A study finds big broadband providers boost capacity in politically competitive counties, then states adopt fewer pro-entry measures such as rights-of-way reforms.
New research drawing on a decade of U.S. broadband expansion suggests that large internet service providers may be able to shape state policy not only through lobbying, but also through where and how aggressively they invest.
Analyzing broadband deployment from 2010 through 2019 alongside state-level policy actions, economists Karam Kang and Mo Xiao find a consistent political pattern: big providers increase broadband capacity more in counties where elections are closely contested. In other words, areas that could plausibly swing between parties—places where elected officials may be especially sensitive to constituent satisfaction—appear to attract disproportionately greater capacity expansion from the largest firms.
The authors then connect these investment choices to what happens next in state policy. Their data show that when large-provider capacity is higher in these politically competitive counties, states subsequently adopt fewer policies that would otherwise make entry and expansion easier for other broadband providers. The relationship is particularly strong for “rights-of-way” accommodations—measures that streamline access to public land, poles, conduits, and similar infrastructure needed to lay fiber or build out networks. Because navigating rights-of-way is a common cost and delay for would-be entrants and smaller firms, such accommodations can materially lower barriers to deployment. The study’s results indicate that these facilitating steps are less likely to appear after dominant providers expand capacity in electorally pivotal areas.
To make sense of these patterns, Kang and Xiao develop a theoretical model in which a policymaker weighs the benefits of intervening to encourage broadband deployment—such as improving coverage, lowering prices through competition, or accelerating buildout—against political or administrative costs. In the model, a large firm’s capacity investment can reduce the policymaker’s perceived payoff from taking pro-entry action. If service improves enough, the argument goes, the political gains from pushing additional supportive policies may diminish. That dynamic creates room for what the authors describe as “policy deterrence”: strategic investment that makes future intervention less attractive.
The model highlights consequences that extend beyond the large firm’s own footprint. By discouraging policies that would ease competitors’ deployment, deterrence can increase the large provider’s market share. It can also leave overall broadband buildout lower than it might have been under a more entry-friendly policy environment, even if the initial investment surge raises capacity in targeted counties.
The paper includes acknowledgments to numerous scholars and seminar and conference participants who provided feedback. The authors state they have no financial relationships relevant to the research, and they emphasize that any errors are their own. The study is disseminated through the National Bureau of Economic Research, which notes that the findings and views are those of the authors and do not necessarily represent the NBER’s positions.
Why it matters
If broadband investment can dampen governments’ incentives to adopt pro-competition deployment policies, the mix of infrastructure and regulation may be jointly determined—especially in politically high-stakes places. That could affect smaller providers that rely on rights-of-way and similar reforms to expand, and ultimately shape prices, service quality, and coverage for households. Policymakers and regulators may want to watch whether investment surges in “swing” areas coincide with fewer entry-facilitating reforms, and what that implies for long-run deployment.