Federal Investment in Broadband Won’t Improve Digital Equality

Last weekend, a bipartisan group of Senators had released the legislative text of a $1 trillion infrastructure bill. While significant investment may be required to repair the nation’s roads, bridges, ports, and airports, the bill’s proposals for increased state investment in broadband will undermine an ecosystem that is already providing consumers with faster speeds, lower rates, and increased accessibility.

Simply put, the bipartisan infrastructure bill, in its current form, is bad for digital equality and bad for consumers. Congress should reject the provisions pertaining to broadband and allow private providers to continue providing higher quality services at lower prices.

Under the current provisions outlined by the bipartisan infrastructure bill, the federal government will invest $65 billion over the next decade to ensure “every American has access to reliable high-speed internet.” The bill also aims to “lower prices” for consumers by requiring providers “a low-cost affordable plan.” To achieve this, the infrastructure bill would require providers to offer a low-cost option to consumers, extend the Emergency Broadband Benefit Program, as well as provide grants to bridge the digital divide between rural and urban communities.

While the $65 billion investment in broadband may seem impressive, it pales compared to the significant investments providers have made over the past few years. Under the plan, over the next ten years, the federal government will only provide around $6.5 billion each year, far below annual private investments.

In 2019 alone, private companies invested $78.1 billion in broadband. Even in 2009, when industry investment was at its lowest, that figure stood at $64 billion. These statistics show that even in down years, private providers are capable of surpassing the federal proposed federal investment.

These investments have resulted in significant increases in speeds and an improvement in the quality of service for consumers. For example, a recent report by USTelecom showed that internet speeds had increased dramatically over the past six years. In 2015, the average download speed was just 22.3 megabits per second (Mbps). By 2021, that had increased to 58.4 Mbps, a 94.2% increase.

The consumer benefits of increased broadband speeds are significant. Not only are consumers provided with more reliable service, but consumers are able to do more with their connectivity. With faster internet, consumers are better able to receive virtual healthcare, work remotely, stream TV and movies, and go to school online. These rapidly increasing speeds will also allow consumers to reap the numerous benefits promised by artificial intelligence and the Internet of Things.

As service speeds increased, the price of broadband has declined dramatically, allowing for increased connectivity for rural and low-income Americans. A recent report from USTelecom revealed that contrary to the White House’s claims, the price of broadband fell significantly between 2015 and 2021. In 2015, USTelecom estimated the monthly price of broadband to be $45.58 per month. By 2021, that figure had fallen to just $31.35 in real dollar terms, a 31% decline.

This price decline would have principally benefited low-income Americans by affording them extra disposable income and increased their economic security.

As prices declined, more and more Americans were able to connect to broadband. In June 2021, Pew Research reported that the number of low-income households with access to home internet had reached a record high of 57%. While this figure still lags well behind those in the middle- and upper-income brackets, it represents a significant increase from 2011 when just 40% of low-income Americans had broadband access. For rural Americans, the increase in broadband access has been more impressive. In 2007, only 35% of rural Americans had access to broadband. By 2019, that number had increased to 63%.

The increased availability of broadband for rural and low-income Americans means they can access remote work opportunities and virtual healthcare at the same levels as their urban counterparts.

If the goal of the $1 trillion infrastructure bill is to improve access to broadband for rural and low-income Americans, it seems abundantly clear that the promised $65 billion will do little to solve digital equality. Over the past decade, substantial private investments in broadband have led to a decline in price and increased speeds. The final result has been high-quality broadband that is more widely available.

With this in mind, the federal government should reconsider the necessity of interfering in an ecosystem that has generated substantial consumer welfare. Failing to do so will only leave consumers and taxpayers facing higher costs, inferior service, and less accessibility.

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