Bluegrass Beacon: Private broadband investment key to sturdy long game
By JIM WATERS
President, Bluegrass Institute for Public Policy Solutions
Friday, Sept. 4, 2020 — The pandemic cursing our globe also reveals the fruit of tremendous blessings produced by the private sector’s $1.7 trillion investment in the nation’s broadband networks over the last 20 years, which US Telecom dramatically asserts has brought most Americans access to high-speed internet.
Hundreds of millions of Americans were suddenly able to work and learn from home, visit their healthcare provider without going to a doctor’s office and video chat with family and friends across the globe.
Critics of free-market broadband policy want to make the entire narrative about what remains undone.
They hope to convince policymakers that private-sector providers cannot be trusted to bring high-speed broadband to unserved or underserved areas because they’re driven by profit rather than more-altruistic motivations.
Yet it’s the incentive to remain profitable and open for business that requires private providers to stay ahead of the game when it comes to emerging technologies and how best to meet broadband needs not only today but in the future.
Government can effectively address the digital divide by remaining in its lane – recognizing that it’s the private sector which knows how to bring more, better and faster broadband to the commonwealth while driving policy to remove barriers keeping still too many from the blessings of connectivity.
Lexington leadership has demonstrated what an effective municipal broadband policy looks like.
When there was a demand for more and better service, former Mayor Jim Gray and other policymakers in 2017 made a crucial decision to work with MetroNet, a private company.
Lexington rightly avoided the failed policies often chosen by other cities diving in to building and operating their own networks, for which government is ill-equipped and has a poor track record when attempting.
Instead, MetroNet invested $75 million and recently completed installing more than 4 million feet of fiber-optic lines in Lexington providing the city with the fastest-possible internet service.
In a policy brief analyzing obstacles to more – and more effective – private-sector investment in internet infrastructure, Margaret Mire at Americans for Tax Reform addresses several issues which should be in Kentucky’s crosshairs, including eliminating sales taxes for capital expenditures involving wireless, wireline and cable network equipment and facilities.
Telecom companies’ investment in the equipment needed to build and boost broadband in Kentucky would increase by $100 million in just the second year after eliminating the tax, according to a study published by the Broadband Tax Institute.
Freeing up $100 million could provide significant resources for bringing high-speed internet to, say, the mountainous, unserved areas of eastern Kentucky.
Legislation removing this tax gained traction during this year’s legislative session before COVID-19’s arrival.
There should be widespread support for its return when the General Assembly reconvenes in January to consider another one-year budget.
Not only is the idea backed by a solid coalition, including the state, Louisville and Lexington chambers of commerce, but changing scenarios engendered by the coronavirus – including thousands of students beginning this school year online, as they ended the previous term – make any policy encouraging more investment in the commonwealth’s internet infrastructure a no-brainer.
Adding to the urgency is the fact that all our neighboring states offer some type of sales or property-tax refund, which will continue to draw investment by private telecom companies away from the Bluegrass State.
Gov. Beshear’s administration is implementing temporary measures to help address the digital divide, including designating $8 million in COVID-19 relief funding to assist low-income families with children who don’t have internet access – an especially tenuous situation since many schools are beginning this year’s instruction online.
But sufficiently meeting Kentucky’s broadband needs also requires a long game.
Removing tax-and-regulatory burdens will encourage the type of increased private-sector investment to close – and keep closed – the digital divide long after COVID’s curse has lifted.
Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.
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