By Joy Wiltermuth
Can the digital divide be fixed? The NTCA’s Bloomfield applauded Biden’s decision to include broadband in its infrastructure proposal. “No infrastructure package would be complete without digital infrastructure,” she said in a statement after details of the plan emerged. “We need to aim high and invest in efficient and scalable technologies like fiber to meet the needs not only of today’s consumers but also tomorrow’s.”
Congress already funds rural broadband projects, including recently with a focus on vetting providers, but also through a new mapping initiative to better pinpoint existing services, speeds and potholes, through funding from prior coronavirus aid packages.
Breaking down $115 billion need
The Biden administration outlined details on Wednesday of its plan to invest $100 billion to expand fast and affordable broadband to everyone in America, as part of its roughly $2.25 trillion infrastructure and stimulus blueprint.
Prior to the release of the Biden plan, Jeff Johnston, CoBank’s lead communications economist, estimated that out of $115 billion likely needed to bridge the U.S. digital divide, there had been about an $80 billion funding gap, even after considering the tens of billion already earmarked for various broadband funding programs.
“That is obviously a big number,” he said, comparing the funding shortfall with the near $30 billion that major telecoms allocate to wireless capital expenditures each year.
The entire broadband investment, as currently proposed, would be less than one month of the Federal Reserve’s $120 billion a month bond-buying program of U.S. Treasurys /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -1.07% and government-backed mortgage bonds, which was kicked off last spring to keep credit flowing, and has no slowdown in sight .
Even so, Johnston sees at least two ways to tackle the broadband funding shortfall: either by pushing through the new infrastructure spending package or by expanding the FCC’s current pot of fees collected from landline providers, where the pool of customers is shrinking, to include broadband providers.
“Look, it is by no means a slam dunk,” Johnston said, adding that charging new fees would probably face resistance from technology giants like Comcast Corp /zigman2/quotes/209472081/composite CMCSA +1.26% , Google parent Alphabet Inc. /zigman2/quotes/202490156/composite GOOGL +1.48% , Facebook Inc . /zigman2/quotes/205064656/composite FB +2.52% and Charter Communications Inc . /zigman2/quotes/201656355/composite CHTR +1.22% . “But we think that’s something that should be revisited.”
Big Tech and towns
As Washington gets ready for more wrangling over how it taxes and spends in the new Biden era, Cooper at BroadbandNow said positive developments already have been happening at the local level and among highflying technology companies that could ease a path to quicker, universal broadband.
“There are entirely new forms of connectivity that are at the precipice of becoming realistic at scale,” Cooper said, pointing to several low-Earth orbit satellite programs in development, including Elon Musk’s Starlink program , a part of SpaceX, which is beta-testing domestic and international broadband service. Amazon /zigman2/quotes/210331248/composite AMZN +1.45% owner Jeff Bezos also has been developing a competing program called Project Kuiper , as well as the U.K.-based OneWeb telecom.
The upshot would be that satellite service could bypass the need for providers to lay down and maintain expensive terrestrial programs. Although, in terms of building up local communities, it is hard to ignore the progress made in cities like Chattanooga, Tenn , which took off as a technology hub, after the city built its own broadband company.
“The kicker here, why they are not super commonplace, is that, unfortunately, there are 22 states that roadblock or outlaw these sorts of initiatives at the state level,” said Cooper.
Mark Santero, chief executive officer at Homestead Funds , which manages assets for the National Rural Electric Cooperative Association, sees a brighter economic forecast since early in the year, thanks to abundant fiscal stimulus that’s helping stabilize household finances to ramped up vaccinations to Biden’s efforts to modernize the nation’s infrastructure.
“Agriculture specifically is becoming more and more technology dependent, with connected machines collecting data to boost crop yields,” he said, adding that healthcare and retail also have been adapting to technology by offering virtual doctor visits and expanded online ordering.
“In rural areas, it’s the lack of broadband access that is a barrier,” he said. “If the Administration’s vision of connectivity for rural households becomes a reality, that’s very positive for rural economies.”