The Biden administration’s American Jobs Plan is riddled with issues, especially when it comes to a broadband deployment strategy. The plan seeks to impose 20th century command-and-control government mechanisms, akin to that of an electric grid, to a thriving and diverse internet ecosystem. Sadly, this plan will only leave consumers with less competition and higher cost for broadband services.
The crux of the plan is to create a nationwide municipal broadband network that the government will build and operate to compete with private carriers. In theory, adding another competitor (even one that is government owned) should increase network deployment and decrease the overall cost to consumers. Unfortunately, the opposite is true. Government-owned networks end up costing the taxpayers more for less broadband infrastructure. This is largely due to the maintenance and upgrades that networks need. Expenditures that the government simply cannot afford. These models also edge out new competition by prioritizing government builds in ideal locations, forcing private companies into a cooperative agreement with the local government monopoly. It’s either that or effectively cease operating in an area.
Even outside of this issue, the plan imposes a “future proof” requirement that would nearly eliminate competition by wireless and satellite providers. The requirement implicitly redefines broadband to the absurd speed of 100/100 Mbps, which only fiber can provide. This takes satellite and wireless carriers out completely. It means the United States would only recognize those providing fiber as broadband providers. This is misguided, as 100/100 Mbps is unnecessary for today’s consumer use. In fact, consumers could run Netflix on multiple devices in the same house with only 25/3 Mbps at most. 100/100 Mbps is simply overkill unless you’re a devoted gamer.
The Biden plan also imposes rate-regulation to promote artificial competition in its newly defined broadband market. The administration’s underlying belief is that the internet acts like a public utility. Although the internet of the 1990s was far more comparable to a “dumb pipe,” today’s broadband infrastructure is far more dynamic than that of a power grid or water main. When the Federal Communications Commission tried to reclassify broadband as a public utility in 2015, we saw fewer competitors in the broadband market and a large divestment in our broadband infrastructure. These two factors alone disincentives start-ups, such as Starry, and satellite providers, such as Space X and Amazon, from investing in their respective broadband infrastructures. That limits their providing services that actually bridge the digital divide in rural areas.
Another important issue is that fiber-optic cables are incredibly expensive to deploy, and the plan’s $100 billion disbursement would not even begin to cover the cost. For example, a one mile build with 13 homes has a total project cost of $20,000 plus $600 for each home that is connected to the service. This means that if only 7 of those homes sign up for service, the cost per home served jumps to $3,460. This isn’t even a rural example where houses can be several miles apart. Now take that figure nationwide! The math just is not there and will leave many without internet access.
This plan also relies on an unsound assumption. Namely, that broadband in the U.S. is worse than in other countries. To make its case, the administration uses a similar tactic to that of the Pentagon when the agency attempted to nationalize 5G. They both conflate a country’s investment in broadband with a lack of deployment as compared to countries such as China. However, there is virtually no data to support the notion that more government investment equals a county’s dominant position in broadband. In this case, it means the opposite.
The U.S. allows privately owned carriers to lead the charge with a slower deployment strategy. There’s a reason for that: it ensures that their wireless networks can efficiently inter-operate with their entire network, which yields better service. This is why the European Union and China trail behind the U.S. in both deployment and broadband speeds. Hence, our current strategy is working without Biden’s impending restrictions.
Let’s not make this a national policy.
Joel Thayer is outside policy counsel for Lincoln Network and an attorney with Phillips Lytle LLP’s telecommunications and data security and privacy practice teams.
