Missouri, along with two partners, plan to spend $85 million to expand the availability of broadband, connecting 660,000 homes and businesses across the state, Gov. Jay Nixon announced Wednesday.

The funding for the broadband expansion across northern Missouri includes $66.3 million awarded under the federal American Recovery and Reinvestment Act, passed last year to stimulate the economy.

Missouri Gov. Jay Nixon

“We are competing for every dollar to transform communities across Missouri,” Nixon said in a statement. “Just as the railroads and interstates transformed Missouri communities in decades past, these projects will connect much of northern Missouri with the information superhighway of the future.”

Part of public/private partnership

BlueBird Media will use a grant of $45.1 million from the U.S. Commerce Department to construct a high-capacity network covering 59 counties. It is providing a cash match of $9.1 million, and the state will provide an in-kind, non-monetary match of $10.5 million that includes use of right-of-ways on state roadways, for a total cost of approximately $65 million.

United Electric Cooperative received a grant of $14.8 million and a loan of $6.3 million from the U.S. Department of Agriculture, covering six counties in northern Missouri.

BlueBird Media and United Electric Cooperative are part of a public/private partnership called MoBroadbandNow, an iniative created by the governor last year. Including this latest round of funding, the initiative has obtained $134.5 million in federal funds for broadband this year.

Funding broadband expansion

With more than $900 million in state budget cuts already made for this fiscal year and a budget shortfall estimated at around $600 million for fiscal year 2012, starting July 1st, 2011, is spending millions of taxpayer’s dollars to expand broadband access in rural areas across Missouri a wise use of the state’s limited resources?

It is hard to say what the “best” use of public funds is, said Ruth Ehresman, director of health and budget policy at Missouri Budget Project, a progressive public policy organization. The federal funds are designated for broadband and the state’s contribution is in-kind, therefore not affecting the budget’s bottom line, she noted.

Broadband expands opportunities in rural areas, Ehresman told Missouri Watchdog. “Not having access to broadband certainly can be a disadvantage in terms of education, access to medical services, and jobs.”

Choices involve trade-offs, responded Christine Harbin, a research analyst with the Show-Me Institute, a free-market think tank. “If an individual desires faster Internet service, he or she can either pay the market rate for the service or relocate to a larger town in order to access a broadband connection that’s less expensive.”

Expanding broadband is a question of revealed preference, an economic theory by which it is believed to be possible to discern the best option on the basis of consumer behavior, Harbin told Missouri Watchdog.

“To many people, living in a rural area is more important than having fast Internet service, and this is revealed from the fact that they don’t relocate to a more urban environment,” she said, adding that individuals face trade-offs by living in urban areas as well; for example, hiking trails are not as easily accessible as in rural areas.

“It’s not the role of government to subsidize some activities over others,” Harbin concluded.

By Brian R. Hook, brhook@missouriwatchdog.org, (314) 482-7944