State of the States Emphasizes Digital Infrastructure Funding

By Tamara Lowin
Senior Municipal Research Analyst
Van Eck Associates Corporation

As the country prepares for gubernatorial elections this coming fall, states are requesting access to sustainable broadband solutions.

With 36 gubernatorial elections in the fall of 2022, this year’s State of the State addresses are particularly influential. Constituents want to see that the party in power is addressing their current needs. This year we saw that in addition to the routine messages regarding budgets and employment, many governors focused on topics newly prioritized by the pandemic, predominantly the need for reliable and affordable broadband service, which appears to be a bipartisan platform.

The nation began to recognize the importance of home internet access at the start of the COVID-19 pandemic when over 10 million K-12 students could not attend remote schooling (this number does not include the students who could not attend due to a device deficit)1. As the pandemic continued, additional demands for technology presented themselves.

In addition to education, the work from home environment revealed that without sufficient speed, internet access was not reliable – especially when multiple users connected simultaneously. 2020 also saw internet hackers increasing their activity as more services moved online. States and local municipalities saw a significant uptick in data breaches, resulting in about $18.88 billion in recovery costs and downtime in 2020 alone,2 highlighting the critical need to address cybersecurity. Finally, the increased demand for tele-healthcare remains elevated, particularly for remote patients and less mobile patients.

In response to the digital infrastructure needs, the federal government included $65 billion in its infrastructure bill toward this endeavor and many governors highlighted the steps they are taking to thoughtfully spend the considerable subsidy in their State of the State speech.3 Addressing these needs will not happen quickly. The planning stage involves creating and staffing new departments and planning how to deploy funds. Multiple stakeholders need to agree, including governments, the health insurance industry, internet providers and municipal bond holders. The execution stage will also be lengthy, as the physical build-out of the necessary infrastructure will take time.

While not all states spent time discussing broadband access this year, its prominence across states, regardless of party affiliation, is noteworthy. We believe this will increase the probability of near-term progress and, importantly, the continued momentum, regardless of election outcomes. As an endeavor that is expected to take years in many states, the likelihood of fruition is positive for the nation.

Stay tuned as we continue to explore both cyber and capital infrastructure developments.

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Originally published by VanEck on April 11, 2022.

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1 Education Week.

2 Comparitech.

3 Federal Department of Commerce.

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