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Digitally Unequal

Poor areas have lousy Internet. Here’s what Trump can do to help them.
December 20, 2016

The economic and democratic activities of American life now rely on advanced communications services—and there’s a huge gap between those who get access to these services and those who don’t. It springs from a lack of infrastructure investment in some parts of the country (see “The Hole in the Digital Economy”).

And where are these places? It just so happens that the areas with the least investment in communications infrastructure, like fiber-optic cabling, are the same rural precincts that broke so strongly for Donald Trump in November.

Rural areas are typically served only by phone company infrastructure—aging copper networks. That means they’ve never benefited from competitive cable networks that could provide faster and cheaper access to the Internet. Some rural networks date back a century and are being shut down or neglected as phone companies find that their dollars can be spent more profitably elsewhere. Given the massive up-front investment that’s necessary, there’s simply not enough revenue potential in rural areas to justify the capital cost of upgrading networks.

“The areas with the worst communications infrastructure broke strongly for Trump in November.”

President-elect Trump knows a thing or two about using tax, subsidy, and partnership strategies to get projects financed and built. Here are three ways he could use that knowledge to shrink the digital divide.

First, if Trump proposes a major infrastructure financing bill, as anticipated, he should include broadband infrastructure. Broadband deployment creates immediate construction jobs and also offers long-term economic benefits. High-speed Internet is the electricity of the 21st century—you don’t get economic growth without it.

Second, he should expand the New Market Tax Credits program, which lets community development agencies in poor areas sell tax credits to private entities to help finance economic development projects (like new broadband infrastructure). This is a bipartisan program that generates more revenue than it costs. It gets investment into areas that would otherwise struggle to attract private capital.

Third, he should allow public-private entities to use tax-free municipal bonds to build communications infrastructure. Typically, such bonds can’t be used for projects where a private entity will use whatever infrastructure ends up being built, and that rule is stifling development. Pikeville, Kentucky, is trying to finance the construction of a fiber-optic network that it would subsequently lease to private entities that could then offer services on the network (since the city doesn’t want to be in the broadband business). Under the current rules, this kind of project can’t be built with tax-free municipal bonds. Trump could change that.

The president-elect has long been a builder of hotels, golf courses, and casinos. It’s time he invested in the critical communications infrastructure necessary for economic growth in the rural areas that supported him so strongly.

Joanne Hovis is the CEO of the Coalition for Local Internet Choice and the president of CTC Technology & Energy.

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