ROI for funding Community Owned Internet Networks vs subsidizing access to incumbent ISPs

When comparing the ROI (Return on Investment) of funding community-owned internet networks versus subsidizing access to incumbent ISPs, several factors come into play. Here’s a detailed analysis based on the sources provided:

1. Community-Owned Networks

Community networks generally offer long-term ROI through equitable access, cost savings for residents, and economic development:

• Cost Efficiency Over Time: While upfront costs are high (for building and deploying infrastructure), community networks recoup investment through direct control of pricing and operations. This avoids the profit margin of ISPs.
• Economic and Social Benefits:
• Economic Growth: Municipal broadband has been shown to boost local economies by attracting businesses, creating jobs, and supporting education.
• Digital Equity: These networks directly address digital inequities by prioritizing underserved or rural areas, as seen in places like Orangeburg, SC.
• Control and Accountability: Community networks are directly accountable to residents, leading to better customer service and potentially lower fees compared to private ISPs.
• Long-Term Revenue Streams: Community networks can generate revenue for reinvestment in local infrastructure or other community projects, a benefit absent from subsidy models.

2. Subsidizing Incumbent ISPs

Providing subsidies to incumbent ISPs often shows limited ROI for public funding:

• Short-Term Gains with Long-Term Dependence:
• Subsidies lower immediate costs for end-users but do not guarantee ongoing affordability once the subsidy ends, as seen with programs like the Affordable Connectivity Program (ACP).
• Profit-Driven Allocation: Incumbent ISPs may not prioritize rural or underserved areas unless incentives are substantial. Historical patterns show large ISPs often fail to meet coverage or quality promises despite subsidies.
• No Asset Ownership: Subsidies do not provide communities with lasting assets, unlike community-owned networks where the infrastructure remains a public good.
• Regulatory and Pricing Challenges: ISPs retain control over pricing and services, often leading to higher long-term costs for consumers.

3. Comparison of Costs and Outcomes

• Initial Investment: Community networks require significant upfront capital but offer long-term self-sustenance. Subsidies have lower initial costs but may need continual funding.
• Digital Equity: Community networks better address digital divides and provide sustainable, equitable access.
• Economic Multiplier Effects: Municipal broadband often catalyzes local economic activity, which can outweigh initial investments.

Recommendations:

• Favorable for Community Networks:
• Opt for community ownership where feasible, as it secures infrastructure, promotes equitable access, and provides lasting benefits.
• Strategic Subsidies:
• Use subsidies strategically for immediate connectivity needs but pair them with mandates for equitable access and performance metrics.

Conclusion

Community-owned networks provide superior ROI over time by creating sustainable infrastructure, fostering economic growth, and addressing systemic inequities. Subsidizing ISPs can offer short-term relief but lacks the transformative impact of publicly owned broadband systems.