By JIM WATERS
The Bluegrass Institute
While Senate Bill 99 was left to languish on the precipice during this year's General Assembly, the legislature instead agreed to issue $30 million of taxpayer-backed bonds with the stated goal of providing broadband access in eastern Kentucky to promote job growth.
Frankfort's big-spending politicians opted for spending millions in "Silicon Holler" while denying a bill that would have reduced regulatory burdens that discourage additional private investment in broadband.
Wrong move, Frankfort.
Passing a policy like that contained in SB 99 would result in saving taxpayers money and increase access as private telecommunications companies would invest and grow Appalachia's broadband infrastructure by a lot more than the relatively paltry amount that was budgeted.
The larger investment would better serve students, teachers, small businesses and medical professionals, who, as a result, would advance their educational attainments, grow their businesses and improve health care while reducing its costs.
Government's more proper - and helpful - role in advancing broadband growth is to remove those obstacles in regulatory policy that hinder private broadband projects from flourishing.
Clearing out the regulatory underbrush, such as SB 99 was designed to do, reducing taxes and fees on private providers, speeding up the approval process for broadband build-outs and providing companies with access to public infrastructure are relatively simple steps that Frankfort could take to expand Kentuckians' access to the prosperity offered by new information technology.
Allowing government to build, and possibly even operate, a statewide system that counters private providers will stifle new broadband investment by reducing the very factor that ensures greater access, use and quality of service: competition.
Why would any rational private company willingly move to, or expand in, this commonwealth if a chief competitor is a state project propped up by taxpayer dollars rather than earned profit?
Indeed, the policies I'm advocating are the ones that allowed the Internet to flourish in the first place.
No less than Larry Irving, who headed up the National Telecommunications and Information Administration during President Bill Clinton's administration, supports this limited-government approach.
"In its initial strategic paper concerning the Internet, 'The Agenda for Action,' the (Clinton) administration underscored that our first principle was to promote private sector investment through tax and regulatory policy," Irving said.
In this instance, the Clinton administration honored the free market, and it worked.
Clinton's fellow Democrat and current Kentucky Gov. Steve Beshear should try it, too.
Beshear originally proposed twice as much government funding for the eastern Kentucky broadband build-out than originally was approved by lawmakers in the state budget.
Wouldn't it be a better use of taxpayer dollars for legislators to focus on the 30 percent of Kentuckians who have chosen not to use the Internet, even though most of them already have some type of access to broadband services?
For instance, instead of running their own broadband networks, cities could:
n Offer more digital education classes at local schools and colleges.
n Provide more computers at libraries where residents can log on.
n Launch local education efforts about the benefits of broadband use.
Educating Kentuckians about the benefits of broadband will encourage more of them to get online and participate fully in the 21st century economy.
The relatively few dollars spent on these education efforts will likely more than pay for themselves through better education outcomes for our students, enhanced economic activity and lower health care costs for everyone.
Heck, it will probably even mean an expanded tax base - and more revenue - for local governments.
I bet small-town officials struggling to meet tight budgets - while constantly looking for the resources to build and repair streets and fund their employees' pensions - would likely label such an approach "the right move."
Jim Waters is president of the Bluegrass Institute, Kentucky's free market think tank.
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