The newly announced American Jobs Plan (AJP), unveiled by the Biden Administration last March, contains provisions that would inflict unnecessary harm on taxpayers and reduce the number of internet technologies developed.
The AJP details a commitment to invest $100 billion of government funding into building “future proof” or fiber-only broadband infrastructure in unserved and underserved areas to reach 100% coverage. The plan prioritizes this “future proof” infrastructure in rural and tribal areas where close to 40% of consumers lack access to broadband coverage.
Employing a “future proof” approach to broadband deployment would slow the development of infrastructure for consumers in unserved areas and lower the disposable incomes of taxpayers. Picking winners and losers among broadband technology also undermines competition that improves access. Policies for broadband buildout should focus on a technology-neutral approach that meets the needs of individuals and communities.
Deploying fiber-only broadband in America’s underserved areas would be expensive and impractical in some places. Delivering fiber to the 14% of areas that currently lack internet access would cost around $80 billion, with $40 billion of that total going to serve just the last remaining 2% of consumers. These Americans live in locations where building fiber infrastructure is incredibly difficult, such as in towns nestled in the Appalachian Mountains or isolated communities in Alaska.
Aside from being more expensive, laying down fiber infrastructure is also incredibly time-consuming. Building Google’s fiber network, for example, requires laying thousands of miles of fiber optic cables. In a medium-sized city like Austin, Texas, it took Google around two years of building infrastructure before fiber was available to a limited number of consumers in the city. Deploying fiber networks, especially in rural communities that are not suited for fiber infrastructure, could take many years longer.
Consumers in these areas would benefit much more from a technology-neutral approach that would allow networks to pick the best and most cost-effective network.
Including other technologies such as wireless LTE (Long-Term Evolution), unused spectrum, and low orbiting satellites would significantly reduce the cost of reaching 100% coverage. A report from Boston Consulting Group estimates that through a mix of technologies, consumers without a broadband connection could receive high-speed internet service for only about $10 billion, approximately $70 billion less than the fiber-only approach outlined in the AJP.
Because the costs of both these plans would come at the expense of taxpayers, choosing to spend significantly more on a fiber-only plan would unnecessarily reduce the disposable income of American consumers. Lawmakers should go for the more efficient option to save taxpayers the added expense.
Focusing on an inefficient fiber-only approach would serve to distort competition in the internet market. If fiber begins to receive a larger percentage of public investment, other providers that would usually see government investments for competing technologies will be incentivized to start providing fiber service to expand coverage when other means are more beneficial. An artificial increase of investment into fiber networks would decrease competition from other technologies in the market and disincentivize producers from innovating to improve the quality of fiber or other networks.
This lack of competition could also reduce broadband access. The last time the government interfered in the internet market with the passage of the Open Internet Order(OIO), which imposed net neutrality rules on providers during the Obama Administration, internet speeds declined 18%. As a result, consumers were left paying around the same amount for a lower quality internet service. A similar effect could occur if technological competition in the internet market is affected. A technology-neutral approach would ensure a variety of networks remain available to consumers at affordable prices.
New technologies are already being developed to connect rural consumers. SpaceX and Amazon have launched satellite networks to deliver broadband to the 3% of customers in the hardest to reach areas of the country. These satellite constellations, which are ubiquitously deploying coverage, including to underserved communities in United States, Canada, and the United Kingdom. They will be able to deliver high-speed internet access to unserved communities much faster than publicly-funded fiber, which is subject to red tape and other government hurdles.
While low earth satellites may be part of the solution in the U.S., there are also expanding 5G solutions that may allow much faster connections than specified in the infrastructure plan, as well as TV white spaces that may allow for much lower subscription costs. Having competing technologies is a great alternative, compared to a fiber alone solution.
If lawmakers are serious about reaching 100% coverage as quickly as possible, they should be investing in technologies that are proven to expand connectivity. A commitment to building fiber-only networks in unserved and underserved areas would stall deployment of vital infrastructure for these areas and reduce taxpayers’ incomes. This approach would also substantially reduce competition, which is necessary to improve the quality of all internet technologies and expand internet access.
Policies alternatives to building broadband infrastructure in rural areas should focus on meeting the needs of communities instead of a blanket approach. Consumers in rural areas are overdue access to the internet, and proposals like the AJP aim to reach 100% coverage much more difficult.