A remarkable wave of public-private collaboration in broadband is underway—a wave that began in the early months of the COVID-19 pandemic and will likely reach a crest in the next few years as many tens of billions of dollars of public and private capital are invested in next-generation broadband.
The pandemic accelerated a number of important preexisting trends:
- The influx of private capital—including both private equity and major increases in investment by incumbents—that has supercharged the fiber-to-the-premises market(1);
- The growing willingness of state and federal appropriators to invest in deployment of best-in-class broadband facilities;
- The urgent willingness of local policymakers to invest in broadband infrastructure, with particular focus on working with private ISPs; and
- The growing willingness of various types of ISPs to work with local communities to achieve win-win outcomes that meet local broadband policy goals and improve private network deployment economics.
These trends predate the pandemic, and, indeed, all of these dynamics emerged in the 2015–2020 time period. But COVID-19 demonstrated to American policymakers the absolute need for plentiful connectivity and the crises faced by those who don’t have it—and simultaneously demonstrated to private investors the economic potential of best-in-class, future-proof broadband.
Public-private collaboration creates new patterns for flow of both public and private broadband dollars. The wave of collaboration is shifting the traditional dynamic of where public and private capital flow—and attracting private capital to communities that had not previously been of interest to private investors.
Historically, private broadband capital has focused on already-served, high-return markets. The areas with the least robust infrastructure tend to be those in which the private-sector business case for investment is weakest. Private capital—for both new networks and upgrade of existing networks—predictably flows to the areas that offer the greatest potential return, which are usually those in which population density is high, construction cost is modest on a per-household basis, and household and disposable income are high.
In contrast, most public capital is directed to unserved markets where private investment has not materialized because higher per-customer construction costs and lower revenue expectations result in lower (or nonexistent) return on investment.
The potential for public-private collaboration changes that binary and attracts private investment to areas where return is low or nonexistent but can be improved through collaboration with the local community. And the potential for collaboration unlocks local public investment in already-served communities where policymakers want better broadband but prefer to do so in partnership with the private sector.
In our new report, The Era of the Broadband Public-Private Partnership: New trends and opportunities in the wake of COVID-19(2), we discuss these trends and review how recent changes have increased the potential for new public-private partnerships in broadband. Specifically, we look at:
- The public policy goals that are animating local decision-makers to innovate new public-private partnerships—and the wide range of communities that are doing so;
- The range of private entities that are interested in broadband public-private collaboration, including both competitors and incumbents, as well as other types of providers and investors that are new to the broadband marketplace;
- The types of business arrangements that are emerging in this new, dynamic environment;
- How federal and state funding programs are increasingly incentivizing and supporting public-private collaboration; and
- Considerations for localities—including guidance for what local governments should be doing right now to take advantage of these unprecedented opportunities. This section also describes best practices for local governments in considering how to protect and meet community needs through a public-private partnership model.
Joanne Hovis is president of CTC Technology & Energy, where she heads the firm’s work in public broadband strategy, network business planning, market analysis, and policy. Joanne advises states and local governments on how to build strategy and opportunity for public–private partnerships in broadband. She leads the CTC teams that have developed broadband strategic guidance for the states of Alabama, Connecticut, Delaware, Georgia, Maryland, New Mexico, and Vermont. Joanne is co-founder of the Broadband Equity Partnership and serves as CEO of the Coalition for Local Internet Choice. She is also on the boards of Consumer Reports, the Fiber Broadband Association, and the Benton Institute for Broadband & Society.
Ryland Sherman, a broadband economics and policy researcher at CTC Technology & Energy, focuses on federal and state broadband strategy and policy frameworks; mapping and funding programs; and digital equity initiatives. Prior to joining CTC, he provided significant research support for the development of the Benton Institute for Broadband & Society’s comprehensive broadband agenda, Broadband for America Now, analyzing broadband competition issues and the economic impacts of broadband. He holds a Ph.D. and a law degree from Indiana University’s Media School and Maurer School of Law, respectively.
Marc Schulhof is a principal analyst and director of editorial services at CTC Technology & Energy, where he collaborates on the development of broadband strategy, market analysis, partnership approaches, grant funding options, and network business models for local and state government clients.
- Based on public statements from incumbents, including AT&T, Verizon, Lumen, Frontier, Windstream, Consolidated Communications, Cincinnati Bell, and others, as well as recent private equity investments in competitors like MetroNet and Wyyerd, we estimate investment of $40 billion to $60 billion in fiber-to-the-premises infrastructure in the next decade.
- This document was commissioned by the Communications Workers of America, prepared by CTC Technology & Energy in the summer and fall of 2021, and published by the Benton Institute for Broadband & Society in November 2021.
The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy – rooted in the values of access, equity, and diversity – has the power to deliver new opportunities and strengthen communities.
© Benton Institute for Broadband & Society 2021.