Broadband Stimulus Spending ‘Unnecessary and Wasteful’

Published April 1, 2009

The stimulus package President Barack Obama signed into law in February includes a $7.2 billion expenditure intended to increase broadband access across the United States.

The new law requires the National Telecommunications and Information Administration to create a Broadband Technology Opportunities Program to award $4.7 billion in federal grants to high-speed Internet providers for build-out on a competitive basis. The remaining $2.5 billion will go to the Department of Agriculture’s Rural Utilities Service.

Spending Called Wasteful

Cord Blomquist, senior communications director for the Competitive Enterprise Institute in Washington, DC, says the enormous public investment is unnecessary and wasteful.

“[We are] giving out money in the name of expanding the number of people using broadband Internet connections, but it’s hard to see how the supposed stimulus will do that,” Blomquist said. “The problem with this approach is that many people in rural areas choose not to use the broadband options already available to them, while those without options may not be helped because [they don’t fit] the criteria being used to dole out the stimulus dough.

“Even if the money were doled out efficiently, however, this sort of spending is ultimately wasteful,” Blomquist said. “Spending billions on laying wires in sparsely populated rural areas will only crowd out more efficient solutions, like advanced 4G wireless technologies, Wi-Max, and even optical data transmission.”

Tracking the Money

The Obama administration has set up a Web site,, where the public can track how the money in the stimulus bill is spent. Blomquist is skeptical the site will contain enough information to be of much value.

“We’ll see where the dollars are going, but we likely won’t know about specific broadband projects, or what those dollars are really doing.” Blomquist said. “I have less faith in than I have in the private sector acting on its own.

“Even the best transparency and accountability in government is no match for how the free market holds companies to account,” Blomquist said. “We’ll likely see billions of dollars lost in the shuffle over the next several years.”

James G. Lakely ([email protected]) is a research fellow at The Heartland Institute and managing editor of Infotech & Telecom News.