US President Joe Biden says he wants every American to have access to high-speed internet through his $100 billion broadband plan. But industry heavyweights worry his initiatives will leave them out of critical federal funding.
Brendan Smialowski/AFP via Getty Images
President Joe Biden wants to spend $100 billion to connect every American to affordable high-speed internet. It’s a lofty goal that’s hard to dispute, right? Lobbying groups representing cable and telecom companies that deliver those services, however, are worried Biden’s hefty spending plan will leave them out of the running for government grants and subsidies that could be used to offset the cost of building new infrastructure.
Key aspects of the broadband plan that were announced last week as part of Biden’s $2.3 trillion infrastructure package include prioritizing spending for government-run or nonprofit networks. Such providers have “less pressure to turn profits” and “a commitment to serving entire communities,” according to a White House fact sheet.
The plan also prioritizes federal dollars to support companies deploying “future-proof” infrastructure, which many in the industry believe is a veiled reference to favoring companies building fiber infrastructure. And the last concern is over Biden’s pledge to make broadband more affordable by bringing down prices.
Michael Powell, head of the cable industry lobbying group NCTA, has called the Biden proposal a “serious wrong turn.” In a blog post this week, he said that the industry has the same goal as President Biden, “ensuring 100% of Americans have access to robust broadband networks.”
The harsh rhetoric underscores many of the challenges facing Biden’s infrastructure plan, which has already drawn criticism from Republicans, such as Senate Minority Leader Mitch McConnell, of Kentucky, who has called the plan a “Trojan Horse” for progressive programs and moderate Democrat Sen. Joe Manchin of West Virginia, who worries the proposed tax increases on big businesses are too high. But even an initiative with broad support, like universal internet access, will likely require deft negotiation and compromise. Biden’s push comes as more than 30 million still lack high-speed internet, according to the White House.
Powell, for his part, cautioned the Biden Administration against pushing policies that would penalize incumbent broadband providers. He points to the billions of dollars in private investment in broadband infrastructure that has “achieved spectacular results over the last decade and most notably met the enormous challenge of the pandemic, keeping Americans working from home, learning remotely, and using telehealth to stay safe,” as an important reason not to leave these companies out of future federal funding.
It’s a sentiment echoed by lobbyists representing the big telecom companies like AT&T and Verizon.
“Our shared communications networks are backed by $1.8 trillion in private investment that helped the country navigate the depths of the pandemic with reliable and resilient connectivity,” said Jonathan Spalter, president and CEO of USTelecom, a trade group for the telecommunications industry.
Spalter added that moving forward, Congress should continue to look for ways to “incentivize continued private investment to get the job done.”
Broadband is essential
The pandemic shed a bright light on the fact that broadband is essential to daily life. During the crisis, access to high-speed internet has become integral to our lives, as millions of Americans relied on broadband to work and take part in remote learning.
But it’s also highlighted just how many people are still without access. It’s a problem that is not just limited to rural areas, but exists in cities as well. Broadband policy advocates have been sounding the alarm on this issue for years. In spite of billions of federal dollars being spent encouraging broadband providers to connect rural communities in the hardest to reach areas of the country, the digital divide persists. Between 2009 and 2017, the federal government spent $47.3 billion to get infrastructure to these communities, according to a 2020 report from the US Government Accountability Office.
Another $20 billion over the next decade has already been lined up for rural broadband access. And Congress has also allocated $9 billion for deployment of high-speed 5G service for rural regions. Billions more has already begun flowing to underserved areas as part of the COVID relief packages.
Now the Biden Administration wants to devote $100 billion of the proposed $2.3 trillion infrastructure package to not only get Americans in rural areas connected broadband but to also make broadband more affordable to ensure low-income people can get access too.
The details of the plan are still fuzzy. But one thing is very clear: What’s been done in the past hasn’t worked and a new approach is needed.
“The Administration is putting internet service providers on notice,”said Kathryn de Wit, manager of the broadband access initiative at The Pew Charitable Trusts.
She added the message to the industry as well as to public officials, who oversee these programs, “is that they need to be better stewards of public funds.”
Bones of contention
One of the biggest issues that the broadband industry has with the Biden proposal is its focus on providing funding to municipalities and cities to build their own networks. For nearly two decades, the broadband industry has been critical of cities or municipally-owned utilities that have sought to build their own high-speed broadband networks in markets where traditional providers have not provided service or have refused to upgrade their infrastructure .
The industry argues that such networks backed by taxpayer dollars and government bonds unfairly compete against private industry. In state legislatures across the country and in Congress, industry lobbyists have pushed for restrictions and outright bans of these networks.
But progressives, including Sen. Elizabeth Warren of Massachusetts, have long pushed to loosen state restrictions on municipal broadband and to direct federal dollars to municipalities, public utilities and electric cooperatives.
In his blog, Powell acknowledged that local governments and electric co-ops can play a role in filling in broadband gaps. But he said the federal government should not have its thumb on the scale in their favor.
“The White House plan places a priority on government and non-profit networks to receive public funding,” he said. “We realize that rural co-ops or local governments may be the best solution in some unserved communities, but the government shouldn’t irrationally favor one solution over others.”
Powell also argued the same is true when it comes to the government prioritizing one type of network technology over another. While no specific details on the plan have been released, the fact sheet the White House put out last week refers to giving priority to “future proof” technologies. Many in the industry believe this is a reference to investments in fiber-to-the-home technology, which is capable of delivering near limitless network speeds on both uploads and downloads. While cable systems and some wireless systems can offer very high download speeds, it’s often not possible to offer similar upload speeds, which is increasingly important in the age of high-resolution video conferencing and virtual collaboration for people working from home. Powell argues that should not be a disqualifying factor for receiving federal grants.
“The cable industry offers the fastest internet service to consumers more widely than any other, with 1 gigabit speeds available to 80% of all U.S. homes,” he said. “Insisting that providers dedicate resources to [symmetrical 100Mbps/100Mbps standard] sacrifices much more ambitious targets like multi-gigabit networks where downstream and upstream speeds are right-sized to real-world uses.”
Biden also made it clear in his proposal that broadband needs to be affordable and that the government will not perpetually subsidize the cost while prices remain high. He stopped short of saying the government will regulate rates. But he implied that he wanted Congress to explore ways to drive down prices.
“When I say affordable, I mean it,” Biden said during his speech introducing the plan. “Americans pay too much for internet service. We’re going to drive down the price for families who have service now and make it easier for families who don’t have affordable service to be able to get it now.”
Powell said “the ambiguous idea of having the government regulate broadband rates” is “misguided.”
“Low-income citizens need subsidized broadband rates that are lower than any reasonable price that would result from a drawn-out government rate regulating process,” he continued. He also made it clear that should Congress head down this path, the industry would push back against these efforts in court.
“Such a process would be a thorny, lengthy morass of complexity, that would drag on for years at regulatory agencies and through the courts, further delaying the help that is needed,” he said.
Republicans have already declared that Biden’s infrastructure plan has little chance of getting their support. Given the Democrats’ slim control in the Senate, this means there will be much negotiation over the coming months. And no doubt, the broadband industry will be looking to soften the edges of the broadband proposal.
“We are ready to support a new broadband expansion plan that is well-crafted and will connect unserved areas and provide financial assistance to low-income and minority communities,” Powell said. “Billions of dollars are a big factor in this equation, but wise policies and carefully crafted details will make the difference between a watershed moment, and a flood of waste, failure and regret.”