Here’s why Florida should provide broadband leadership | Opinion
The federal government is on a path to waste over $30 billion of the $65 billion it plans to spend over the next few years to expand broadband services throughout the nation. Florida can take steps to keep that waste from happening by assuming a leadership role among states determined that their citizens should receive all the broadband that they pay for.
The $65 billion is set aside for several broadband programs included in the 2021 Infrastructure Investment and Jobs Act (IIJA) adopted late last year. The largest allocation is for the $42.5 billion Broadband Equity, Access and Deployment (BEAD) program so states and territories can build networks in areas that currently do not have service and improve speed of existing networks.
The remaining $22.5 billion is to provide service discounts for low-income households, promote broadband adoption and use, fund broadband services on tribal lands and expand rural distance learning and high-speed internet backbones.
As any businessperson knows, the most cost-effective way to get something built is to manage costs, clearly define what you want, make suppliers compete for your business and hold the winners accountable for delivering on promises. This won’t happen given how the Biden Administration is implementing the IIJA and overcoming the flawed approach will require strong state leadership, which Florida can provide.
The most problematic aspect is the idea that states should run grant programs in which prospective funding recipients submit project proposals that state officials then evaluate and choose between. Studies of previous grant-funding programs consistently found this wastes money because accountability is low and political favoritism is high.
The international best practice for subsidizing broadband is to treat it like a business: Define what is to be built, specify how potential builders will be judged and held accountable and make the prospective providers compete on price. The Technology Policy Institute found this business-like approach cuts costs by 50% compared to a grant approach.
There are other features of the federal plans that add unnecessary costs. The programs press states to pay union-level wages, which tend to be about 11% higher than non-union wages. They also tell states to tilt the grant competition against America’s world-class broadband providers to favor municipalities and startup companies. But these enterprises fail to achieve financial viability 90% to 95% of the time. That wastes taxpayer money.
One local municipal utility is an exception to that rule: Gainesville Regional Utilities (GRU), which is a sponsor of my research center at the University of Florida, is one of the few city-owned broadband providers in the country that is both technically and financially successful. It’s just that GRU is rare in this regard.
Florida can provide leadership by partnering with like-minded states to form sound policies and resist the federal inefficiencies by advocating for the business approach to the broadband build out. This will require quick action as the federal government is already rallying support from state broadband officials for its approach.
A first step for Florida and its partner states would be to adopt a funding model that emphasizes transparent price competition between would-be broadband providers and includes protections against favoritism. Creating price competition can be complex, but numerous countries have used this approach for broadband and other communications services. A coalition of states could run effective competitions.
Florida and its partner states could also push the federal government to publicly justify its cost-increasing policies. In essence, Florida and other states would be putting the burden on the federal government to defend why its cost-increasing policies are more important than taxpayers getting their money’s worth. The federal rules attempt to put states on the defensive. States should turn the tables.
Mark Jamison is the director and Gerald Gunter professor at the Public Utility Research Center at the University of Florida’s Warrington College of Business.
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This article originally appeared on Tallahassee Democrat: Here’s why Florida should provide broadband leadership | Opinion
