$7 million per household for broadband?!

July 13th, 2011 by 1 Comment

A new study criticizes the Broadband Initiatives Program (funded by the 2009 federal stimulus plan) for subsidizing the construction of duplicative broadband networks and imposing high costs on taxpayers while placing private sector providers at a competitive disadvantage.

Nick Schulz, a fellow at the American Enterprise Institute, writes in Forbes

“No one is against expanded access to broadband. And in rural areas especially, where there might be less market incentive to provide access, maybe there’s a role for government to play. The question for prudent policymakers is how much such a project should cost and who should bear the cost. Surely there is some price that’s too high to justify expanding access.”

Discussing the findings, Schulz says, “So how much did it cost per unserved household to get them broadband access? A whopping $349,234, or many multiples of household income, and significantly more than the cost of a home itself.”

He adds, “Sadly, it’s actually worse than that. Take the Montana project. The area is not in any meaningful sense unserved or even underserved. As many as seven broadband providers, including wireless, operate in the area. Only 1.5% of all households in the region had no wireline access. And if you include 3G wireless, there were only seven households in the Montana region that could be considered without access. So the cost of extending access in the Montana case comes to about $7 million for each additional household served.”

[We mentioned this study in an op-ed in the Atlanta Journal-Constitution in May.]

One thought on “$7 million per household for broadband?!

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