The challenge of providing fast broadband
Efforts by government to increase access to broadband is primarily focused on extending infrastructure. While one community may have high speed internet access provided by private industry, another may lack it entirely. As a result, the promise of providing fast broadband internet access to rural and other underserved communities remains an alluring political idea.
Some states have taken action already to curb potential overreach. For example, in Michigan the law limits the ability of municipalities to create broadband delivery systems.
Providing Fast Broadband in Michigan
The conditions for government operated broadband are narrow in Michigan. This was intentional. Communities can only get start offering services from a government owned broadband system when:
- they cannot get any private industry internet providers
- when they can prove they can deliver high speed internet for less without taxpayer subsidies
However, a good number of municipal owned broadband systems are in development in Michigan. Many don’t appear to meet these requirements. For example, several are in areas with more than one private internet provider.
Why is this the case? Additionally, how are they doing on the promise of providing access to fast broadband? The Michigan Capital Confidential set to find out. As a result of their reporting, they discovered academic research on the topic.
2019 Study by ISEG Executive Director Cited
On July 16 2020, Dr. Ted Bolema, Executive Director of the Institute for the Study of Economic Growth (ISEG), had a recent study cited in the story “Michigan Cities Getting Around State Ban On Risky Internet Projects: Study Finds Local Governments Tilting the Scale Their Way” by Parker Thayer in the Michigan Capitol Confidential.
“The government projects are usually promoted with overly optimistic cost and revenue estimates, and they claim to be more efficient than commercial vendors. The reality is often very different, though, as the study by Theodore Bolema at the Institute for the Study of Economic Growth at Wichita State Universities shows. Before taking his current position as the institute’s director, Bolema spent years studying government regulation of regional utility monopolies. Bolema is also a member of the Mackinac Center for Public Policy’s Board of Scholars.
In addition to using overly optimistic scenarios, Bolema writes, municipal broadband planners often fail to account for the negative impact of government regulations on private sector competitors. Moreover, some less-efficient local government broadband services sell their service for less because they are exempted from regulations commercial providers cannot escape.”