US society needs a broadband big dig to get out of its hole
Overhauling the internet’s infrastructure would create jobs and reduce poverty
Almost nothing is growing these days, with one exception: internet use.
Over the past few weeks, we’ve seen the sort of uptick in broadband usage that you’d expect to see over the course of years.
Italy, Spain and the UK have all had high double-digit increases in traffic. In the US, data usage via the cable company Comcast is up 32 per cent nationwide, and by over 60 per cent in locked-down cities. Verizon had a 75 per cent increase in gaming traffic in just one week in mid-March.
No wonder network latency, or the time it takes for data to travel, is a major issue. New York, San Diego, San Jose and Houston are all experiencing declines in download speeds. Just try watching a Netflix or Amazon video after dinner and you’ll see what I mean.
With bricks and mortar businesses closed, and ecommerce booming, there’s little doubt that the transition to a digital economy will be dramatically sped up by coronavirus. The richest and most powerful tech companies, from Amazon to Google, will undoubtedly be even stronger post-crisis than before.
Meanwhile, entire sectors of the economy, including retail, commercial real estate, and many parts of the travel and tourism sector, won’t come back anytime soon — if they come back at all.
These areas were among the strongest job creators in recent years. In the last US jobs report, issued before the virus hit, restaurants were the second fastest growing category. But now we’ve come through a second record week of unemployment claims, and Congress is busy trying to craft yet another multitrillion dollar stimulus package.
Legislators are rightly discussing support for everything from greener forms of transport such as passenger rail, to highway and bridge repair. As everyone knows, America’s infrastructure is woefully inadequate, and money for major public spending programmes has never been cheaper. But there’s also a case to be made for a public works programme that would make high-speed fixed broadband an essential infrastructure, just like water or electricity.
Let me be very clear: a major infrastructure spending programme isn’t a substitute for short-term emergency aid. Millions of individuals and small businesses will need debt write-offs (and not just loans), as well as grants and other cash infusions over the next few weeks and months.
Even so, unemployment is likely to remain elevated for a year or more, until a vaccine can be developed and normal travel and labour patterns resumed.
A broadband infrastructure programme would kill several birds with one stone.
For starters, a “big dig” to install broadband fibre, the most robust and resilient kind of broadband connectivity, would focus on the kind of work that can be done soonest in the midst of a pandemic, namely large scale, protected, outdoor projects.
It could employ and deliver needed services to some of the most vulnerable Americans. Only about half of those with incomes of $30,000 or less have broadband at home. Nearly 68 per cent of those live in rural areas. Others include urban poor who can’t afford the $72 national average cost for the internet (it’s more than $100 in many cities).
Many people who cannot work from home are falling into poverty, and children who cannot access virtual curricula are falling behind in school. This is nothing less than a national security issue. The internet is almost the only thing that has kept the economy and society functioning over the past few weeks. Imagine if it went down the next time around.
There are several challenges to installing universal broadband in the US. Coverage is currently provided via a patchwork of local monopolies.
In addition, a dysfunctional political economy is at work: state politicians in hock to large companies can prevent cities or rural areas from accessing public funds to hire competitors to build out networks. In recent years, private companies in the telecoms and tech sectors have also opted to do share buybacks rather than invest in costly infrastructure.
But money shouldn’t be an issue here. Even before the coronavirus crisis, the Federal Communications Commission had allocated $20bn to broadband expansion, on top of hundreds of millions from the Department of Agriculture. More cash will very likely be allotted in a future stimulus bill. This could be used to prompt telecoms providers to keep workers on the job and employ more to build new services and improve existing ones.
Money could also be given to local municipalities to build their own systems, like the 1935 Rural Electrification Administration programme that transformed America’s heartland and increased productivity for decades.
Costs should be shouldered by the private sector too. Public debt may seem not to matter now, but it will someday. Facebook, Amazon, Apple, Netflix and Google — the so-called “FAANG” companies — are the heaviest generators of internet traffic, and have far higher profit margins than telecoms. Already brimming with cash, they will emerge from the crisis even richer and more dominant than before.
If there was ever a time for a digital tax on the data wealth that these companies currently harvest for free, it’s now.
If we allow another financial crisis to pass without forcing the richest companies to do their part for the national interest — and that means more than delivering toilet paper — we will see a further erosion of trust in both the public and private sector. That is something that we truly cannot afford.