Federal telecom infrastructure funding initiative needed

The American Recovery and Reinvestment Act of 2009 appropriated $4.7 billion in grant and loan funding to support the construction of Internet telecommunications infrastructure. Most of it has gone toward middle mile infrastructure projects to bring fiber backhaul closer to homes and businesses. But it was only a drop in the bucket relative to the need. What’s needed now is last mile infrastructure to link the middle mile to these premises.

According to the Institute for Local Self Reliance, nearly 400 communities in the United States have local telecommunications networks, many providing fiber connections to premises. That’s critical to the nation’s future given that legacy incumbent telephone and cable companies aren’t upgrading their metal wire networks to fiber notwithstanding the burgeoning growth in bandwidth demand and the availability of federal and state government subsidies.

Those 400 community networks represent a good start. But other communities won’t be able to follow them unless state laws restricting them are repealed (shown in red on the ILSR map) and there is substantial, relatively unrestricted funding to help them. A likely consequence is these 400 community networks will end up as one off builds, leaving the rest of America to the tender mercies of the incumbents who lack incentive to build out and upgrade given that costly telecom infrastructure is a natural monopoly.

In the wake of the severe recession at the end of the last decade, local governments are still struggling financially and can’t easily fund these projects on their own. A recent survey by the National Association of Counties found only one in 50 U.S. counties has fully recovered economically since the start of the recession in 2007. The federal government should step up with an expanded telecommunications funding program to build on the ARRA stimulus funding. It should include technical assistance grant funding to help communities plan fiber to the premise network infrastructure as well as grants and loans to help finance their construction. In the end, it would likely prove to be a good investment, generating taxable economic activity to defray the expenditures.