Gerard Scimeca
Reasonable Americans agree that when people can’t afford the basic necessities of life, our government has a responsibility to step in and offer a helping hand. When families can’t afford food, for instance, the Supplemental Nutrition Assistance Program (SNAP) gives them vouchers to redeem at supermarkets, convenience stores and so on.
These programs — whatever their deficits — reflect a basic American decency, a fundamental belief that a great nation must also be a good nation. But the way these programs are constructed is also quintessentially American: families who benefit from SNAP do not go to a government-run grocery store. They go to private sector operations and spend public funds.
The idea of the government constructing grocery stores to address food insecurity sounds faintly ridiculous — but it is the exact approach that the Biden administration has proposed to expand Internet access. This plan, which intends to force the government into the Internet business, takes the generous instincts and impulses of the American people and betrays them.
President Joe Biden’s proposed American Jobs Act and recently-passed American Rescue Plan (aka “the stimulus”) both seek to close the digital divide in America — connecting those Americans who do not have internet access. The goal is noble, and it is that rare area of bipartisan agreement in today’s fractured times. Both Democrats and Republicans believe all Americans should be able to get online.
But there are major flaws in Biden’s approach to this goal. For one, he prioritizes government-run broadband as the solution to the digital divide. Make no mistake: there is a long and illustrious history of government-run broadband failures. The vast majority of these projects run at a loss, which leaves taxpayers in debt and threatens local bond and credit ratings. In the past, government-initiated broadband projects have even led to increases in electricity bills as local governments scramble to stop their financial bleeding.
Worst of all, those taxes, debts and steep bills haven’t helped connect more Americans to the internet, nor have they reduced prices for internet access.
So why, in the face of all that evidence, is the Biden administration plunging ahead with government-run broadband? One reason is that some politicians and activists simply prefer that broadband be run as a government business rather than a private one — they’ve bought into the long-discredited idea that the government can run more efficiently and cheaply than the private sector. Failure after failure hasn’t changed their minds.
What compounds the problems with Biden’s plan is that it redefines what it means to be “unserved” by broadband. By drastically increasing the definition of broadband speed — from 25/3 Mbps to 100/100 — the number of “unserved” Americans would skyrocket from around 4.3 million households to 64 million.
Here’s the result: because so many people would now be categorized as “unserved,” funds that should help connect rural areas or assist low-income Americans with their internet bills would instead go to gold-plating existing internet service and building redundant, government-run networks in areas that already have excellent broadband. And if history is any guide, those government-run networks won’t only be redundant — they’ll be poorly constructed and operated.
This approach would waste the goodwill of people on all sides of the political spectrum. Republicans are broadly supportive of FCC subsidies to low-income families to help pay for internet access. The Emergency Broadband Benefit was passed on a bipartisan basis last year, and it’s already helping over a million Americans pay for broadband, only one week after its launch. That temporary program can — and should — serve as a template for broadband affordability going forward. Crucially, it had support from both parties.
That program also demonstrates that we do not need a massive government-led restructuring of the broadband marketplace. There are private providers today who’ve invested $1.8 trillion in their networks, who have taken a leading role in closing the digital divide, and have connected over 14 million Americans to broadband through low-income plans that range from just $10-20 a month.
These providers should be at the forefront of any efforts to close the digital divide — not an afterthought — and policymakers shouldn’t be trying to run them out of town in a haphazard attempt to prove that governments can run internet networks.
The way forward is simple: the government should partner with the private sector to bring broadband networks to rural areas and make access more affordable for low-income Americans in need. The Biden administration should embrace this bipartisan approach and avoid lengthy and costly endeavors to restructure the market. Americans are fundamentally generous — but that generosity should not be taken advantage of for failed ideas and bad policy.
Gerard Scimeca is an attorney, chairman and co-founder of CASE, Consumer Action for a Strong Economy, a free-market oriented consumer advocacy organization.
In the 70’s, the federal took over the Mustang Ranch and tried to run it. They lost money selling hookers and whiskey. What does that say about their management skills.