From education to accessible public spaces, fire departments and mass transit networks, many of the essential public services we rely on daily are provided by our local governments. A reliable and affordable Internet connection has become another essential public “good” as individuals and cities fight to keep pace with a harsh, fast-moving economy. The Internet is the 21st century equivalent of the transcontinental railroad, interstate highway system, Panama canal and public school and library systems all rolled into one. So why have we settled for a few private companies controlling how and where we get access and how much we pay? Local governments should build publicly-owned local broadband networks and issue bonds to borrow the money they need. This is the solution we've been looking for to provide affordable and equitable Internet access.
Why build your own network?
The Internet is the essential conduit for commerce, information and ideas, as well as a driver of economic growth and a shaper of culture. But in a system where corporate earnings guide decisions about where to run cables and build towers, not all Americans have equal access to the Internet. Ten percent of Americans—roughly 32 million people—have no broadband access (25 Mbps/3 Mbps service). But for rural populations, it’s about 39 percent.
For much of the 20th century, policies and regulations ensured broad access to the essential public services of the time. Interstate highways were intended to be toll-free, railroads were barred from using monopoly power to take advantage of the farmers who relied on them to transport their crops, and public schools and libraries were open to all who lived in the community whose tax dollars supported them.
The Internet, too, was originally funded by federal tax revenues through the Department of Defense, but today access is controlled by companies incentivized by profits to build broadband infrastructure in fast-growing and affluent markets, while avoiding customers in other parts of the country. Yet the government has shown no interest in putting pressure on these companies, or otherwise incentivizing them, to expand access.
The FCC has allocated $540 million this year to expand internet access, but the estimated cost of bringing broadband to all of the nation’s schools, libraries and health providers — not even every household (as the Clinton campaign promised by 2020 via public-private partnerships) — approaches $20 billion.
With the private sector and federal government unable or unwilling to provide the investment needed to provide broadband access to all, cities and towns must consider building their own broadband networks, just as they build other critical infrastructure like schools and libraries.
As Alex Shephard points out in the New Republic, Chattanooga built its own network and then experienced an economic boom. “Unemployment dropped, wages grew, and manufacturers—notably Volkswagen—moved to the city. “We know that the wage rise is linked to internet jobs and particularly the technology sector,” the city’s mayor told The Tennessean in 2016.”
Why leverage the power of public finance?
Waiting for state or federal funding, or entering into complicated private partnerships are not the only way forward here. Municipal bonds have successfully raised capital for infrastructure projects for more than 200 years. Landmarks from the Golden Gate Bridge in San Francisco to New York’s Public Library were financed with municipal bonds, and at least 8 municipalities and the U.S. Virgin Islands have issued bonds for financing broadband since 2000.
The municipal bond market is highly developed and gives communities the chance to tap into a much larger pool of investment capital than would otherwise be available, with their community members as the first investors.
And revenue bonds, unlike general obligation bonds, pledge network revenues to repay debt without necessarily placing additional burden on taxpayers.
The result is that local governments can raise the money they need when they need it from local investors, to build essential services that directly benefit the community. And when it comes to broadband networks, public ownership ensures that the best interests of the community are the only incentive.
I've advocated previously for the power of affordable Internet access to boost economic growth and equality, and now I’m excited to be here with the team at Neighborly — the public finance technology company modernizing the municipal bond market — where, among other exciting projects, we want to help cities fund and build their own broadband networks to protect themselves from the threat to the open Internet, boost local economies and open up opportunities for all residents.
If you’re interested in building a municipal broadband network, sign up here to learn more.