Pandemic brings heightened attention to broadband infrastructure

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Presidential hopeful Joe Biden plans to invest $20 billion in rural broadband infrastructure.

The coronavirus pandemic could serve as a catalyst for broadband infrastructure as many people work from home to stop the spread of the illness.

At The Bond Buyer California Public Finance Conference Wednesday, infrastructure experts said the effects of COVID-19 on people needing to work at home and the implementation of online learning could bring more attention to broadband infrastructure.

“COVID has brought a real catalyst and attention to the deficiencies in our infrastructure so hopefully we’ll get people focused here and we get something done,” said Rick Cosgrove, partner at Chapman and Cutler LLP.

Large segments of the country don’t have internet access, Cosgrove said.

Presidential candidate Joe Biden said he wants to bring broadband to “every American household,” adding that more than 21 million Americans still don’t have broadband. He plans to invest $20 million in rural broadband infrastructure if he takes office in January.

“In a 21st century economy, Americans need broadband,” Biden’s campaign said. “Without it, students face substantial barriers to doing their homework and the sick and elderly can’t access remote health care. Broadband is a prerequisite for starting a business, working remotely, accessing government resources, and engaging in public debate.”

Biden also plans to direct the federal government to support cities and towns that want to build municipally-owned broadband networks, according to his campaign site.

Public-private partnerships could also be a way to fund future broadband projects.

Cosgrove said perhaps the most prominent such example is Kentucky Wired, which was developed in 2015. The Kentucky Economic Development Finance Authority financed the project to install a broadband system by issuing $232 million of tax-exempt revenue bonds and $58 million of taxable revenue bonds. It partnered with KentuckyWired Operations Co. LLC.

Years later, though, that project was riddled with issues such as cost overruns and botched procurements.

Adam Sherman, managing director and head of public and infrastructure finance at SMBC, said there has been some interest in private investment in state programs.

“We’ll see a little bit more activity perhaps in the municipal sector, but it really has not been prominent,” Sherman said.

Small cities and rural areas have the greatest need for broadband infrastructure, Sherman said.

“This is where subsidies and subsidized financing from state and local government issuers can be most beneficial,” he said.

The pandemic has caused huge increases in data usage for businesses, education, as well as social and entertainment, Sherman said.

“The pandemic has really accelerated and redirected the growth of digital capacity,” Sherman said.

The panel on Wednesday also discussed the financial and legal obstacles facing Maryland’s light rail system. The Maryland Department of Transportation assumed contracts from Purple Line Partners this month after the private partner shut down construction of the rail line. Sources have said the project could make investors more hesitant to embrace future transportation P3s.

The P3 project was plagued with $800 million in cost overruns, delays and lawsuits.

“That one can be viewed as an aberrant and maybe lessons learned and not a determinant. The (P3) model absolutely works,” Sherman said.

Cosgrove agreed and said P3s were the best way to get projects done quickly.

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Coronavirus Public-private partnership Infrastructure Washington DC Joe Biden
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