Is rural Internet a ‘public good’?

I often wish that Star Tribune columnist Lee Schafer’s work could find its way off the business pages and closer to the paper’s front page because his work is too stimulating to be relegated to one of the most ignored parts of the newspaper.

People may — and should as a matter of intelligent discourse — disagree with some of his views, but he asks the right questions that should be the underpinning of public debate.

His July 22 column on the lessons of a tax-cutting scheme in Kansas should dominate any discussion of the shell game that constitutes an economic theory. It won’t be, of course, but it should be.

In his column today, Schafer doesn’t back away from an equally important question: what exactly constitutes a public good?

He tackles the question with some of the most emotional debates in Minnesota: The right to choose who takes your trash and garbage away, and whether people who choose to live in rural Minnesota have a right to publicly-subsidized broadband.

An economic case for subsidizing broadband isn’t even as strong as organized garbage collection, although the electric utility analogy comes into play here, too. Fast internet access isn’t a nice-to-have, advocates say, it’s a must-have like the electricity it takes to run a refrigerator or keep the lights on.

Here the problem is not too many competitors going after the same lucrative customers, and eliminating the risk of competition by forming local monopolies. It’s having so few potential customers in sparsely populated areas that no company can justify the capital investment.

This summer, crews have been building out a project in Itasca County paid for in part with a $1.98 million state grant announced last year. Having fast internet service will be a godsend for the potential customers in the area — all 1,255 of them. Just the state portion of the project alone works out to nearly $1,600 for each.

I may have missed it when I went looking through the list of “market failures” published in my handy economics reference book, but it was hard to come up with one that seemed to apply here. It could be as simple as the local provider correctly assumed customers in a low-density area wouldn’t pay what it would really cost to bring broadband there.

Is it a public good?

It’s going to cost a fortune for Minnesota to bridge the digital divide. But supporters say it’s necessary to keep young people from fleeing small towns (Disclaimer: Minnesota Public Radio has championed the expansion of high-speed Internet).

Is that something that hard-wired broadband will solve in the era of smartphone data? Check back in a generation.

Curiously, these specific “is this my problem to solve” questions rarely emerge as particular issues in election years, which may explain why the default answer in the state increasingly is “yes.”