‘Connect Ohio’ Commits Bucks to Broadband

Published August 1, 2008

With the launch of the ambitious Connect Ohio initiative and the inclusion of language authorizing up to $80 million in public funds for broadband deployment in a state economic stimulus package, Ohio taxpayers are spending significant sums to bring broadband connectivity to the whole state.

Policy analysts, however, are unconvinced the program will fill a real economic need.

Connect Ohio, slated for completion at the end of June, was proposed by Gov. Ted Strickland (D) during his 2006 campaign. With $2.9 million a year in taxpayer funding, it is a public-private partnership to map out broadband access in the state and evaluate how technology is being used by the public. The stated goal is to use this information to spur private entities to invest in the areas lacking broadband service.

In addition to Connect Ohio, the state also has allocated funding for direct broadband development. As part of a $1.6 billion economic stimulus package signed into law on June 12, the General Assembly approved language that would allow the Ohio Public Works Commission (OPWC) to allocate up to $80 million to support broadband initiatives. The legislation establishing Connect Ohio was signed into law on December 17, 2007.

Local Control Allowed

State Sen. John Carey (R-Wellston) spearheaded the drive to include the broadband language in the stimulus bill. “I don’t think we could have done a jobs stimulus bill without addressing the broadband issue,” he said.

The language in the bill authorizes OPWC to use taxpayer money from Ohio’s Local Infrastructure Development Fund for “broadband initiatives.” OPWC and Connect Ohio are tasked with developing language to implement the funding. Carey said his intent is that local public works commissions will determine how they will use this money, either for grants or loans.

The funds are not intended to be used to compete with the private sector, Carey says. Language included in the stimulus legislation prohibits the local commissions from doing so. Presumably this means projects funded through the Local Infrastructure Development Fund could be placed only in areas currently lacking broadband service.

Real Needs Unknown

How extensive this lack of broadband is in Ohio is unknown. The Connect Ohio initiative is planning to release a state map of broadband coverage in late June–it was not available at the time the stimulus package was approved.

Carey acknowledges there were no studies indicating how many areas of the state actually lack broadband. Being from a rural district, though, he says, “Broadband access is probably one of the top five issues I hear from constituents about.”

Carey says other legislators have had the same experience, and that this is what drove the inclusion of the broadband language in the stimulus bill.

No Market Failure Identified

The lack of information about the extent of broadband deployment in the state puzzles some observers. Donald Alexander, Ph.D., an economist teaching at Western Michigan University who has studied government broadband efforts for the Mackinac Center for Public Policy, questions the need for government broadband ventures. “Where is the market failure?” he asked.

Alexander notes his study of government broadband programs found they were unnecessary because the pace of private broadband deployment was following the basic, normal business pattern: More profitable areas received it first, followed by less profitable areas. “There is no need for additional stimulus,” he concluded.

A 2006 study released by the Ohio Telecom Association noted about one-third of Ohio homes had broadband service. And while there are no concrete numbers about how many homes have such service today, the number has almost certainly increased in the past two years.

From 2003 to 2006 the number of high-speed Internet subscriptions had tripled, and 28 percent of those surveyed in 2006 who did not have broadband indicated they would obtain it within a year.

Tradeoffs Cited

Although some areas–such as rural locations very far from more-populated areas–may be unprofitable to reach with broadband, Alexander notes this is simply part of the tradeoff for living in such an area. “People in rural areas have less access to stuff they claim they need,” he points out. Although rural areas are short on facilities such as retail outlets, gas stations, and restaurants, governments are not establishing programs to subsidize their creation, Alexander notes.

Maggie Thurber, a former commissioner in Lucas County, Ohio and current radio talk show host who monitors Ohio government on her blog, Thurber’s Thoughts, agrees with Alexander’s skepticism. “If government is going to get into the role of providing something already offered by the free market, then government is getting into the role of competing with private providers. It’s unfair competition.”

Thurber said, “Even if everyone agrees with the conclusion that this is the proper role of government, is this the highest priority government should have?” Noting the other problems facing Ohio, she asked, “Is this the most effective use of taxpayer dollars?”

Thurber does not see Ohio’s real problem as being the lack of broadband in some rural areas. Instead, she said, “The real problem is the unfriendly business environment in Ohio.”

Marc Kilmer ([email protected]) writes from Columbus, Ohio.