Nestled in the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) recently signed into law by President Joe Biden is the largest ever one-time federal investment in broadband infrastructure. At $65 billion, the funds designated for broadband constitute the biggest category of spending in the IIJA outside of transportation.
Though the federal government will be footing the bill, it will ultimately be state and local governments deciding how to spend most of the IIJA money earmarked for broadband through the $42.5 billion Broadband Equity, Access, and Deployment (BEAD) Program. This represents a significant departure from the roughly $85 billion total in previous federal broadband spending since 2009, which was almost entirely controlled by federal agencies, in that it shifts the locus of decision-making to the state and local level. To help policymakers maximize this opportunity, this analysis will explore the range of policies and practices state and local governments have implemented in recent years to expand access to, improve affordability of, and increase adoption of broadband, especially in rural and other underserved areas.
From think tanks and advocacy groups to NGOs and government agencies, calls for increased government funding for broadband infrastructure have abounded in recent years. The benefits of reliable high-speed internet are numerous and well-documented, including allowing students to attend school remotely, making it easier for job seekers to search for jobs, enabling patients to use telehealth services, and even increasing real per capita GDP. However, in spite of these benefits, over 30 percent of American households do not have broadband, and the digital divide—the gaps in access to the internet and other information technologies between certain groups of people—persists. Thanks to the COVID-19 pandemic, the necessity of broadband and the presence of disparities are more apparent than ever. Private sector investment alone cannot address these issues. To promote digital equity and inclusion, public sector funds, such as those offered in the IIJA, are crucial.
The Basics of Broadband
Types of Broadband
The Federal Communications Commission’s (FCC) definition of broadband is download speeds of 25 megabits per second (Mbps) and upload speeds of 3 Mbps. Broadband internet can be offered through fiber, cable, DSL, or satellite providers, and the quality and pricing of the service varies between the four. Fiber is the most reliable and offers download speeds of up to 10,000 Mbps, which with an average cost of $63 per month, tends to cost more than cable (average of $51 per month) and DSL ($47 per month). Cable offers a maximum speed of 1,000 Mbps while DSL and satellite offer speeds up to 100 Mbps.
Satellite internet is the most widely available and is often the only option in many rural areas. However, it is also the least reliable and the most expensive, with plans ranging from $70 to $150 per month, depending on the data cap. As mentioned in our previous blog, “Broadband Expansion and Coronavirus,” quality can be poor and service is prone to going out on windy days or during storms. Satellite packages also come with data limits, such as 10 gigabits or 20 gigabits per month. Once the account reaches its data usage cap, upload and download speeds slow to below the FCC standard.
Broadband Infrastructure: Last-Mile vs. Middle-Mile Networks
Last-mile networks are the part of the telecommunications network that connect local internet service providers (ISPs) to end-users such as homes and businesses. Middle-mile networks connect these local last-mile networks to the backbone of the internet, the network of large data routes that connect different regions and countries. Of the $65 billion in broadband funding in IIJA, only $1 billion are designated for grants to build middle-mile infrastructure.
State Policies for Promoting Broadband
While a multitude of strategies exists, state-level policies and initiatives surrounding broadband largely fall into five categories:
- creation of strategic plans, mapping initiatives, and broadband offices,
- funding and tax incentives to encourage investment by private internet service providers (ISPs),
- construction of publicly owned broadband infrastructure,
- rights-of-way laws and other efforts at enabling infrastructure access, and
- promoting broadband adoption and addressing affordability and awareness.
Between these five categories, all 50 states have implemented at least one policy that promotes broadband deployment, though some states have offered much more support than others.
Strategic Plans, Mapping Initiatives, and Broadband Offices
Collectively, strategic plans, mapping initiatives, and broadband offices allow states to effectively plan, design, execute, oversee, and evaluate the broadband programs and policies they pursue. Elements such as funding and legislation are important pieces of the puzzle when it comes to increasing access to, and adoption of, broadband. Yet, such policies can only go so far without an understanding of where there are needs, what those needs are, which stakeholders to engage, what practices to follow when designing and implementing a program, and how to measure success or failure.
Over two-thirds of states have developed strategic planning documents that outline strategies for expanding broadband access. These plans generally provide an overview of the current state of broadband in the state, define priorities and goals, and issue recommendations for how to deploy additional broadband infrastructure and increase access (see, for example, strategic planning documents in Delaware, New Mexico, Arizona, and Oregon).
… the Department of Transportation calculated that the average cost of laying fiber optic cable is approximately $27,000 per mile.
Numerous states have also undertaken mapping initiatives to identify locations where broadband is not yet available. Understanding where there are gaps in coverage is a crucial step in ensuring equitable access to broadband and bridging the digital divide. Though the Federal Communications Commission (FCC) maintains its Fixed Broadband Deployment Map, in 2019, it became clear that the map had inaccuracies that overstated broadband deployment across the country. Fortunately, some states are stepping in to fill the void. For example, in 2018, the Georgia legislature passed the Achieving Connectivity Everywhere (ACE) Act, which, among other provisions, prompted the state to create a map of where broadband access exists and where it is lacking. More recently, New York launched a mapping survey to examine the quality and availability of broadband across the state.
