Keeping up with the Congress: The Good and Bad of the Broadband Infrastructure Package
Providing Support for Broadband Deployment
This is a bit of a cop-out on my part, but it’s my list, so here we are. Broadband is critical infrastructure, and the pandemic only exacerbated the need to support broadband deployment. Markets must remain the driving force behind our broadband strategy, but some communities lack the potential profits to justify deployment in isolation. While some may argue that cost-of-living in these areas may factor in things like a lack of broadband, or that tax dollars are better spent elsewhere, providing connectivity to unserved Americans can drastically improve their ability to participate in the digital economy. This may be an obvious point, but the fact that the Biden administration understands the importance of broadband and includes infrastructure deployment as a key priority is something worth celebrating.
Focusing on Unserved Areas
The package rightly acknowledges the need to focus on unserved areas first and requires states to provide coverage to these areas before any funding can go to areas with existing networks. Currently, the Federal Communications Commission (FCC) defines broadband as having speeds of 25 Mbps download and 3 Mbps upload. This speed threshold generally covers the basic requirements for most modern applications, though some have argued that we should increase the definition’s speed thresholds. As a recent Deloitte report highlighted, increasing access to broadband at a baseline level has significantly more economic impact than increasing speeds. While I understand why proponents of increasing speed thresholds think that the baseline 25/3 Mbps has become outdated, the fact is that many communities across the country are unserved—lacking even this baseline level of service. If we allow funding to go to underserved (below 100/20 Mbps) areas before covering all of the unserved areas, then unserved communities will only fall further behind as companies may find it more profitable to upgrade existing networks first.
Avoiding Symmetrical Speed Requirements
Though the definition of broadband won’t be changing, any network funded by this bill will have to be updated to meet a speed of 100 Mbps download and 20 Mbps upload. Many have called for any broadband deployment projects that receive funding through the infrastructure package to have a minimum of 100 Mbps up and down. Usage data doesn’t support this symmetrical speed threshold: consumers currently download 14x more than they upload. The reason, therefore, proponents want to set this speed threshold is because it would essentially require grants to go to only fiber networks—a technology that would theoretically future-proof the networks.
However, this approach would be misguided for a few reasons. First, and most obvious, not all communities are the same. Fiber is not ideal in every situation, and many existing networks that already provide excellent service couldn’t simply extend without changing infrastructure. Things like fixed wireless and satellite internet may also make more sense for a community in which the costs of deploying fiber are just too high. Second, many of these technologies are still in their infancy, and foreclosing their ability to compete by only subsidizing fiber would limit any future innovation. It remains to be seen whether something like satellites will ever truly resolve latency/consumer equipment cost issues, but we shouldn’t hinder the ability for these networks to compete.
The infrastructure package does not impose symmetrical speed requirements on grant recipients, meaning providers can utilize different technologies and build out networks in a more cost effective manner. The package does require networks to offer speeds greater than 25/3 baseline; specifically 100 Mbps up and 20 Mbps down. While these speeds are still somewhat arbitrary and may not reflect what Americans actually need, moving away from a symmetrical speed requirement is the right approach.
In awarding funding to broadband projects, the package prohibits states from choosing to exclude support for municipally run broadband networks. Not all efforts by municipal governments to get involved with broadband provision are bad, but they present significant challenges that can stifle deployment if not done carefully or in a manner that contemplates the effect subsidized competition will have on private investment. For example, many municipal projects can leverage captive rate-payers on the utility side of a business (normally an electric utility) to subsidize costs on the broadband side. If the municipality actually competes with private providers, those private providers may be excluded from access to critical infrastructure, making it more difficult for them to deploy. All of this comes with significant risk to the taxpayer, and considering subsidized entry can drive out private investment, a failed municipal network can be disastrous.
The package would require any provider who receives funding to offer a plan for low-income consumers at rates dictated by the state in consultation with the National Telecommunications and Information Administration (NTIA). While the package tries to make clear that it does not allow rate regulation of broadband, this provision does just that. It is clear that affordability is a key challenge, and the existing subsidy mechanisms for consumers need to be updated. However, the package goes too far in allowing rate regulation, which distorts the market and limits potential profit, thereby hampering potential investment in these networks.
The market must be the driving force, and support for low-income Americans should go directly to those consumers—not to mandates on what plans providers must offer. As low-income consumers increase in purchasing power, further investment and options will become available.
Broad Delegations of Authority
Finally, the package would grant broad authority to the NTIA and states to distribute funds, which can lead to waste and subsidization of already competitive markets. For example, the NTIA will be granted broad authority to define best practices regarding reliability, cybersecurity standards and quality-of-service of the subsidized networks. While these are important considerations, they should have been addressed at the outset and not delegated to the NTIA. Likewise, states have fairly broad authority to spend the money, which isn’t inherently bad. Folks on the ground generally have a better idea of what local communities need, but without additional restrictions on how the funding could be used, projects that may not actually increase availability or adoption can siphon funds away from critical efforts to bridge the digital divide.
And this isn’t even to mention a broad grant of authority to the FCC to “facilitate equal access to broadband internet access service.” While obviously a laudatory goal and something we must strive for, there are almost no restrictions placed on the FCC in passing these rules. Rather than just giving the agency a broad mandate to solve the problem, Congress would be better served narrowly identifying the issues and designing targeted responses to those issues.
Some good policies made it into the final infrastructure package, and promoting broadband deployment is a challenge worth taking. But as lawmakers consider their votes, I urge them to remember that the market driven approach has worked; we shouldn’t forego this baseline model to broadband deployment as we contemplate how to connect those areas that the market hasn’t been able to reach.
Image credit: Bill Perry