Business & Economics

A Giant Leap for Broadband

LEO satellites and technological innovation can help close the digital divide

Internet for all: Private companies are using low Earth orbit satellites to increase consumer access to broadband internet. Image Credit: Starlink Mission/Wikimedia Commons

A new space race has begun, and it could mean another giant leap for mankind. The race is taking place primarily among private companies rather than nation-states. Leading the way are Amazon’s Project Kuiper, SpaceX’s Starlink and the British-Indian company OneWeb. And this time, the goal is to send into orbit not more humans, but thousands of low Earth orbit satellites (LEOs). Once operational, these LEOs can provide reliable broadband internet anywhere, thus helping to close the digital divide between the internet haves and have-nots. The Biden administration and state governments should embrace these and other new technologies.

Internet for All

There is no consensus on how many Americans lack reliable broadband internet, but it’s almost certainly in the tens of millions. The White House puts the number at more than 30 million, while BroadbandNow estimates that more than 42 million Americans do not have internet access. The need is especially pronounced in rural areas. And the emergence of COVID-19 has only underscored the importance of reliable, affordable internet access. The Omicron variant’s rise over the past month has led to another wave of school closures nationwide, making internet access a necessity for students to learn online.

This lack of internet access is often the result of missing infrastructure. Private-sector broadband providers have invested over $1.6 trillion in infrastructure and R&D since 1996, which has led to increased adoption and unprecedented broadband speeds for consumers. But it’s expensive and unprofitable for broadband companies to install the cables, fiber optics and other physical technologies necessary to bring high-speed internet to sparsely populated rural areas. As a result, the federal government is stepping in, but its interventions may do more harm than good.

Closing the digital divide is a key feature of the Biden administration’s Bipartisan Infrastructure Law (BIL). The law allocates $65 billion to build broadband infrastructure and provide broadband internet to those who still lack access. Of that $65 billion, $42.5 billion is for states to use for grants to improve broadband infrastructure, allowing them to fund municipal broadband networks instead of working with internet service providers or other private companies. The National Telecommunications and Information Administration is now accepting public comments on program designs and implementation for investment.

Since the bill’s introduction, the Biden administration has emphasized the need to build “future-proof” infrastructure. Its vision includes a larger role for government-operated networks to close the digital divide. But this mindset is counterproductive and unreliable for two reasons. First, attempting to “future-proof” broadband infrastructure dismisses historical trends of innovation within the telecommunications and technology sectors. And second, historical precedent indicates that building future-proof broadband infrastructure isn’t always feasible, especially when that infrastructure is built by municipally owned, government-operated broadband networks.

New Technologies Will Increase Access

Embracing innovation and competition in telecommunications is critical to closing the digital divide. Otherwise, the BIL’s infrastructure spending will be but another small step, and it will fail to help those who need it most.

Compared with traditional satellite internet, LEO satellites can provide faster internet and higher bandwith per user by beaming signals down from space to an individual antenna or dish. Unlike traditional satellites, LEOs orbit hundreds of miles above the Earth’s surface rather than thousands. Instead of one large satellite, thousands of LEOs will dot the sky and provide internet. LEO satellite providers Project Kuiper and Starlink each plan to launch thousands of satellites to make up their “constellation” of service. OneWeb, another competitor in the LEO market, is also building a constellation that will include hundreds of satellites once finished.

All three providers plan to provide download speeds somewhere between 100 and 500 Mbps with low latency. These specs can support remote learning and work, as well as streaming and other activities. Starlink has launched more than 1,900 satellites into its constellation. It has also shipped over 100,000 satellite terminals to customers in 14 countries. OneWeb has launched 358 satellites into orbit, more than half its planned “mega constellation.” The company hopes to provide global wireless coverage by the end of 2022. Project Kuiper anticipates launching 3,236 satellites, with the first wave launching in 2022 and at least half launching by 2026.