Thirty-four states have designated an office, task force, agency, council, or other related authority with the sole purpose of promoting and facilitating broadband deployment in their state. Many of these initiatives focus on deployment in rural areas. Though all state authorities have essentially the same goal, they differ in how they support achieving that goal. Some authorities are tasked with collecting data and evaluating the condition of the state’s broadband availability, quality, and/or affordability, as well as developing strategies to improve upon these metrics (such as Kansas’s Office of Broadband Development and the New York State Broadband Program Office). Many work to procure federal funding (such as the California Broadband Council and the Oregon Broadband Office), while others actively work with local ISPs through public-private partnerships (such as Michigan’s Collaborative Broadband Committee and New Mexico’s Office of Broadband Access and Expansion).
State Funding and Tax Incentives to Encourage Investment by ISPs
The upfront costs of building broadband infrastructure are significant. For example, the Department of Transportation calculated that the average cost of laying fiber optic cable is approximately $27,000 per mile. Because of these costs, private sector ISPs generally prioritize investments in areas with more potential customers where they are more likely to turn a profit. Meanwhile, areas that are more remote and less populated require greater investment and offer a lower rate of return on investment for private ISPs and are therefore more likely to go unserved. However, governments can encourage investment in these areas by subsidizing the upfront costs.
The most common type of state broadband initiative involves funding private ISPs (or, occasionally, utility cooperatives or local governments) to develop broadband infrastructure in rural and other under- and unserved areas. This is most often done through direct grants but is sometimes accomplished through loans, bonds, or tax incentives. In the case of grants, states will typically have ISPs apply for subsidies to offset the cost of building infrastructure assets, including conduit, fiber-optic cable, and wireless towers. Ordinarily, states only fund projects that will provide last-mile broadband service to households that lack access. Increasingly, states are instituting minimum speed requirements to receive funds.
Over two-thirds of states have developed strategic planning documents that outline strategies for expanding broadband access.
One prominent example is that of New York. In 2015, the state established the $500 million New NY Broadband Program, which offered grants to ISPs. Over the course of three phases, 53 grants were made totaling $487 million, which was supplemented by nearly $235 million in matching funds from private ISPs, resulting in a total investment of nearly $722 million. According to the New York State Broadband Office, nearly 90 percent of the funding was awarded to projects focused on developing broadband service in under- and unserved areas of the state, closing the gap between rural and urban areas and providing access to 98 percent of residents. The program stipulates that ISPs must provide internet at speeds of 100 Mbps in all but the most remote areas.
Another method of providing funding is through public-private partnerships wherein states (or sometimes county or municipal governments) and ISPs each contribute a portion of the costs. While in the direct funding model, private ISPs typically maintain operation and ownership of the infrastructure and therefore receive all of the profit and take on all of the risk, in most public-private partnerships, the control, risks, and potential benefits of broadband deployment are shared to varying degrees. The Benton Institute broke down the three most common public-private partnership models in a 2017 report.
In 2020, New Mexico entered a public-private partnership with ExxonMobil and Plateau Communications to fund a $5 million fiber network that now provides high-speed internet to businesses along a 107-mile span between the cities of Carlsbad and Jal. There are also numerous examples of public-private partnerships involving county or municipal governments, such as the partnerships between Westminster, Maryland, and Ting; Urbana and Champaign, Illinois, and iTV-3; and Huntsville, Alabama, and Google Fiber. In these and similar cases, it is common for the municipality to own some or all of the broadband infrastructure and then lease it to the private ISP to operate the broadband service.
Publicly Owned Infrastructure
A less common method states use to promote broadband deployment is funding publicly owned broadband infrastructure. The largest such project is KentuckyWired, a state-run network comprised of over 3,000 miles of high-speed, high-capacity fiber optic cable that reaches every county in Kentucky. In 2017, Kentucky ranked 47th in the country in broadband speeds and capacity, in part because it was too expensive for private ISPs to build out middle-mile infrastructure—networks that connect last-mile infrastructure to the greater internet—throughout the entire state. With KentuckyWired, the state sought to bridge the gap by building out its own middle-mile network, differentiating it from most other state-funded projects which usually target last-mile infrastructure. Through this design, private ISPs can connect their last-mile infrastructure to the KentuckyWired network to bring broadband to end-users.
Publicly owned and operated broadband infrastructure is more commonly done at the local rather than state level. This is a concept known as “municipal broadband.” There are also many hybrid public-private partnership models throughout the country wherein some or all of the broadband infrastructure is owned by a public entity but operated by a private ISP. Such “Public Infrastructure/Private Service” models are more commonly found among counties and municipalities— such as those listed in the previous section—than among states.
