Biden aims to spend $100B of the $2.25T spending bill on expanding the nation’s broadband network
Former FCC Chairman Ajit Pai joins 'America's Newsroom' to discuss Biden's infrastructure plan.
Broadband internet has become part of America’s core infrastructure. It’s right to focus on it in the infrastructure debate, but President Biden’s most recent proposal offers a misguided solution: Giving government more control.
As I can attest from my time as mayor of Provo City, this is an ineffective way to pursue the worthy goal of expanding broadband access, which is more important than ever in the wake of the coronavirus pandemic. The better path is to lean on the expertise and innovation of private companies.
When I served as mayor, no challenge loomed larger than Provo’s government-owned broadband network, which I inherited upon taking office. The iProvo network was established with the promise of delivering affordable high-speed internet connections to all the city’s residents.
But the network failed to effectively reach residents across the city and created massive costs that were ultimately paid for by residents. Our local paper dubbed it a millstone around our necks. The debt we incurred to build it dictated the city’s every move.
We considered all of our options as we looked for a path forward, including letting the network go dark. My team and I ultimately decided it was in everyone’s best interest for the government to get out of the broadband business.
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After reaching out to many potential buyers, we found a private company, Google Fiber, that fit the bill. It had more expertise and resources than us to make the project work; it could use its resources to upgrade and expand affordable internet services for residents. In 2013, Provo City sold iProvo to Google Fiber for $1.
You read that right. We sold it for $1 because that’s how little the government-owned network was worth. Its technology was out of date and its infrastructure was unworkable.
We had to come to terms with the fact that we had a decade-old network and just like a computer that’s a decade old it was near worthless. Technology advances so quickly that what is cutting edge today may be obsolete in just a few months.
The whole experience taught me that government-owned broadband networks have serious flaws that prevent their success.
First, investing in broadband networks involves risk. Even well-financed and experienced private operators lose money. Taxpayers don’t sign up for such risk nor should taxpayer dollars be spent on such risky ventures.
The Biden plan would invest billions in broadband expansion while giving preferential treatment to government-owned networks.
Second, there is an inherent problem with the government stepping out of its core competency. There are dramatic differences between standard government functions – including streets, sewers, parks and city-owned utilities – and the highly competitive and fast-changing world of broadband deployment.
This experience also taught me the vital lesson that the private sector is far better equipped to handle such a challenging, important and risky investment. All of this is further supported by the fact that our nation’s most successful telecommunication companies have invested over $2 trillion in these networks over the past 25 years. They clearly see the technological potential, yet keenly understand the challenges of delivering these cutting-edge services.
That’s one of the reasons why I’m so concerned about the Biden administration’s rural broadband proposal. The Biden plan would invest billions in broadband expansion while giving preferential treatment to government-owned networks. There’s no question rural broadband investment is needed in Utah and many other parts of rural America, but the Biden approach is completely misguided.
Study after study shows that government-owned networks fall short. Provo is far from the only proof. One recent study found that only 10% of such networks generated enough revenue to cover the costs of development over a 30-40 year span. Nearly 60% didn’t make enough money to cover their operating costs. Five didn’t expect to do so for 100 years. Another study, from my home state, found that such networks "result in negligible benefits for public and private users."
Given the evidence, it is inappropriate for federal broadband funding to favor government-owned networks. The White House and Congress should let states and local governments decide when and where that is the case. A better path is for Congress to streamline the regulations that stand in the way of rural broadband rollout, and I have introduced two bills to that effect.
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I’m also concerned about another round of spending. Congress invested hundreds of billions of federal resources into broadband deployment over the past year, including in broadband programming for rural and underserved communities. Instead of proposing billions more, we should be concentrating on stretching the resources we allocated as far as possible.
Congress has a bipartisan track record of smart investments in rural broadband. While the Biden administration’s infrastructure plan is well-intentioned, it does not meet that standard. It spends too much money and favors the government-owned networks that are almost always a bad investment. Americans without broadband internet access – in Utah and in every state – deserve better.