Evaluating the Cost-Effectiveness of RUS Broadband Subsidies: Three Case Studies

46 Pages Posted: 14 Apr 2011

See all articles by Jeffrey A. Eisenach

Jeffrey A. Eisenach

NERA Economic Consulting; American Enterprise Institute

Kevin W. Caves

Infotech Consulting

Date Written: April 13, 2011


The American Recovery and Reinvestment Act (ARRA) appropriated $7.2 billion to subsidize broadband deployment, including $2.5 billion to the Rural Utilities Service (RUS). Prior investigations have shown that RUS’ broadband subsidy programs were not cost effective, and often funded duplicative coverage in areas already served by existing providers. In this study, we analyze three large projects subsidized by the ARRA-created Broadband Initiatives Program (BIP). These projects received a total of $231.7 million in Federal support (including subsidized loans as well as grants), or about seven percent of total RUS’ subsidy obligations. The evidence indicates that RUS’ history of funding duplicative service has continued under BIP, and that the current program is not a cost-effective means of achieving universal broadband availability.

Suggested Citation

Eisenach, Jeffrey A. and Caves, Kevin W., Evaluating the Cost-Effectiveness of RUS Broadband Subsidies: Three Case Studies (April 13, 2011). Available at SSRN: https://ssrn.com/abstract=1809002 or http://dx.doi.org/10.2139/ssrn.1809002

Jeffrey A. Eisenach (Contact Author)

NERA Economic Consulting

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American Enterprise Institute ( email )

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Kevin W. Caves

Infotech Consulting ( email )

2970 SW 50th Terrace
Gainesville, FL 32608
United States
3523814400 (Phone)

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