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STUDY: TechNet Shows Private Broadband Investment Increases Access and Improves the Economy

December 20, 2012

A new study from TechNet confirms the Coalition for a New Economy’s basic premise: more private investment in broadband leads not only to better access for consumers, but also improves the economy. Furthermore, the policy stances individual state governments take matter to the overall health of the broadband industry and the economy. States with high levels of cooperation with the private sector flourish; those that choose not to engage the private sector fall behind.

According to Hispanic Business, the study found “States with high levels of investment in their broadband infrastructure stand a better chance of seeing economic benefits.” The magazine indicates private investment drives these benefits as do “appropriate” public investments.

To be sure, the TechNet report does advocate for public funding for broadband and highly ranks states that allow for public networks where options private sector are not available, but throughout its study TechNet emphasizes public-private cooperation, not competition (the latter being one of the primary problems many government-owned networks).

Massachusetts Governor Deval Patrick, whose state is in the top three in the TechNet rankings, in comments about the study, emphasized his state government’s relationship with the private sector. Patrick said, “This study reaffirms the importance of our partnerships with private industries and Massachusetts’ leadership in the areas of broadband development and innovation.”

Here is what the full report has to say about such cooperation, “Bringing stakeholders together in the public, private, and non-profit sector is often easier said than done. That is why the leadership of a governor and legislators matters, but other stakeholders have to demonstrate engagement as well. Effective cooperation can lower the cost of deploying infrastructure and boost broad- band adoption rates. Conversely, frictions in such efforts may make it harder to compete for funding that may be available from the federal government or make a state less attractive for businesses that need fast broadband to thrive.”

That theme is one CNE has repeatedly emphasized: when the private and public sectors compete to offer broadband, consumers, taxpayers and the broader economy suffers. Allowing a public entity to compete directly with a private provider makes it less likely a private provider will invest in an area. Local governments miss out on the tax revenues from these providers and local residents miss out on jobs. Furthermore, the resulting government monopoly is bad for consumers who pay higher prices without robust competition.