Advocates have spent years calling for more government spending on Internet access. While they have seen some success in state legislatures, they may end up spending the waning days of President Obama’s administration trying to pull that effort to the federal level.
Though the United States has made “meaningful gains” in the deployment of broadband Internet access, “34 million Americans still lack access to fixed high-speed broadband,” Federal Communications Commission Chairman Tom Wheeler wrote in a Jan. 7 blog post.
Subsidy advocates throw a dizzying number of figures around about the accessibility of “broadband,” itself a loaded term. According to the FCC, the term refers to download speeds of 25 megabytes per second, and upload speeds of 3 Mbps. That contrasts with dial-up speeds in the 1990s, which reached less than 1 percent of the standard for today’s broadband.
The quality of today’s service was virtually unimaginable just two decades ago, but several states have spent considerable amounts trying to make that modern service more widely available. In particular, that includes states with large rural swaths where it can take longer to develop infrastructure. Some states, such as California and Minnesota, provide direct subsidies to companies willing to develop broadband infrastructure in hard-to-reach areas. Others, including Iowa, offer tax abatements to those companies.
Yet while the subsidies are often intended for rural areas, legislators from those areas are often the most skeptical of whether the money really needs to be spent.
“We need the government to butt out,” state Rep. Steve Drazkowski, a rural southern Minnesota Republican who chairs the state’s House Property Tax Committee, told the Washington Examiner. “It would be better if we gave people tax relief so they could develop their own connectivity options.”
To a significant degree, the state’s residents appear to have done that. Data collected from the FCC and other agencies indicates that more than 85 percent of residents have access to broadband through their computer or mobile devices.
With accessibility at that level, taxpayers can expect to achieve a rapidly diminishing marginal rate of return on their investment. But it remains a lucrative prospect for recipients of the funding: In November, the state announced that it was awarding $11 million to 15 telecom companies to engage in development.
“The state is picking winners and losers,” Drazkowski said. “This is not a proper role of government.”
For better or worse, the program is limited to Minnesota. But if regulators in Washington have their way, new federal programs could emerge.
Broadband is not being deployed in a “reasonable and timely fashion,” the FCC declared in a 3-2 vote along party lines on Jan. 28. That means more federal subsidies could be coming on top of those already doled out, something Republicans argue is unnecessary.
“There are numerous ways the FCC could promote broadband deployment without spending a dime of taxpayer money,” Commissioner Ajit Pai told the Examiner. He cited deregulatory measures that could be taken instead, such as eliminating a rule that requires telecom companies to prop up copper telephone networks that are largely unused. He also suggested streamlining a regulatory approval processes that treats modern wireless infrastructure according to anachronistic, decades-old rules.
“None of the deregulatory measures that could be taken would embroil the government in the kind of wasteful central planning that’s long been proven to fail at these goals,” Pai said.
The FCC has no deadline to take action, so it remains to be seen what may come of the January vote. Because the agency has the ability to raise funds through a “Universal Service Fee” imposed on consumers’ utility bills, it is able to fund its own programs largely free of any congressional oversight. It’s done that munificently in recent memory, increasing the size of the fund by 45 percent between 2008-15, from $7.2 billion to $12.1 billion.
The prospect that it could get involved concerns Drazkowski.
“It means the federal government is going to be taking money from some states and giving it to others,” he said. “In that scenario, it isn’t hard to see Minnesota, which already receives less back than it sends to Washington, coming out on the short end.
“The federal government is great at breaking ‘laboratories of democracy’ around the country and sending the bill to taxpayers when they’re done,” he added. “That’s likely what will happen if they get more involved with this issue.”
