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Rural Broadband Infrastructure Programs Should Include Reverse Auctions, Evaluations to Ensure Cost-Effectiveness

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Wallsten and Gamboa Review Subsidy Programs in U.S. and Abroad

June 22, 2017 – In light of President Trump’s announcement that rural broadband access will be included in his infrastructure plan, the Technology Policy institute is releasing suggestions on how to design a cost-effective program.

In “Public Investment in Infrastructure: Lessons from the US and Abroad,” authored by Scott Wallsten, TPI President and Senior Fellow, and Lucía Gamboa, review current subsidy initiatives in the United States and Europe to inform policymakers of what types of programs improve broadband availability and adoption.

The survey of U.S. and European programs reveal that a broadband infrastructure subsidy should be distributed via a reverse auction in order to ensure cost-effectiveness.  The subsidy auction should:

  • Set a single, clear and measurable objective.
  • Define “broadband” by taking into account research on consumer use and demand characteristics. Any technology that can meet the definition of “broadband” should be eligible to participate in the auction.
  • Make the program a one-time subsidy.
  • Rank-order the bids in terms of cost-effectiveness in terms of new locations, not area, connected per subsidy dollar.
    Rigorously evaluate the results, but ensure that the evaluation is conducted by organizations other than the one implementing the program.

Wallsten and Gamboa conclude, “Following these guidelines will help create a cost-effective program that might actually increase availability and adoption in rural areas, rather than a continuous stream of subsidies that have little benefit to the households who need them.”

Public Investment in Infrastructure: Lessons from the US and Abroad” is available on the TPI website.

 

Contact: Amy Smorodin, 202-828-4405,