Big companies have had their chance at providing broadband to underserved areas; now, argues Wally Bowen, it's time for local owners and planners to step in.
In a recent op-ed entitled “The Right Broadband Stimulus Package,” Robert D. Atkinson calls for broadband infrastructure proposals “based on pragmatic logic rather than ideological thinking.”
This opinion sounds reasonable until we learn that Atkinson proposes that the lion’s share of broadband stimulus funding go to cable and incumbent telephone companies, an approach that fails his own test of pragmatism.
Any local economic development official in America will readily tell you that the big telephone and cable companies are the last places to look for “shovel ready” broadband projects in underserved areas.
Here in the mountains of North Carolina, Verizon, AT&T and Charter control more than 90 percent of the landlines to homes and businesses. Yet local politicians and economic development officials — and the state’s broadband authority — gave up years ago trying to cajole or bribe the big carriers into deploying broadband to underserved neighborhoods and rural areas.
The idea that these carriers might suddenly produce plans for “shovel-ready” broadband projects in our rural mountains is more magical thinking than pragmatic logic.
Instead, we are far more likely to find “shovel-ready” projects on the drawing boards of local planning agencies and state broadband initiatives like the N.C. Rural Internet Access Authority, now known as the e-NC Authority.
Frustrated by the neglect of the big telephone and cable companies in Western North Carolina, our local planning agencies and various nonprofits came together more than 10 years ago to begin mapping our own broadband infrastructure. Today, we have approximately 600 miles of lighted fiber operated by four nonprofit networks and one public-private partnership anchored by the Eastern Band of the Cherokee.
Six hundred miles of fiber in an area roughly the size of Vermont is a good start, but our needs are far greater. In fact, we easily identified $26 million in shovel-ready projects to recommend to the Obama transition team for funding.
The danger with tax credits for the big cable and telephone companies is that they can become a bait-and-switch scheme. When Atkinson writes that “a sizeable portion” of any stimulus package should go to these companies to deploy broadband “in areas without it,” we see the bait. But then we hear that the tax credits can also be used “to expand speeds in areas with it,” and there we see the potential switch.
If you’re the CEO of one of these Fortune 500 companies, your investment strategy is aimed at major corporate clients and affluent residential areas, where the return on investment is greatest. So the choice of how to use tax credits from the stimulus proposal is a no-brainer: you’re going to use those tax credits to increase speeds and become more competitive in markets where you already have broadband service.
Besides, your shovel-ready projects are all aimed at these lucrative market sectors; they’re not aimed at underserved areas. This is so obvious and self-evident. So let’s be clear: few, if any, shovel-ready projects on the drawing boards of these Fortune 500 companies will be in underserved areas. And any CEO who re-directs his company’s investment strategy toward markets that aren’t a good fit for his business model is putting his future career path at risk.
So, why are we trying to bribe the big telephone and cable companies to go where their Wall Street business models have no future? That’s a question that advocates for tax credits must answer.
Meanwhile, we all need to remember that President Obama set forth another critical requirement for these economic stimulus projects: they must also be a good use of the taxpayers’ money. That again gives the advantage to funding local networks — the local and regional nonprofits, telephone and utility cooperatives, and municipal networks that have sprung up all over the country. Local network operators live in the communities they serve, and our reputations are on the line if we don’t follow-through. Our fellow citizens can pick up the phone and call us; when they pick up the phone to call the Fortune 500 carriers, they get connected to a call center overseas.
Local networks will create local jobs; we don’t outsource. And over the longer term, local networks open the door to local innovation and economic growth in ways that are impossible with absentee-owned networks.
Here’s just one example: A local developer about a half hour north of Asheville bought an abandoned school on an island in the French Broad River in Madison County and converted it to studios for local artists. He wanted to make sure that each studio had a broadband connection, and we were able to give him this assurance. He could not get this kind of assurance from Verizon; in fact, it was virtually impossible for him to speak to anyone above the level of a call-center supervisor at Verizon in some remote part of the world. He was able to move forward with his bank financing because he could count on his local broadband network.
I offer this guiding principle for the broadband stimulus policy AND for future federal, state and local broadband policy:
No tax dollars for broadband infrastructure should go to absentee-owned networks, unless no local network is available for this taxpayer support.
Wally Bowen is executive director of the Mountain Area Information Network, a local Internet service provider based in Asheville, North Carolina. This article is adapted from his remarks at the panel presentation, “Broadband Stimulus: Diverging Views on How to Spur Broadband Investment.”