Government-funded fiber: Deadweight loss or merit good?

[Commentary] Reflecting on the deadweight loss of Christmas inevitably leads (for a technology policy scholar) to considering the deadweight losses associated with government and municipal beneficence in gifting fiber broadband networks to constituents. If fiber is to be gifted by governments, the deadweight loss of taxation attends every dollar of public funds applied to the network. This begs the question of whether, given competition for the use of these funds, a fiber network represents their most productive use. Would the same amount of money deliver more benefit if applied, for example, to improvements in other government or municipal infrastructures, such as roads or schooling? While this question appears self-evident, it rarely enters into discussion when government funding of fiber networks is proposed.

[Howell is a faculty member at the School of Management, Victoria University of Wellington, New Zealand.]