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How Much Do You Pay For Broadband Access?
It's Over Thata Way
No Problem! It's Only "Government Money"
Not another tax payer shakedown attributed to the 2009 American Recovery and Reinvestment Act (ARRA)? Yes, I’m afraid so. In between writing and reading this weekend plus doing the old chores, I kept hearing about this and I’m appalled that someone wouldn’t even do a cost analysis on this before proceeding. But then again, maybe it was done and the “damned the torpedoes, full speed ahead” attitude that is prevalent in the Obama administration had them in a head lock or a brain freeze maybe.
How much do you pay if you have broadband internet access? Whatever the cost is maybe after reading this you’ll recalculate a bit. I’m not sure if this is under the “jobs saved” or “jobs created” category. I’ll ask Biden when I see him. The debate here isn’t whether the stimulus worked or not. If you ask a Democrat it was a rousing success. If you ask a Republican it was a belly flop. One thing is for certain though, if you look at the cost of a job created it is usually astronomical. In the case of a “job saved,” I think that whole concept is a bit on the abstract side. What kinds of jobs were saved?
One of Obama’s campaign pledges was to expand broadband access to the internet. The first thing I question is that a government function or a private enterprise function? Free enterprise interests usually go through a thorough cost analysis before making decisions. Our federal government doesn’t seem overly concerned with that since it isn’t their money they are spending. It is ours and the future generations that will come after us.
There is a price too high to pay for producing a product or service. That’s both a business fact and a principle of economics. In the case of the expenditure of our stimulus tax dollars those policymakers seemed to have totally ignored that important principle. It wasn’t their money so why worry about it.
Have you ever heard of Navigant Economics? Me neither until they issued a study of what it cost for the ARRA to subsidize rural broadband access. They looked at three rural areas, in particular Southwest Montana, Northwest Kansas and Northeast Minnesota. For info purposes, the median household income in the areas is $40.1 -$50.9K and median home prices run from $94 to $189K.
How much would you guess it cost to provide broadband access to those in the unserved areas? Hold onto your seats tightly now. The bill came to $349,234 per household. Now go back up and look at what I called “for info purposes.” How many multiples for houshold income does that equate to? How can it cost more than the house costs and by how much? I guess the real question is not “how?” but “why?” The “why” comes easy to me here. It was “government money.” In other words, it was the tax payer’s hard earned dollars being squandered again.
Montana was well served I reckon. Though it is by no means unserved or underserved, with more than seven (7) broadband providers in that area, a whooping 1.5% of the households had no wired access. Factoring in 3G, there were a grand total of seven (7) households who had no access to broadband. This is where this whole subject goes over the cliff. The cost of each additional house covered in Montana came to $7 million per household? You could probably buy the entire state of Montana for that kind of scratch.
But no problem right? The total cost of this fiasco was around $7.2 billion. Chump change to the chumps on Capitol Hill making such stupid economic cost analysis decisions. Or did they even bother? After all, it’s only “government money. What a disgusting thought process that is.