Twelve years ago, the federal government awarded hundreds of grants for broadband infrastructure with stimulus funds from the Recovery Act of 2009. In this study, I review the subsidy allocations from the Broadband Technology Opportunities Program and compare actual outcomes with those that a reverse auction or random lottery may have yielded. My analysis shows that a reverse auction might have connected nearly twice as many buildings for the same total subsidy dollars relative to the results from the grant review process. Moreover, the grant review process used by the NTIA did only slightly better in subsidy-dollars-per-building-connected than a random lottery probably would have. Lessons from the Recovery Act are drawn from public data on proposed and awarded projects from application files for stimulus funds. I conclude that the government likely overpaid for broadband by using grant review rather than a reverse auction. The analysis strongly implies that future broadband grants be distributed using market-based methods to get better returns on investment from infrastructure funds.
Sarah Oh Lam is a Senior Fellow at the Technology Policy Institute. Oh completed her PhD in Economics from George Mason University, and holds a JD from GMU and a BS in Management Science and Engineering from Stanford University. She was previously the Operations and Research Director for the Information Economy Project at George Mason School of Law. She has also presented research at the 39th Telecommunications Policy Research Conference and has co-authored work published in the Northwestern Journal of Technology & Intellectual Property among other research projects. Her research interests include law and economics, regulatory analysis, and technology policy.
