John Locke Update / Research Brief

Rural broadband expansion needs policymakers to clear the way for private enterprise

posted on in COVID-19 Series, Economic Growth & Development, Economics, Government Reform, Law & Regulation, Rights & Regulation
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  • Growing reliance on high-speed broadband in the wake of the COVID-19 pandemic has heightened the divide between urban and rural communities over broadband access
  • Such an obvious societal need signals opportunities for human ingenuity in the private sector
  • North Carolina legislators should continue to focus on removing regulatory barriers to enable more rapid expansion by broadband entrepreneurs

Government directives and people’s choices amid COVID-19 have fast-tracked the American reliance on high-speed broadband. Work from home, remote learning, and telemedicine are three big examples of this transition. At the same time, this greater reliance on broadband has heightened the rural/urban divide.

Broadband access is a greater challenge for rural areas. There are fewer providers, fewer choices, and less access to high speeds (and in some places, none). These differences prompt worries that people, patients, and students in underserved rural areas could get left behind.

North Carolina’s leaders should keep the focus on clearing the way for private enterprise. They should especially seek to avoid cronyism; i.e., having the government picking corporate winners and losers. It’s a common pitfall when there is an obvious societal need such as rural broadband and lots of well-intentioned people wanting it solved as quickly as possible.

The fact that it is an obvious societal need means also that enterprising people are already working on ways to meet it. An obvious societal need is also a business opportunity. Human ingenuity is our ultimate resource. State policymakers should be careful not to frustrate it by stifling opportunities through government intervention, however well-intended.

This dynamic is true in general, but it is especially true in such a fast-paced field as technology. Government entanglements are slow-footed, and in terms of rural broadband it could risk getting state (or local) money deployed in soon-obsoleted service provision. Then it would amount to a waste and little practical good.

The good news is that North Carolina is relatively well positioned to bridge the rural broadband gap. Over 95 percent of North Carolina has at least three providers of 25/3 megabits per second speed, according to the most recent FCC data, while the rest had two providers). But at higher speeds (100/10 mbps or more), 6.4 percent lacked any provider, and while over 93 percent had access to at least one provider of higher speeds, for about half of them it was their only choice.

Still, the R Street Institute’s most recent Broadband Scorecard Report for the states awarded North Carolina a B+ grade. The scorecard ranks states on a broad range of laws concerning broadband deployment, including right-of-way access, zoning to construction permits, franchising, etc. North Carolina scored higher in this scorecard than 30 other states.

R Street’s advice to North Carolina policymakers was that “North Carolina should focus on wireline broadband construction and establish a fee cap for franchises. These steps will help with the deployment of wireline infrastructure to balance out the great work the state has done on wireless.”

Part of that work was a major regulatory reform passed in 2019. Among other things, Senate Bill 355 made several reforms to help promote and further the provision of mobile broadband and wireless telecommunications services. The law encourages the collocation (when new equipment is placed on existing structures) of wireless support structures and sets time and fee limits on their permitting by local governments, and it also places strict limits on how cities can regulate the collocation of small wireless facilities. It furthermore forbids cities from entering into exclusive arrangements “for use of city rights-of-way for the construction, operation, marketing, or maintenance of wireless facilities or wireless support structures or the collocation of small wireless facilities.” These include utility poles, conduit, cable, and related facilities.

Also passed in 2019, Senate Bill 310 removed state impediments to electric membership corporations from being able to participate in a federal rural broadband grant program. The law allowed them to apply for federal grant funding to install broadband infrastructure along their easements and rights-of-way in order “to connect rural areas that currently have insufficient broadband service.”

In November of 2020, the NC Department of Transportation (DOT) and the Department of Information Technology (DIT) finalized a state “Dig Once Policy” to expand high-speed broadband access during state road projects. This policy was prompted by a 2019 directive from Gov. Roy Cooper.

As explained by R Street, a “dig once” policy would

require that all broadband providers receive public notice prior to any excavation in public rights of way. This allows multiple providers to access an excavated right of way during a single dig, increasing the efficiency of deployment and minimizing the disruption of traffic flows.

The idea of the policy is to give any interested broadband provider notice of a “joint-trench opportunity” whenever an internet service provider (ISP) notifies the DOT that they intend to use conventional open trench construction to build new or relocate existing facilities within the limits of a state highway. The ISP would advertise this opportunity for at least two weeks, and any interested other broadband provider could join in.

One other program bears mentioning here, because it was at the center of controversy as 2020 closed. The Coronavirus Relief Act 3.0 (House Bill 1105) appropriated $30 million from the federal Coronavirus Relief Fund to supplement the “Growing Rural Economies with Access to Technology” Fund created by the General Assembly in 2018. On Nov. 20, lawmakers learned that the Office of State Budget and Management had nevertheless canceled over $30 million in grants for rural broadband projects that had attracted more than 70 applicants, and they wrote a letter to Cooper demanding to know why.

Locke fiscal policy expert Joe Coletti explained the controversy in Carolina Journal and then drew an object lesson worth paying attention to:

Since Cooper has no apparent incentive to divert the GREAT appropriation, the controversy may be simply a case of confusion and incompetence. The budget office was slow to create the Pandemic Response Office and get it staffed. Although every conversation with Congress and the federal executive branch have indicated states and their vendors needed a good-faith effort to complete the work on time, Cooper’s team decided to take a strict reading late in the process and call off contracts with almost no time left to adjust.

This issue highlights why the John Locke Foundation and Civitas joined with 27 other state-based think tanks seeking more flexibility from Congress to states for how they could use the Coronavirus Relief Fund (CRF). We feared that states would use CRF money for less valuable purposes [than offsetting lost tax and fee revenue or providing one-time tax relief to individuals and businesses] that would then create obligations for state funds. An example would be planning a massive broadband investment that the state would then fund by issuing bonds, such as Cooper has proposed.

Going forward, where policymakers can help is by clearing the path for the enterprisers, and that is where our policymakers have recently done some good. Promoting trench-sharing, collocations, and small wireless facilities and also forbidding exclusive arrangements for use of city rights-of-way are good examples of eliminating obstacles without playing favorites.

They should stay focused on removing regulatory roadblocks, easing permitting, and otherwise letting the private sector flourish in wireless and wireline broadband provision.

Jon Sanders is an economist studying state regulations, that spreading kudzu of invasive government and unintended consequences. As director of regulatory studies and research editor at the John Locke Foundation, Jon gets in the weeds of all kinds of policy… ...

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