

Community Broadband/Benefits? Economic Analysis Local Gov Broadband Initiatives [pdf] - aaronchall
http://grad.mercatus.org/sites/default/files/MGPE_Deignan_0.pdf

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aaronchall
by Brian Deignan

ABSTRACT "This paper examines the economic impact of local public initiatives
to build and operate broadband internet infrastructure. I find that local
efforts produce small economic benefits, but they cause a notable increase in
the size of local government. Using difference-in-differences estimation on
panel data consisting of 23 years of observations from core based statistical
areas in the contiguous United States, I find that publicly supported
broadband networks lead to over 3 percent more business establishments, while
reducing worker income by 1.3 percent, all else being equal. The networks have
no discernible effect on private sector employment, but they increase local
government employment by around 6 percent.

In light of the financial difficulties some public networks experience and the
limited economic benefits they offer, public involvement is more wisely
directed toward fostering private sector innovation as opposed to maintaining
a more active role. Local initiatives that maintain an active role for local
government can lead to a misallocation of resources if they ignore market
signals and cause taxpayers to bear the uncertainty of the broadband market as
opposed to private shareholders."

