Biden administration’s infrastructure initiative must reorder roles and responsibilities for advanced telecommunications

If the United States is to rapidly modernize its outdated copper telephone infrastructure to fiber optic lines reaching every American doorstep – the need for which became painfully apparent with pandemic public health restrictions that turned homes into offices, classrooms and clinics – it’s imperative the Biden administration’s infrastructure revitalization initiative reallocate roles and responsibilities in order to make that happen.

A major impediment has been expecting too much of legacy telephone companies. For the past three decades, advanced telecommunications policy has placed the burden on them to do it all: own, finance, design, build and operate. They simply lack the capacity to take on all five functions, even with subsidies to make financing easier. Subsidies haven't worked because unlike legacy voice telephone service where companies must provide connections to all homes requesting them, there is no regulatory incentive to utilize them.

Infrastructure requires billions of dollars. Investors in these companies aren’t willing to make those major investments unless they generate returns in five to six years. That limits them to dense urban and suburban neighborhoods and greenfield and multifamily developments, leavings others unfibered for the foreseeable. These companies also have highly leveraged balance sheets that limit their ability to finance construction even if their investors were more favorably inclined and willing to wait longer for financial paybacks or accept lower shareholder dividends.

These circumstances demand a reallocation of the five functions between the public and private sectors to get the nation to where it needs to be in the 21st century of digital, Internet protocol powered advanced telecommunications. The public sector and utility consumer cooperatives will have to take on finance and ownership and leave it to the investor-owned companies to do what they can reasonably be expected do and do best: design, build and operate -- and not own and finance. As the Biden administration introduces its proposed infrastructure revitalization program, this reordering of roles and responsibilities will be an essential component.