I’ve been reading everything I can find about the next administration’s plans for investing in infrastructure. It looks like the heart of any plan is going to be tax incentives to lure private money to invest. It’s likely that telecom infrastructure will fall under the broader infrastructure plan unless Congress gets involved and pushes for direct government investment in broadband. There are rural members of Congress from both parties asking for a rural broadband funding plan separate from other infrastructure spending, but it’s too early to know if that has any legs.

So, how might tax incentives benefit the construction of more broadband networks? One benefit of such a plan is that it might attract back a lot of the money that US corporations have been hoarding overseas to avoid US taxes. If the tax credits are good enough, corporations like Apple might pull some of that money back into the country – and such money would have to be invested in infrastructure. Tax credits also ought to make it more lucrative for pension funds, insurance companies, and wealthy investors to invest in infrastructure.

But there is one feature of private investment that is not going to change due to tax credits – private investors are still going to want decent returns on any investment. That means that the private money is a lot more likely to chase infrastructure projects with guaranteed decent returns like water systems, toll bridges or electric grids. And it means that new private money is not likely to pursue infrastructure that has no return or a low return such as freeway overpasses, public transit or city streets.

Investing in fiber infrastructure lies in between these two extremes along with other infrastructure like toll roads. These kinds of infrastructure have the potential to make a decent return, but are not guaranteed to do so. And worse, infrastructure like fiber networks and toll roads can lose money for an investor.

It is the perceived risk that has kept private money from investing in fiber today. Investment in fiber in the last few years has come from several sources. First is from telcos that can mortgage their existing equity to finance fiber. This ranges from numerous small independent telephone companies up through CenturyLink and AT&T. There is also some municipal bond money being used to build fiber – and bonds are viable since they are generally supported by tax revenues in case of poor performance of the fiber asset. But there has only been a little more than a hundred projects financed with bonds over the last decade, and most of them are in relatively small towns. There has been some private money invested in fiber, such as has been done by Google, but that has also been relatively small on a nationwide scale.

It is no sure thing that a tax credit will be sufficient to lure private money to invest in fiber. A tax credit cannot reduce the risk or offset the possibility that the investor could lose their investment if the project doesn’t perform. A tax credit does not change underlying fundamentals of an investment – it instead adds icing on the cake for projects that already look relatively safe.

We have some history with tax credits and telecom. For example, there was an investment tax credit program for investing in telecom networks in the 1960s. The purpose for that particular program was to promote construction to stimulate job growth. Since that was long before competitive telephony, the credits went entirely to the incumbent telephone companies. But the ugly truth is that these tax credits did not induce much new investment. Instead, telephone companies took the credits for network expansions they were already planning to build.

My best guess is that new tax credits are not going to do much better for fiber this time. Companies that are already investing in fiber networks like CenturyLink will likely gain great benefits from claiming tax credits for their already-planned expansions. It is possible that tax credits might even induce somebody like CenturyLink to accelerate construction to take advantage of the tax credits, but it’s unlikely to lure them to build somewhere they weren’t already planning to build.

But tax credits are not likely to lure other big ISPs like Verizon or AT&T to build new fiber. Those companies already have sizable annual capital budgets and they will probably work hard to classify as much of that infrastructure as possible to qualify for the tax credits. But they are unlikely to build fiber to any homes or businesses that weren’t going to get fiber anyway.

And tax credits are unlikely to change the ability of smaller fiber builders to raise money. By definition, competitive overbuilding is a risky business from the perspective of an investor. Private investors like safety, and that means avoiding companies that don’t have a strong balance sheet. This means that private money is rarely available to small ISPs. Finally, I don’t see tax credits changing the financial picture for very many rural fiber projects. The vast majority of fiber projects that aren’t easy to finance today are not going to be made significantly more viable with tax credits.

I may be proven wrong, but I’ve spent the last decade working to finance fiber projects. And I can’t see tax credits changing the underlying risks of investing in fiber to the point where it will attract huge amounts of new money. There will be some new money attracted to fiber investments – but only for projects that have a relatively safe return such as fiber to cell towers or undersea cables. It’s already difficult to attract bank and investor money to last-mile fiber and I just don’t see tax credits fundamentally changing that.