Issuers eye broadband, clean water dollars in bipartisan infrastructure bill

Newark, New Jersey has spent the last two years replacing 22,000 lead service lines and crafting a plan to expand Internet access to all residents, Mayor Ras J. Baraka said today during a Volcker Alliance and Penn Institute for Urban Research briefing.

But a fresh influx of federal cash for broadband and clean water programs promised in a bipartisan infrastructure bill now being debated in Washington would still be a “godsend” for the city, Baraka said, ticking off the city’s continued infrastructure needs: its water and sewer system, water pump stations, sewer lines, flood mitigation and resiliency upgrades.

“The barrier is money,” he said during the briefing, which focused on the Infrastructure Investment and Jobs Act’s broadband, water, resilience and equity provisions.

“That’s the real barrier, with full transparency, to being able to get these things done.”

Volcker and the Penn Institute held the briefing as the House is expected to vote on the infrastructure bill as soon as Monday. On top of major highway, bridge and mass transit dollars, the legislation includes $65 billion for broadband access and $55 billion for water and wastewater infrastructure.

The bill’s broadband funding would be made in the form of grants to states. In the past, most federal funding and polices have been tied to carriers to subsidize the expansion of Internet access, said Tom Hazlett, an economist at Clemson University and former FCC chief economist.

Since 1996, the federal government has provided more than $225 billion in federal subsidies to various carriers, mostly phone and cable companies, Hazlett said.

“We’ve had over the last 20 years an opportunity to see very large funding go to very inefficient phone companies at costs that were really outrageous,” he said. In recent years, the playing field has been leveled with the use of reverse auctions and the inclusion of wireless and satellite carriers, he said.

With the emphasis on the carriers, the “actual users have gotten lost in the shuffle,” he said.

Making grants directly to the states may help change that focus, he said.

“The emphasis on the state level might be about the users with the new round of funding,” he said.

The infrastructure bill also features a provision that would for the first time allow state and local governments to weigh in, said Kathryn de Wit, who directs Pew’s broadband access initiative.

“That’s a significant step forward,” she said.

Underserved or low-income areas often don’t offer enough of a profit motive to draw carriers in, de Wit added.

“If we are going for universal availability, we can’t always achieve efficiency because the market doesn’t always support that,” she said.

Federal dollars support only about 5% of all expenditures in the water sector, with the rest coming from local water rates or borrowing, said Howard Neukrug, director of the University of Pennsylvania’s Water Center and former commissioner and CEO of Philadelphia Water.

Some municipal wastewater systems are making progress by lowering their energy use and learning how to recycle and treat their wastewater, he said.

“Great strides have been made, but the renewal and upgrade of the nation’s water infrastructure will be extensive and expensive,” he said.

Neukrug agreed with Newark’s Baraka that money remains the great barrier.

“We’re setting priorities and some are politically based and some are based in the reality [of consent decrees], but there’s just not enough money,” he said.