Putting monopoly-style regulations from the 1930s on the competitive broadband sector won't work.
In a very crowded Democratic primary—October’s presidential primary debate was the largest in American history—the issue of broadband access is popping up with great (and welcome) frequency. With this month’s debate fast-approaching on Nov. 20, candidates are continuing to try to distinguish themselves and, as often happens in campaigns, there’s a bidding war going on.
Former Vice President Joe Biden, for instance, has proposed spending $20 billion on broadband access; Massachusetts Sen. Elizabeth Warren quadruples that with a proposal for $85 billion. Not to be outdone, Vermont Sen. Bernie Sanders wants to spend $150 billion on broadband deployment (as former Sen. Everett Dirksen once said, “A billion here, a billion there; pretty soon you’re talking about real money”). Minnesota Sen. Amy Klobuchar wants to connect every house to the internet by 2022 as part of a $1 trillion plan to improve the country’s infrastructure.
Let’s be clear: Everyone agrees that all Americans should have access to fast, secure broadband. The questions are how best to get there and how quickly and efficiently each different policy would achieve the desired result (if at all). Let’s also acknowledge that there are some more rural regions that have proven difficult to serve, which is why the Federal Communications Commission spends about $4 billion a year to connect Americans in those areas to broadband through commercial networks.
It’s not just Democrats who are focused on this issue. Plenty of people in “red” states, particularly more rural areas, still need reliable access to high-speed broadband internet. So how do we reach universal broadband coverage—through direct federal spending or by encouraging the private sector to make these investments based on supportive regulatory policies that also embolden innovation?
We know what’s not going to work: putting monopoly-style regulations from the 1930s on the competitive broadband sector. When that experiment was tried briefly, from 2015 to the beginning of 2018, investment fell as private sector companies were concerned about getting the full returns on their investment and investors looked towards less-regulated opportunities outside of infrastructure. Now that the longstanding deregulatory rules are back in place, rules that promote investment and innovation, capital expenditures on broadband are once again rising—to about $75 billion for 2018.
Unfortunately, most of the Democratic candidates favor the other approach, the one tried in 2015, under the politically-potent banner of promoting “net neutrality.” But, their push for Title II rules just means putting monopoly-era regulations on only one part of the internet ecosystem—he part that invests in actually bringing fast broadband to people and businesses—skewing the playing field. With that approach, it would take a lot more government spending to bring broadband to everyone, with less innovation in newer, better, competitive networks.
If the private sector does not have the right incentives to invest in broadband deployments, how can it invest the tens, even hundreds, of billions each year that will be necessary for the full deployment of 5G wireless technology? Without those investments, we cannot make the next leaps in connectivity and security—things like truly connected cars, the internet of things, and other innovations that will improve our daily lives even more radically than in the past decade. If the dollars do not come from the private sector, we can expect presidential candidates in 2024 or 2028 to call for trillions in government investments, while bemoaning our national failure to keep up with Chinese 5G investments that are happening today.
Worse, some of the Democratic candidates’ proposals would permit this spending only for certain types of groups—not private-sector network operators who have delivered broadband across the country for the past 20 years … but instead only for local governments, nonprofits, and cooperative organizations. Some candidates explicitly favor government-funded networks to the exclusion of private players. Mayor Pete Buttigieg favors a “public option” for broadband in areas “[w]here companies have not provided coverage or where it is unaffordable”, with a total cost of about $80 billion.
The candidates don’t explain, however, why government would bring broadband to most people more quickly than the private sector would or how local governments would be able to keep up with innovation, save even more government funding. Or who would define what is “unaffordable” and how we might avoid inefficiencies. Nor do they explain the multiple failures with past attempts at government-funded networks, which have cost taxpayers many millions of dollars in locations across the country. For example, a government-owned network in Bristol, VIrginia, failed and was sold to a private company at more than an $80 million loss.
Fortunately, there is a better way: Encourage private sector investments and then target federal funding to areas that, principally for reasons of geography, are difficult to serve. There is no need to reinvent the wheel—or to shift broadband to government-owned-and-operated networks—for everyone to enjoy fast broadband service across the country.
It’s time for candidates to discuss how they propose to get to fast broadband for everyone, rather than just throwing money at a problem and hoping for the best public sector solution. We’re on the right path to universal broadband and fast deployments of 5G. Let’s not divert in ways that explode the federal deficit and saddle the economy with government-funded networks that won’t match the capabilities of competitive commercial operators.
Bruce Mehlman is a founding co-chairman of the D.C.-based Internet Innovation Alliance and served the Department of Commerce as assistant secretary for technology policy under President George W. Bush.