NCTA: Broadband Subsidies Are Wasting Millions

The National Cable & Telecommunications Association said that the Agriculture Department's broadband subsidy program wastes millions of dollars to overbuild existing service and, if it is symptomatic of a larger infirmity, could mean it would cost $87.2 billion to reach every unserved household in the country, rather than the FCC's estimated $23.5 billion. NCTA's new study finds that "millions of dollars in grants and loans have been made in areas where a significant majority of households already have broadband coverage," and that "the costs per incremental home passed are therefore far higher than existing evidence suggests should be necessary." The study found that over the three projects analyzed, more than 85 percent of households were already served by existing providers and in one, more than 98% were served by at least one other provider.

Defenders of the program argue that grantees need to be able to provide service in the more lucrative served areas to afford sustainable service to the target unserved areas--sustainability is one of the requirements of the one-time grants and loans. But the NCTA study points to the cost-ineffectiveness of the government spending what amounts to $349,000 per incremental home passed if mobile broadband is counted, and over $30,000 if it isn't. The study was conducted by Jeffrey Eisenach and Kevin Caves of Navigant Economics of Washington.