The federal government has awarded two Illinois counties $11.9 million to deploy a 130-mile fiber network, a move industry insiders suggest could ultimately crowd out private broadband investment.
The National Telecommunications and Information Administration (NTIA), one of two federal agencies in charge of dispersing “broadband stimulus” money from the Recovery Act President Obama signed last year, awarded the grants to DeKalb and LaSalle counties in the suburbs west of Chicago in February.
The network, says the NTIA, will provide high-speed Internet connections to at least 60 anchor institutions, such as schools, hospitals, libraries, public safety entities, and numerous government agencies.
“The level of interest in this program has been extraordinary, and is yet another indicator of the critical role broadband plays in achieving durable, sustainable economic growth,” said Lawrence E. Strickling, NTIA administrator and assistant secretary for communications and information, in a statement.
Grants Called a Mistake
As excited as those county governments must be to receive these grants, such programs can end up distorting the broadband market, says Randy Skoglund, executive director of the Washington, DC-based Americans for Technology Leadership.
“Technology companies have spent billions of dollars investing in the infrastructure that powers the powerful devices and applications we use,” Skoglund said. “When the government comes in and builds networks, we must be very careful that we are not discouraging private investment.
“Government should not be in the business of a broadband lottery that chooses winners and losers,” he added.
Seen as Unnecessary
“Taxpayers are best served when companies compete in the marketplace,” Skoglund said. “Local agencies should be able to let private companies compete for the business.”
Bartlett Cleland, director of the Lewisville, Texas-based IPI Center for Technology Freedom and the Institute for Policy Innovation, agrees.
“The big opportunity here that the [federal government] and local officials have missed is that there is a demand problem” in these counties, Cleland said. “If there was enough demand, this would have been rolled out by the market already.”
Trying to Create Demand
It’s a chicken-and-egg situation, Cleland said.
“If you put more functions online, people will want to be able to have the broadband access,” he said. “This will bring in providers to build the system. This plan looks like government will be the main customer. That’s upside-down from the way government should work.”
Local governments tried to spur broadband projects on their own but have largely failed due to poor service and lack of demand, he notes.
“Historically, those municipal projects that deal with Internet infrastructure, whether it’s wi-fi or fiber lines, it’s been a mixed story on the success of those networks,” said Scott Testa, professor of business administration at Cabrini College in Philadelphia. “Someone sees value in wider pipes and sees it as a good investment of the government’s money.
“Sometimes it is, but often it’s handled better by private infrastructure,” he added.
Phil Britt ([email protected]) writes from South Holland, Illinois.
