ACI Sends a Letter to GOP on Broadband Availability and Affordability

Senate Republican Leader McConnell and House Republican Leader McCarthy:

With millions of Americans needing the broadband door unlocked to access better education, improved healthcare, and higher-skilled jobs, we commend your efforts to continue to close the digital divide. We represent the American Consumer Institute, a nonprofit education and research organization. While we chair the FCC’s Consumer Advisory Committee, our views here are solely our own.

With many proposals circulating on this issue, we are deeply concerned that adopting some aspect of these proposals could be very counterproductive and wasteful to taxpayers, and we recommend caution.

Proposals that subsidize or seek to prioritize the role of local governments, nonprofits, and co-ops for building broadband networks to compete with private companies should be avoided, as they are doomed to fail. The faulty assumption that these entities will have lower costs for building networks than private internet service providers is not corroborated by empirical evidence.

A plethora of empirical research shows why and how government-run broadband networks fail to deliver access to reliable, high quality, affordable broadband. The overwhelming evidence points to the increased inefficiency of these networks due to the high fixed cost investments and the long-term debt obligations for the local residents, leading to low adoption rates and perpetual cross-subsidization of the internet service. In addition, government-owner networks do not invest in research and development and they do not contribute to standards setting, nor innovative technologies.

Those arguing for massive spending have incorrectly stated that the United States has the highest broadband prices in the world.  However, empirical evidence suggests the opposite. Misleading price arguments should NOT be used as an excuse to justify government intrusion into the private market, government-run networks, or government price controls.

Establishing arbitrary speed benchmarks, like a 100/100 parity between upload and download speeds, would prove unnecessary and wasteful. As empirical evidence suggests, insisting on symmetrical speeds, despite no evidence that consumers want or need them, would only direct subsidies away from truly unserved rural areas and toward urban and suburban areas that already enjoy gigabit download speeds.

Advocating closing the digital divide solely on the promise of future-proof networks would be a costly mistake. Running fiber to every unserved home is not only financially unfeasible, but also not ideal. Proposals should instead prioritize the variety of different technologies to meet the geographical diversity needs of unserved communities. With technological alternatives such as low earth satellite broadband that are already showing promising results in remote areas like tribal lands, limiting the expansion to fiber would only curb the progress to close the digital divide by bypassing other emerging wireless alternatives like TV White Space technology and expanding speeds of 5G broadband services.

While it is critical that Congress prioritizes efforts that promote broadband access and adoption for the unserved communities, any approach that includes the stipulations we discussed above would result in a disaster of regulation, spending, and excess that ignores the fundamental realities of how the Internet works.

Respectfully,

Steve Pociask, President, American Consumer Institute

Krisztina Pusok, Ph.D., Director, American Consumer Institute

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