The Key Word For Our National Broadband Plan: Leverage

Given the fact that America's financial resources appear as though they'll never be turned full force towards tackling the broadband challenge, it's likely that our national broadband plan will have to be crafty with how it recommends allocating scarce resources to maximize the impact of the dollars we do have to spend. In other words, the plan must leverage whatever money is available as much as possible.

Unfortunately, to date our government hasn't been very good at leveraging taxpayer dollars to create long-term broadband assets that can be built upon and expanded on into the future.

The most recent example of this is the broadband stimulus package, where the bulk of the money was given to NTIA to hand out as grants. The only leverage this approach realizes is the 20% local match. In other words, for every dollar of grant we only get $1.25 of broadband.

In no way am I trying to denigrate grants as I think they're an absolutely essential tool in our broadband toolkit as some projects would only be feasible with a government grant. But what I am saying is that in light of the fact we don't have enough resources to just write the check to bring broadband everywhere, we need to maximize the impact of each dollar, and grants deliver little to no leverage. Therefore I do believe that we should be looking at grants as the exception and not the rule.

Another example of government squandering opportunities to leverage taxpayer dollars to a greater degree is USF. Not only does the program still focus on telephone service over broadband, but it's designed primarily to write checks to companies with legacy networks to help sustain their businesses. While I understand that the economics of rural communications networks can be difficult, especially in very remote areas, it doesn't make a lot of sense to me to continue writing checks that do nothing more than maintain the status quo.

I've had similar thoughts related to e-rate. The fact that those funds can only pay for the monthly broadband service charges and not be used to establish long-term infrastructure that can drastically reduce the operating and maintenance costs of broadband service is yet another example of a missed opportunity to leverage government dollars to do something bigger and better.

What worries me is that if we continue down this path of not leveraging these funds to a much greater degree then there doesn't seem to be any way for the national broadband plan to have any chance at accomplishing big things.

Yet on the flipside, if we make leveraging these funds a core element of every way that we're spending money then this dynamic can change dramatically.

For example, let's consider a very basic attempt at USF reform.

Today USF pulls in a bit over $7 billion a year. Now, instead of writing checks for operating expensives, let's shift that money to a program that prioritizes mechanisms that can leverage these funds to raise the availability of money for capital expenditures, like loans and loan guarantees. By doing this that $7 billion in budget authority can expand to at least $70 billion in loans and/or loan guarantees.

If we circle back to a number the FCC released as an estimate of what it'd cost to wire America with 100Mbps service--$350 billion--you can see how by leveraging the resources we already have coming in to a greater degree we can free up enough capital to accomplish this goal by 2015.

Of course there are a million details to work out in this model, like how existing operators that are dependent on USF can survive and keep offering service until new networks are built, who should get the financial support to build these networks, if the networks need to be open access with multiple service providers, whether it's better to give out money as loans or loan guarantees or something else entirely, etc.

But I think this example captures in a nutshell the opportunity that we have, despite the lack of new money coming from Congress, to shift the needle in a big way if we stop relying on the simplistic method of just writing checks to a model that leverages government dollars to get the biggest bang for the taxpayer buck.

The idea of leverage is also important in terms of encouraging projects that leverage multiple pots of government money as a fully integrated project setup to benefit all facets of a community should qualify for a host of additional funds. Plus we also need to thinking about how to leverage existing assets so that we're not overbuilding capacity if it's not needed.

I know for a fact that there are good people in government trying to think about how to solve these problems in these ways. My hope is that as they go about doing so they keep in mind the key word for every time anyone spend taxpayer dollars: leverage.