Symposium | America Connected

Connecting the Unconnected. Finally.

By Paul de Sa

Tagged Biden AdministrationbroadbandPoverty

In 2009, Congress provided funding for the Federal Communications Commission (FCC), the country’s telecom regulator, to develop a national broadband plan to “ensure that all people of the United States have access to broadband capability,” including a “detailed strategy for achieving affordability of such service and maximum utilization of broadband infrastructure and service by the public.” Though a 360-page plan was delivered the following year—and tens of billions of private and public dollars have been spent on broadband during the subsequent decade—our nation is still far from achieving its goals. The latest FCC data estimates that 14.5 million Americans lack access to fixed, terrestrial broadband, though the actual number could easily be twice as large, given the Commission uses a methodology that it acknowledges leads to a material undercount of unserved locations. Moreover, the Pew Research Center finds that 44 percent of adults with annual incomes below $30,000 lack a home-broadband subscription, compared to just 8 percent of those with annual incomes of $75,000 or more, a stark inequality in utilization.

Further, during the pandemic, the collapse of public life has not only increased the importance of being online—as schools and workplaces, doctors’ offices and DMVs have virtualized their services—but also reduced opportunities for free Internet access in communal spaces such as public libraries. As a result, the daily disadvantages suffered by those without their own devices and broadband connections have increased substantially. Millions of adults and children are excluded from the online world when it has become even more important to be there.  Adequate connectivity has become essential for most aspects of modern life, and the United States must do a better job of ensuring universal access to affordable broadband.

Why Isn’t Everyone Connected Yet?

In contrast to many domestic policy challenges, the goal of universalizing broadband is bipartisan, affects both rural and urban areas, and is achievable with relatively moderate expenditures. Further, there is general consensus about the policy pincer movement needed to achieve the goal. On the supply side, where there is no commercial case for building broadband networks—in low-density, rural areas (i.e., places with high deployment costs) and in low-income areas (i.e., places with low expected uptake and therefore limited profit)—that market failure needs to be remedied with sufficient support to make the business work for at least one credible player. On the demand side, those who need, but cannot afford, broadband should qualify for subsidies, ending the de facto redlining of the ability to access online services.

But despite agreement on this high-level approach, to date, significant action has largely stalled for three reasons.

First, the problem of inadequate broadband deployment has mostly been left in the realm of esoteric telecom policy, rather than considered as a critical part of the nation’s twenty-first century infrastructure plans. For example, federal, state, and local governments budget almost no tax dollars for broadband networks, compared to annual expenditures of more than $400 billion on transportation and water infrastructure. This is particularly unfortunate given that—even aside from the equity implications—the return on investment in digital infrastructure is relatively high, due to both direct job creation from network construction and the direct and indirect economic benefits of getting communities online. Just as talking about the importance of roads doesn’t fill any potholes, giving speeches about the importance of broadband—as almost every political leader has done over the last year in response to the obvious insufficiency of the nation’s connectivity—will do nothing in the absence of public spending to augment private investment.

Second, the unremitting (though unconscionable) resistance on the part of many wealthy Americans to the government subsidizing essential services for those who cannot afford them has led to little action being taken to assist with broadband adoption, beyond a small, Reagan-era program (“Lifeline”) funded by user fees that now primarily supports mobile voice with minimal amounts of low-quality data connectivity. Perhaps this should not be surprising given the country’s reluctance to ensure basic levels of food, shelter, and health care; but even those who don’t like “entitlements” should be persuaded by the savings that would result from using broadband-based delivery for health care, education, and other services. Indeed, numerous studies support the common-sense conclusion that broader use of telemedicine and e-learning for job training, college, and school result in savings that far outweigh the cost of the necessary broadband connections and devices. The real barrier to action is the lack of a holistic view of the costs and benefits of subsidizing broadband, with the focus in telecom policy only on the costs, absent any accounting for the substantial benefits—economic and otherwise—that accrue to individuals and the nation in other areas.

Finally, through quirks of history (and effective lobbying), broadband networks in the United States have ended up being owned by politically powerful cable and phone companies that are largely deregulated, despite limited competition. As a result, federal and state regulators have mostly surrendered—or, more often, have been forced to surrender—the direct tools necessary to make broadband services affordable and accessible, such as retail-price regulation and build-out requirements. Regulatory actions tend to be formulated through a provider-centric rather than consumer-centric lens, for example favoring deployment over usage, and deprioritizing policies that might increase competition. Further, for-profit providers (unsurprisingly) construct service offerings to maximize profits, rather than access, leading to high prices and limited discounting for low-income households.

A New Strategy for the New Administration 

The Biden Administration’s goals of restoring a functional federal government, driving economic recovery, and “building back better” lend themselves to a new strategy for universalizing broadband, with a three-pronged approach to directly address each of the barriers described above.

First, any significant plan for investing in infrastructure must include sufficient funding in the form of grants and loans for both initial capital investment and ongoing operations and maintenance of universal, future-proofed broadband networks. This would likely take only a few percent of a trillion-dollar infrastructure investment plan and—as the direct and indirect economic returns from investing in broadband are greater than many other forms of infrastructure—would be one of the most productive aspects of any such national initiative.

Second, the Administration should recognize that the task of universalizing broadband has become too important to remain solely the domain of telecom policy. Rather, broadband needs to be elevated to reflect its role as part of the foundation for almost every aspect of the domestic recovery, from remote learning to rural development, telehealth to structural equality. As such, the federal government needs to take a coordinated approach to broadband policy, led from the White House, so that agencies from the FCC to the Department of Agriculture to the Veterans Administration aren’t independently trying to solve the broadband problem, considering only the costs and benefits in their own policy siloes. Further, many state, Tribal, and local leaders have recognized the importance of broadband and are keen to start partnering with the federal government, which has largely ignored them for the last four years.

Third, policymakers and advocates need to recognize that, for better or worse, Internet service is going to continue to be provided, on the whole, by a handful of private companies. Because of incumbents’ political power, the high fixed costs of building broadband networks, and the difficulty of persuading profitable subscribers to switch providers, there are no practical initiatives that the Administration can take to turn the industry into either a price-regulated public utility or a robustly competitive market. Even if new technologies, such as 5G or the “low earth orbit” satellite constellations that SpaceX and Amazon plan to launch in the coming years, are successful, the market will remain highly concentrated with little price competition. It is therefore important to find a pragmatic middle ground between broadband providers earning a reasonable profit and efficient use of public funds. For example, if the government is going to subsidize companies’ network deployments, then the dollars should be conditional on providers offering affordable services for the lifetime of the network. Similarly, if the government is going to subsidize adoption, the taxpayer should get a volume discount, not pay retail rates or settle for sub-standard service that continues to disadvantage low-income consumers.

Unlike many other problems facing our country, we know how to solve the universal broadband problem. The challenge for the new Administration is not figuring out what to do, but rather being willing to spend and act, not just plan and talk.

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Paul de Sa is a co-founder of the advisory firm Quadra Partners and served as Chief of the FCC’s Office of Strategic Planning from 2009-12 and 2016-17.

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