Is broadband in Minnesota a public good? What is the public cost of not having broadband?

There’s an interesting editorial in the Minneapolis Star Tribune this weekend addressing broadband as a public good. Here’s what he said about broadband…

An economic case for subsidizing broadband isn’t even as strong as organized garbage collection, although the electric utility analogy comes into play here, too. Fast internet access isn’t a nice-to-have, advocates say, it’s a must-have like the electricity it takes to run a refrigerator or keep the lights on.

Here the problem is not too many competitors going after the same lucrative customers, and eliminating the risk of competition by forming local monopolies. It’s having so few potential customers in sparsely populated areas that no company can justify the capital investment.

This summer, crews have been building out a project in Itasca County paid for in part with a $1.98 million state grant announced last year. Having fast internet service will be a godsend for the potential customers in the area — all 1,255 of them. Just the state portion of the project alone works out to nearly $1,600 for each.

I may have missed it when I went looking through the list of “market failures” published in my handy economics reference book, but it was hard to come up with one that seemed to apply here. It could be as simple as the local provider correctly assumed customers in a low-density area wouldn’t pay what it would really cost to bring broadband there.

Twin Cities taxpayers could probably be talked into supporting initiatives such as this one if they understood that the median household income is about $47,000 in Itasca County, as of the latest estimate.

That’s only a little over half what it was in metro counties like Washington County, east of St. Paul. Of course, affluent areas think they need the taxpayers’ help, too, as Washington County municipalities had applied last year and were disappointed not to get it.

Installing broadband is expensive. But from a public perspective I think we have to ask – what is the cost of not deploying broadband in rural areas?

What will happen to the communities without broadband? Will people move there? Will people stay there? How will a town prepare students for jobs of the future when they have limited experience with broadband? Who would start or keep a business there? And what about residents who will not be able to take advantage of telehealth options? (Research shows impressive cost saving and improved delivery of services with telehealth.)

It might be case of – you can pay me now or you can pay me later – when it comes to public investment.

This entry was posted in MN, Policy by Ann Treacy. Bookmark the permalink.

About Ann Treacy

I have a Master’s Degree in Library and Information Science. I have been interested or involved in providing access to information through the Internet since 1994, when I worked for Minnesota’s first Internet service provider. I am pleased to be a part of the Blandin on Broadband Team. I also work with MN Coalition on Government Information, Minnesota Rural Partners, and the American Society for Information Science and Technology.

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