Government-owned networks represent an attempt to expand Internet access, but delivery comes up short. Those concerned with unequal connectivity should consider the failing track record of government compared to private networks. Thankfully, there’s more than one way to meet Internet needs. The government can address connectivity inequality by allocating additional spectrum for 5G expansion.
As the name implies, government-owned networks (GONs) are publicly funded broadband networks. Supporters of government intervention in broadband to this extent believe broadband is a public good that the marketplace has failed to adequately provide. Agencies such as the World Bank lend their support to government sponsorship by classifying broadband as vital infrastructure necessary for economic growth and echoing the belief that the marketplace has failed to sufficiently provide the service.
In the U.S., broadband access is close to universal, with 94 percent of the population being served. However, this figure isn’t the same across all portions of the population. In rural areas, almost a fourth of the population lacks access. Tribal areas reach almost a third of the population without access. For specific communities, access is a problem, but government plans far exceed actual shortcomings in the marketplace.
This year a total of 43 states plus the District of Columbia and Puerto Rico have either pending or enacted legislation to expand broadband support. The Infrastructure Investment and Jobs Act included an additional $65 billion for broadband funding. Previously, $7 billion for broadband was appropriated through the Consolidated Appropriations Act, and the American Rescue Plan Act included $350 billion in funding to state and local governments for infrastructure including broadband.
The COVID-19 pandemic demonstrated the importance of networks while highlighting the overall success of the current system. The pandemic dramatically expanded network use. Previously, the average annual growth rate was 30 percent, which was surpassed in just the first two months of the pandemic when growth expanded by 38 percent. During this time, the U.S. outperformed other countries with broadband download speeds 150 percent higher than the global median and mobile broadband speeds 70 percent higher than the global median.
The success of U.S. networks during the global pandemic was largely due to private providers. According to Leichtman Research, the top broadband companies provide internet to almost 110 million subscribers. Given the current estimates of almost 124 million households in the U.S., private providers did much of the heavy lifting during the pandemic.
The success of private companies combined with the historical failures of GONs should give pause to those wishing to expand the government’s role.
One noteworthy GON failure occurred in Provo, Utah in 2004. The government put up $39 million in bonds to cover the cost of the network, but in 2011 the city still had to add fees to electric bills to make the bond payments. Google eventually stepped in and bought the network for only $1 with the agreement to provide residents with free 5mbps internet for 7 years. Despite the sale, the taxpayers were left on the hook for $3.2 million in bond payments.
The government’s historical failure to run successful networks, combined with the necessity of secure networks, should make consumers and lawmakers seriously consider whether the government is up for the job. The SolarWinds cyber-attack from Russia that infiltrated federal agencies and went undetected for months has highlighted the need for secure networks. Placing the government in charge of monitoring and protecting networks when it struggles to even attract sufficient customers to make the networks cost-effective is ill-advised.
Instead of stepping in to provide networks, an alternative pathway for the government is to free up existing areas of the spectrum so that private providers can expand 5G networks to currently unserved communities. This could occur on two fronts: either the Federal Communications Commission (FCC) could allocate unused spectrum to be auctioned for 5G purposes or Congress could draft legislation reauthorizing the FCC’s auction authority and include a mandate that spectrum be allocated to 5G. Either of these pathways would address communities without connectivity without repeating past failures of GONs.