While on a visit to the rust belt city of Pittsburgh, President Joe Biden released his American Jobs Plan, claiming it would “create millions of good jobs, rebuild our country’s infrastructure, and position the United States to out-compete China.” Aside from fixing highways, rebuilding bridges, and upgrading transit systems, Biden’s plan also calls for “affordable, reliable, high-speed broadband to every American.”
While Biden’s plans for broadband might seem positive, his federally driven approach will deny future consumers the benefits of past private sector investments that have resulted in faster speeds, lower prices, and enhanced accessibility for American consumers.
Rather than pursuing a top-down approach to expanding broadband access, the Biden administration should incentivize private companies, with a track record of closing the digital divide, to deploying infrastructure and reach the estimated 19 million Americans who do not currently have access to the internet.
Under Biden’s proposals, $100 billion would be spent over ten years to build and maintain high-speed broadband infrastructure to reach 100% of Americans. Additionally, Biden’s plan would allow “municipally-owned or affiliated providers and rural electric co-ops” to compete with private companies. Finally, Biden’s plan would offer temporary subsidies to consumers to offset the cost of “overpriced internet service.”
One of Biden’s broadband infrastructure plan’s principal flaws is how it ignores the significant financial investments private companies have made in upgrading digital infrastructure. In 2019, US Telecom reported private companies invested $78.1 billion in network infrastructure, an investment that was “delivering resilient networks and more broadband competition at higher speeds than ever before.”
While Biden’s proposal plans to deliver $100 billion over ten years, private sector companies invested $1.78 trillion between 1996 and 2019. These statistics show the federal government simply is not capable of making the necessary investments to expand internet access.
The mammoth contributions private sector companies have made to expand broadband compared to Biden’s proposal shows why the federal government is not best suited to ensure expanded consumer access.
The results of this financial investment for consumers have been notable. In April 2020, the Federal Communications Commission (FCC) reported the number of rural Americans who had access to 250/25Mps internet speed, the metric for high-speed connections, had increased by 85%. Additionally, studies from Pew Research show while broadband connectivity has yet to reach every community type in the United States, 85% of adults in rural communities had access to broadband services. In 2000, only 42% of rural adults had access to broadband.
Privately run broadband networks also resulted in lower costs for consumers, rebutting Biden’s view that federal intervention is an efficient remedy to high prices. The 2020 Broadband Pricing Index reported between 2015 and 2020, the average price of broadband declined by 28%, while speeds have increased between 15 and 27%. The decline in costs and increases in service can be attributed to “fierce competition amongst rival companies and technologies, fueled by sustained network investment.”
For consumers, the decline in prices and increase in speeds not only means more low-income Americans can access the internet, but they can now access online education, virtual healthcare, and the ability telecommute to jobs that are beyond a reasonable physical commute.
Closing the digital divide and expanding broadband access to rural America is a laudable policy objective that rightly enjoys broad bipartisan support. Unfortunately, President Biden’s top-down approach fails to recognize the private sector has been the principal driver of broadband expansion by providing lower costs and better service for consumers – not the federal government. Rather than turning to government, the Biden administration would be better placed to create a regulatory environment that supports their investments. Taxpayers might save $100 billion as well.