Overview

Many states have created funds to help encourage private sector investment in high-speed Internet infrastructure. These states typically employ matching grants to improve the financial feasibility for service providers to expand operations to previously un-served areas. Other states have issued direct funding for projects or research, including the creation of public sector entities that use state funds to construct and lease high-speed Internet infrastructure.

• In Vermont, public sector funds were used for the purchase and construction of high-speed Internet infrastructure. The Vermont Telecommunications Authority (VTA) is charged with bringing affordable high-speed Internet service capable of transfer rates of at least 1.5 megabits per second, and increasing speeds in the future, to every Vermont household by 2010. The state was permitted to provide the Authority with up to $40 million in bonds to back projects in the first year of construction and possibly more. The initial target is to leverage more than $200 million in private sector investment with the state’s backing. Repayment of borrowing for the projects will be based on revenues generated from leasing access to the infrastructure, such as fiber-optic networks and space on towers, or the revenues from services provided over the network.
• Maine created the ConnectME Authority, in 2006, to expand broadband and cellular infrastructure throughout Maine. The statute authorizes the ConnectME Authority to assess every communications service provider an annual fee not to exceed 0.25% of revenue received or collected for all communications services provided in the state by the provider. Maine will use up to $500,000 in "seed money" annually, for at least two years to accelerate private investment in communication services -- especially in underserved areas.
• The California Advanced Service Fund (CASF) was established by the California Public Utilities Commission in December of 2007 as an expected two-year program to (1) provide high-speed Internet services to areas currently without broadband access and (2) build out facilities in underserved areas if funds are still available. The program has been allocated a total of $100 million, and will provide matching funds to qualified certified applicant carriers for up to 40% of the total project cost for the deployment of high-speed Internet infrastructure. CASF is funded by a 0.25% surcharge on end-users’ intrastate telecommunication bills.

Another way states could potentially fund high-speed Internet development and adoption, especially in under-served and un-served areas, is through the use of universal service funds. In the telecommunications context, universal service refers to the practice of providing a baseline level of telecommunications services to every resident of the country. States collect a portion of universal service funds fees on intrastate phone services to help keep phone costs down in rural and urban areas. High-speed Internet is the next generation of telecommunications. It can support telephone services and more advanced applications. Therefore, states should redirect portions of the state universal funds towards supporting high-speed competitive and technology neutral Internet connections, or to help subsidize households who cannot afford a high-speed Internet subscription.

 

Resources:
Progressive States - Mapping and Deploying High-Speed Internet
Educause White Paper - A Blueprint for Big Broadband
Annual Report on the Activities of the ConnectME Authority
California Advanced Service Fund
Vermont Telecommunications Authority, http://www.telecomvt.org/
e-NC Authority