Rights-of-way Laws and Infrastructure Access
Another method states use to facilitate broadband expansion is lowering the barriers to the construction of the necessary infrastructure. Among the most common of these methods are rights-of-way (ROW) laws or regulations, which grant ISPs the ability to build broadband infrastructure on property that is publicly owned. For example, a recently passed law in Arizona allows the state’s director of transportation to lease the areas above or below state highways. Thirty states have ROW laws or regulations of some kind.
ROWs often come in the form of “Dig Once” laws. The FCC has determined that the single biggest cost for building broadband infrastructure is the process of digging and burying fiber optic cables and conduit underground. According to the Federal Highway Administration (FHWA), “ninety percent of the cost of deploying broadband is when the work requires significant excavation of the roadway.” Dig Once laws allow or require highway construction projects to coordinate with broadband providers to give them the opportunity to lay fiber and conduit during the construction of a road or other infrastructure. This cuts down both on costs and deployment time as it means broadband providers do not need to acquire duplicative permits or reviews. As IIJA-funded construction begins on traditional infrastructure, such as roads, bridges, and water pipes across the country, Dig Once laws present a unique opportunity to expand broadband infrastructure at minimal cost and maximum efficiency at a larger scale than ever before.
Beyond ROW, states have implemented a broad range of other ways to ease the financial and logistical burdens of building broadband infrastructure. For example, many states have codes relating to pole attachments, such as Maine, which has a law that requires the owners of equipment attached to shared-use poles—such as telephone and electric utilities—to cover the cost of moving their equipment to make space for the addition of municipal broadband service to unserved or underserved areas.
As IIJA-funded construction begins on traditional infrastructure… Dig Once laws present a unique opportunity to expand broadband infrastructure at minimal cost and maximum efficiency at a larger scale than ever before.
Promoting Broadband Adoption
While most state-led efforts have focused on increasing broadband availability, availability is only part of the equation for ensuring that people can access the internet. The other part is broadband adoption, traditionally defined as residential subscribership to high-speed internet access. According to the FCC, as of 2019, the most recent year for which there are data, 95.6 percent of the overall population had coverage of fixed terrestrial broadband that met the FCC’s 25/3 Mbps standard (though this figure is widely believed to be overstated), yet the broadband adoption rate was only 69.4 percent of households. Common reasons for not adopting broadband include affordability, lack of awareness, and lack of digital skills.
Some states, in addition to promoting broadband deployment, have also implemented initiatives promoting adoption, especially among rural and low-income populations. New York, for example, passed a law in April 2021 requiring ISPs to offer a $15 per month broadband plan to low-income New Yorkers. This would be similar to the minimum low-cost packages phone companies were required to offer in exchange for being granted monopoly rights. However, this law is currently being challenged in court.
California’s Broadband Adoption Fund, meanwhile, aims to help communities with limited broadband adoption through grants geared toward building publicly available broadband and promoting digital inclusion, digital literacy, and public education. At the local level, Lincoln, Nebraska, leverages its partnership with Allo Communications to offer qualifying low-income users high-speed internet access for $10 per month through a local government subsidy that is matched by Allo.
Other Regulatory and Legislative Efforts
In addition to the kinds of policies listed above, many states have instituted a variety of miscellaneous laws and regulations designed to promote the expansion of broadband and increase access. For example, 16 states have laws that facilitate the provision of broadband by cooperatives—nonprofit member-owned organizations that provide broadband to their members for a small fee.
Some states aim to promote broadband by reducing the regulatory burden that providers face. Over 20 states exempt broadband providers from being regulated by their public utility commission or other state regulatory agencies. Similarly, states such as Arkansas and Florida limit the kinds of regulations local governments can place on providers. These policies are implemented with the belief that easing the regulatory burden and speeding up the approval process will encourage private ISPs to invest in broadband deployment in these areas.
Other states, however, take the opposite approach, placing additional regulations on private ISPs with the expectation that increased oversight will lead to wider access to broadband and improved service for customers. Most notably, in the wake of the FCC repealing net neutrality—the idea that ISPs must treat all data on the internet the same—at the federal level, nine states passed legislation or issued executive orders ensuring net neutrality while five others have similar legislation or resolutions pending and 21 others have proposed similar legislation that has yet to pass.
Though most broadband-related legislation and regulation is in support of expanding access, there is one notable exception: municipal broadband restrictions. Currently, 17 states have legal restrictions on public entities such as municipal governments that prevent them from providing broadband while five others have more limited restrictions.
In part thanks to policies such as those included in the five categories discussed above, broadband access and adoption have increased dramatically in recent years. However, there is still a long way to go to reach the level of connection the United States needs to address the digital divide and thrive in a modern economy. As state and local governments begin receiving funds from the IIJA, it behooves them to look to their counterparts to see which policies have been effective under particular circumstances. While there is no one-size-fits-all method, there are a panoply of options and abundant data on which to draw, so states need not start from scratch.
ABOUT THE AUTHOR
Kevin Schwartzbach is a graduate research assistant at the Rockefeller Institute of Government