Study argues rural broadband stimulus wasn't effective

Stimulus funds aimed at expanding rural broadband service are not cost effective and often subsidize duplicative coverage, according to a study from Navigant Economics.

The 2009 Recovery Act included more than $7 billion in broadband subsidies including $2.5 billion allotted to the USDA's Rural Utilities Service. Navigant economists Jeff Eisenach and Kevin Caves analyzed three projects that received $231 million of those funds and found the funds were often used for areas already served by one or more broadband providers.

“The projects we analyzed show the RUS has continued its practice of subsidizing the deployment of overlapping broadband infrastructures, an approach the FCC has concluded would more triple the cost of providing nationwide ubiquitous broadband coverage," said Eisenach, managing director at Navigant.

"As we conclude in the study, this program is ‘not a cost-effective means of extending broadband coverage to un-served households.’”

Eighty-five percent of the households in the three project areas are already served by cable, DSL or fixed wireless broadband providers. The pair argue that when existing mobile wireless coverage is taken into account, the $231 million brought service to just 452 households that currently lack broadband service.

The three projects in question involved $101.2 million in stimulus funds for a 4,247 square mile area of northwest Kansas; $66.4 million for a 2,765 square mile area in Lake and St. Louis counties in northeastern Minnesota; and $64.1 million for a 154 square mile portion of Gallatin County in southwest Montana.

The pair argues the government's policy of ignoring wireless broadband coverage is flawed, especially because next-generation wireless broadband speeds should exceed the benchmarks for standard wireline broadband.

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