providers to foster universal broadband that all Americans need. Even in areas that cannot attract sufficient private sector investment, policies should rely on proven, efficient, and robust broadband support mechanisms that attempt to work with the market to foster private investment.

Local government is extremely important, and cities and towns should focus government resources and expertise in areas most critical to supporting their citizens. Broadband buildout should be left to the private sector which has demonstrated, all across the country, that it can deliver fast broadband and technology upgrades better and more cheaply, without putting the burden of construction and maintenance on local taxpayers.

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