Why Secretary Clinton’s broadband subsidies will fail

[Commentary] Do more subsidies actually finish a job and provide a net benefit? Apparently not. Customers’ spending habits are telling us they have other priorities. Furthermore, people advocating more subsidies for broadband tend to ignore how inefficient the subsidy programs are and exaggerate the benefits of subsidized broadband.

Clinton proposes to grow subsidies currently provided under the Department of Commerce’s Broadband Technology Opportunities Program (BTOP) and the Federal Communications Commission’s E-rate program, to grow the FCC’s Lifeline program, continue the Rural Utilities Service program for broadband, and to provide broadband grants to governments. Economist Hal Singer (not Clinton) suggests an income-based subsidy of $4.3 billion annually to induce 20 million customers currently unwilling to pay the full price for broadband to buy it. What happens if these proposals are put in place? If past experience is a guide, Clinton’s ideas will mean more failed and uncompleted projects, political favoritism, and little if any positive impact. The flaw in her plan and Singer’s plan for Lifeline-like subsidies is illustrated by the FCC’s current Lifeline program.

[Jamison is the director and Gunter Professor of the Public Utility Research Center at the University of Florida and serves as its director of telecommunications studies.]