Michigan to Spend $238 Million to Connect 71,500 to the Internet

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Gov. Gretchen Whitmer and officials with her Department of Labor and Economic Opportunity are lauding the state’s internet program, despite data that shows it costs taxpayers far more than it needs to.

Whitmer and the LEO last month celebrated 10,000 homes and businesses connected to the internet through the state’s Realizing Opportunity with Broadband Infrastructure Networks program.

“The second and final round of ROBIN grants has been awarded and will expand the program to invest $238 million in grant funds and an additional $218 million in private matching funds to bring high-speed internet access to more than 71,500 previously unserved locations throughout the state,” according to a Nov. 25 press release.

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The program is funded through the federal government’s Coronavirus Capital Fund Investment project, at a cost of $6,377 per connection – $3,329 from Michigan taxpayers and the rest in matching funds, Michigan Capitol Confidential reports.

Eric Frederick, LEO’s chief connectivity officer, told the news site the state is using fiber-optic broadband for the program because it’s the best option, though he acknowledged there’s cheaper alternatives.

“Unlike satellite systems like Starlink, fiber provides consistent high-speed internet uncompromised by bad weather, signal latency, or limited bandwidth availability,” he said.

But Ted Bolema, 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, suggests the government-led program faces numerous hurdles that drive up costs that don’t apply to private companies that offer more for less.

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“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,” he said.

Bolema doesn’t buy the LEO’s justification for Michigan’s unnecessarily expensive program, noting spending is often directed to populated areas that already have access, diverting funds from underserved, typically rural areas it’s supposedly designed to address.

“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,” he wrote in an email to Michigan Capitol Confidential.

“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,” he said.

Others, including incoming Federal Communications Commission Chairman Brendan Carr, suggest vouchers for underserved areas would allow residents to connect to high-speed internet for much cheaper than $6,377 per connection.

Michigan Capitol Confidential’s review of the cost to connect to Starlink, a subsidiary of billionaire Elon Musk’s SpaceX, shows a connection cost of between $599 and $249 each. At $599, the 71,500 connections in Michigan would cost about $43 million total, or about $195 million less than what Michigan taxpayers are contributing to Whitmer’s ROBIN program.

That program “will reach 51 of Michigan’s 83 counties by the time construction is complete at the end of 2026,” according LEO, while Starlink connections would take a fraction of that time and would be available to all 83 counties.

“ROBIN is just one piece of (the Michigan High-Speed Internet Office’s efforts to increase affordable internet access,” according to the November press release. “MIHI is also working to implement the Broadband Equity, Access, and Deployment (BEAD) Program and will soon begin accepting project applications from entities that wish to apply for funding to construct high-speed internet infrastructure.”

The BEAD program was spawned by congressional approval to spend $42 billion to expand internet access across the country as part of the 2021 Infrastructure Investment and Jobs Act.

In August, the MIHI explained how bureaucratic procedures continue to prevent officials in Michigan from moving forward on the program Whitmer promised will expand access to “over 200,000 Michiganders … across the state.”

The bottom line is more than three years after Congress approved the spending, not a single connection has materialized. The Mackinac Center juxtaposed that reality with millions connected by Starlink through efforts to expand service that started just months before Congress approved the $42 billion BEAD program.

“During roughly the same time period in which the BEAD program administrators have been working on processes for distributing government funding, Starlink has connected more than 3 million households and businesses to the internet,” according to the Mackinac Center. “Starlink is reaching the very people the Michigan High-Speed Internet office should be targeting, with 85 percent of Starlink’s subscribers in rural areas.”