Whitmer praises plan to spend more than $3k of state money on each internet connection

Gov. Gretchen Whitmer and the Michigan High Speed Internet office announced last month that the state will spend more than $3,000 in taxpayer funds for each high-speed internet connection it subsidizes statewide.

The program has connected 10,000 homes and businesses through funding forecasted to connect 71,500 previously underserved locations, the press release said.

A portion of the funds spent on high-speed connections — $238 million — comes from a Michigan grant program called Realizing Opportunity with Broadband Infrastructure Networks, or ROBIN, which aims to bring internet connectivity to the state.

“Access to affordable, reliable high-speed internet is a necessity to pay the bills, do homework, access telehealth services and so much more,” Whitmer said in a statement. “Today’s announcement of the ROBIN program’s 10,000th high-speed internet connection is a sign of our commitment to building out this critical infrastructure in every region of Michigan.”

The state is “working to create a more digitally equitable Michigan where everyone can leverage technology to improve their quality of life,” said a press release from the Department of Labor and Economic Opportunity.

Program funding comes from a U.S. government program known as the Coronavirus Capital Fund Investment project, according to the Benton Institute for Broadband & Society. It will also include $218 million in matching funds from local governments and private sources, totaling $456 million. Funds will go to various companies, including Spectrum, to spend on 71,500 new connections, the press release said.

Each connection will come at a cost of $6,377, with $3,329 supplied by the state and the rest through matching funds.

This program will connect homes to the internet via fiber-optic technology, according to an email to Michigan Capitol Confidential from Eric Frederick, chief connectivity officer for the Michigan Department of Labor and Economic Opportunity.

Frederick believes fiber optic broadband is the best choice for connecting locations, despite its initial higher cost.

“Unlike satellite systems like Starlink, fiber provides consistent high-speed internet uncompromised by bad weather, signal latency, or limited bandwidth availability,” Frederick said, noting that fiber infrastructure lasts longer and is cheaper to maintain than satellite systems.

Government-overseen programs provide internet at a much higher cost than private companies, said Ted Bolema, a senior fellow at the Mackinac Center for Public Policy and founding director of the Institute for the Study of Economic Growth at Wichita State University.

“This is because these programs have been hijacked by other agendas, including choosing winners and losers among competing internet technologies, climate change mandates, price regulations, preferences for hiring union workers, and a lot of red tape,” Bolema told CapCon in an email.

A large share of the spending ends up in populated areas already well-served by private providers, Bolema said. This diverts funding away from homes in underserved areas, which tend to be rural.

The state can’t predict what technologies will be used in the future, Bolema said.

“These are the same discredited arguments used more than 20 years ago to justify Gov. Engler’s Michigan Broadband Development Authority, and every internet spending program by the Michigan government since then,” Bolema said in response to Frederick’s comments. “Governments have a dismal record of delivering on the promises of economic prosperity they claim will follow when the government chooses the type of Internet access people should have, so they keep coming back with more spending programs to try to deliver on what the last spending program failed to accomplish.”

Bolema added the private sector continues to move forward providing the kinds of internet people want, and at far less cost than when the government gets involved. 

The incoming Federal Communications Commission chairman, Brendan Carr, favors giving vouchers to people without sufficient access and letting them choose the best way to connect. Some may choose satellite-based provider Starlink, which offers high-speed internet with a $199 installation fee if using a service and not self-installing.

The cost to connect to Starlink is about $599 in upfront fees. In reviewing the Starlink website, CapCon found other prices listed, including $349 and $249, suggesting the company offers different pricing to customers depending on how they approach the website.

If the state spent $599 on each 71,500 forecasted connections, the cost would total $43 million.