However, the companies diverge in their plans to deliver coverage. Starlink provides service directly to consumers who lack access to reliable high-speed broadband. But OneWeb and Project Kuiper plan to partner with established providers AT&T and Verizon to increase coverage in the U.S. This variation in the delivery of coverage gives individual consumers and communities a choice to partner with traditional providers or experiment with a direct-to-consumer model.

LEO satellites’ potential to promote rural 5G internet access and beyond is reshaping the telecom landscape. Yet the Biden administration has touted government-run networks to close the digital divide. These networks are often less flexible, rely on older technology and are more costly over the long run than privately provided networks. In 2017, the FCC estimated it would cost $80 billion to deploy fiber-to-the-premise (FTTP) or cable service to all residences and businesses without access. Yet the FCC’s broadband maps are outdated and inaccurate, which raises questions about the government’s ability to administer billions of dollars and solve this issue. The Trump administration allocated funds for new maps in 2020, and the effort is ongoing.

Government vs. Private Networks

Attempts to build “future-proof” telecommunications networks should elicit skepticism, considering historical failures. Australia, between 2009 and 2014, and New Zealand, between 2010 and 2020, attempted to build “future-proof” public broadband infrastructure. They relied on FTTP and government-run broadband networks. Australia’s plan became a political football and failed to materialize after the government had committed over $40 billion in public funds. New Zealand’s subsidized government networks connected almost 90% of citizens as of 2020, but with the rise of new technologies, these networks are already losing out to private competitors.

A 2020 USTelecom report shows how traditional landline voice connections rapidly declined once wireless alternatives became available. Why would broadband internet trends be any different? And, if innovations in satellite broadband technology offer a new way forward, states should consider both the long-term benefits of adoption and the costs of complacency.

Another potential pitfall is allowing states to create and fund municipal broadband networks. The “Broadband Equity, Access and Deployment Program,” the main broadband provision in the BIL, empowers states to offer subgrants to fund networks constructed and managed by local governments, regional bodies or nonprofits, in addition to more traditional providers.

States and local governments are welcome to try to build municipal broadband networks. However, they often come in over cost, are susceptible to mismanagement and do not allocate capital investment at the same rate as privately managed infrastructure. Therefore, a better practice would be for states to partner with private companies: Between 2018 and 2020, private American “tech and broadband firms” spent over $300 billion in capital investments. In 2021, Amazon, Verizon and AT&T again were the top spenders on capital investment in the U.S. In fact, 8 of the top 10 spots went to tech and telecommunications companies.

Competition among LEO satellite providers offers another avenue to closing the digital divide. The language of the BIL allows states and localities latitude to find what type of provider will best serve their community. Consumer vouchers could lower the initial infrastructure investment as well as monthly service costs. Ohio, North Carolina and Wisconsin are experimenting with state-subsidized Starlink pilot programs. In Alaska, Starlink and OneWeb are competing to provide service throughout the state. OneWeb seems to have the upper hand after partnering with a local provider, Microcom, to deliver coverage.

Starlink is not cheap, but Elon Musk and co. see equipment costs falling as the company continues to scale. In my own estimation, based on the current pricing, over 42 million Americans could receive a fully subsidized Starlink connection terminal using only half of the allotted federal funds. Similarly, Project Kuiper’s VP of technology stated in a video, “Affordability is Job One for us.” These private companies’ focus on lowering costs makes them ideal partners for state and local governments.

In his book “How Innovation Works (And Why It Flourishes in Freedom),” Matt Ridley remarks about U.S. states in the 19th and 20th centuries. He sees “a laboratory of different rules, taxes, policies and habits, with entrepreneurs moving freely to whichever state most suited their project.” LEO satellite projects and others illustrate this process of innovation. Incremental improvements over time lead to sudden bursts of change that improve people’s lives. LEO satellite technology and the passage of the BIL empowers states to become “laboratories” again. This will drive broadband adoption and promote consumer welfare for some of the nation’s most vulnerable populations.

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