Biden’s broadband plan is bold, but economic benefits unclear

President Biden is betting $ 100 billion that he can offer a lifeline to rural America and a boost to the economy as a whole, by making high-speed internet accessible to all Americans.

It seems obvious that the plan would help millions of people, especially in agrarian states where Democratic Party support is weakest. However, estimating the precise effect is nearly impossible because no one really knows how many Americans do not have access to a service considered vital to modern life.

“We have a better map of the Milky Way galaxy than those who are not and under-connected in rural America,” Christopher Ali, a professor at the University of Virginia, told the Senate Committee on Commerce during a audience.

According to Microsoft data, approximately 157 million Americans do not use Internet access at high-speed speeds, many in rural areas.

The Federal Communications Commission has decided to address this issue by forming a task force to develop new, more accurate broadband coverage maps, but the effort may not be complete until next year. In the meantime, broadband supporters are hoping the $ 100 billion will remain in a vast array of infrastructure that the administration hopes to pass through Congress later this year. Republicans offered $ 65 billion for broadband in their infrastructure counter-proposal Thursday.

“As a nation, we need to seriously think about this,” said Roberto Gallardo, director of the Regional Development Center at Purdue University. “Are we going to let the coasts pull away and leave the land of flyover behind us?”

If lawmakers need an example of how high-speed internet service can help a local community, they might look to the tiny Jackson County in eastern Kentucky. Its population of 13,000 is spread over rugged terrain near the Daniel Boone National Forest.

Peoples Rural Telephone Cooperative, a local non-profit utility, decided to build a full fiber optic network starting in 2008. About 90% of its $ 50 million investment was funded by loans and grants from the federal government. Now super-fast service reaches almost every home and business in the county, a feat that has been reaped national attention.

From 2014, the year the project was completed, until 2019, just before the COVID-19 pandemic hit, unemployment in Jackson County fell 5 percentage points, more than in any other county in the State and more than double the state average, according to state government data from the Kentucky Center for Statistics.

It is difficult to determine exactly how much of the improvement comes from deploying fiber optic connections, and Jackson County is still poor, with a median income about half the US average. But Betty Hays, director of operations at Telecommuting United States, an employment clearinghouse serving 23 counties in eastern Kentucky, insists it has made a big difference.

“It changed lives, it saved lives,” she said. “We put people in legitimate, honest with God opportunities, placed in your bank account, and remote.”

The group associates workers with jobs connected remotely with employers such as Amazon.com Inc. and Hilton Worldwide Holdings Inc. Examples include technical support, customer service, and handling health insurance claims. The average wage is $ 13 an hour, with some as high as $ 20, in an area where most private sector jobs pay the federal minimum of $ 7.25.

These jobs do not come without a reliable and fast connection. So, Hays said, the people of Jackson County have a clear advantage. Many neighboring counties that rely on private providers either pay more for much slower service or have no broadband options at all.

A storm of university studies proves that ubiquitous and affordable broadband could deliver significant economic benefits. They point to income growth and lower unemployment rates in rural areas, house values and property tax bases, a higher probability new businesses locate there, and even higher crop yields.

One of the most comprehensive studies, conducted by economists at Purdue, looked at the potential costs and benefits of extending broadband to all of rural Indiana. The authors concluded that broadband customer revenues would not cover the costs of the system, but the total economic return would be as high as $ 4 for every dollar invested over 25 years.

Yet economists are blind when asked to estimate the potential overall effect on US economic output of Biden’s broadband plan, as they don’t know how many people would have access if it were implemented.

According to the FCC, landline broadband service was available to 94% of the U.S. population in 2018 and 78% in rural areas, leaving a total of 20 million Americans unserved.

Data from the FCC shows that 21.3 million Americans do not have broadband access – a figure much smaller than Microsoft’s data.

The reality is much worse. The FCC counts everyone in a census block – an area that can house hundreds of people across several square kilometers – as having broadband access if a single provider serves a single facility in that block, dramatically exaggerating the numbers of the FCC.

“The previous mapping has favored incumbent service providers by allowing them to exaggerate their level of deployment,” said Ali of the University of Virginia.

Biden, in a Tweeter Saturday said that 35% of rural America did not have high-speed internet access.

On top of that, many of those who receive what qualifies as broadband are stuck with little to no competition among providers, high prices, and service speeds that cannot meet modern demands. And that’s all before the pandemic hits and makes it even more crucial for tens of millions of workers and school children to have a solid connection with the outside world.

Broadband advocates and economists also point out that to get the most out of the plan, the Biden administration needs to focus on more than just creating access.

The biggest barrier is affordability, said Brian Whitacre, professor of economics at Oklahoma State University. That’s why Biden’s plan needs more long-term subsidies for low-income users, he said. In December, Congress allocated $ 3.2 billion to help subsidize Internet access, but funds are expected to run out within months. A long-standing US grant of $ 9.25 per month, which has been criticized as inadequate, is expected to continue.

“It’s not just availability that makes the difference,” said Whitacre. “It’s adoption.”

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