Broadband Proliferation Should Not Be A Federal Priority


In his 2011 State of the Union speech, President Obama proposed to proliferate broadband internet. Although greater broadband penetration in rural areas indeed provides social benefits, these benefits will not outweigh the cost of millions in taxpayer dollars that will be spent on it. I do not oppose the proliferation of broadband into rural areas, merely the government subsidization of such expansion. Spotty Internet is not a problem that requires a government solution.

According to a Pew study released in August 2010, 50% of people living in rural areas already have home broadband internet service. Furthermore, of the people who do not have high-speed internet and do not have a very reliable ethernet connection, only 6% cited a lack of access as the primary reason for not subscribing, compared with 48% who find the internet irrelevant and 18% who have usability issues.

Choices involve trade-offs. If an individual desires faster internet service, he or she can either pay the market rate for the service or relocate to a larger town in order to access a broadband connection that is less expensive. Expanding broadband is a question of revealed preference, an economic theory which posits that it is possible to discern consumer preference on the basis of consumer behavior. To many people living in a rural area is more important than having fast internet service, and this preference is revealed from the fact that they do not relocate to a more urban environment. Individuals face trade-offs by living in urban areas as well — hiking trails are not as easily accessible as in rural areas, for instance. It is not the role of government to subsidize certain activities or lifestyles over others.

Obama's broadband proliferation proposal will disproportionately benefit trades groups with strong political connections, and the policy will come at the expense of the taxpayer and the businesses that are too small to have lobbying power.

Perhaps wireless technology will be so advanced in the intermediate future, that traditional broadband may be rendered obsolete. By the time that Obama's broadband project is completed, it is likely it will already be antiquated. The president and his advisors are politicians — they’re far removed from the trends of the technology industry. They do not possess the ability to predict future market trends and technological innovation as quickly and as accurately as those working in the industry.

When Obama talks about the positive effects of the Internet in the national economy, he's 100 percent right. However, he makes a mistake when he fails to attribute this change to the free market. Instead of intervening in the market, the federal government should get out and let the free market continue to benefit the economy. Solutions for extending broadband exist in the private sector, and they don't cost taxpayers a cent.

Photo Credit: DeclanTM