President Biden’s $65 billion program to extend broadband internet to low-income urban and rural communities comes with a catch: Cable providers have to slash prices for the service.
Critics say it is the first step toward government price controls for the internet.
The broadband initiative in the $1.2 trillion bipartisan infrastructure plan that Mr. Biden signed into law last month wasn’t particularly controversial. It garnered bipartisan support for bringing broadband to areas with subpar internet service.
But conservatives sounded alarms about requiring companies that pocket the taxpayer funds to offer low-cost options, albeit at possibly slower speeds.
The plans must cost less than what the government determines the price of regular plans to be.
“That’s the definition of government intrusion. Instead of letting the market set prices, we’re going to set them,” said Andrew Long, a senior fellow at The Free State Foundation, a free market technology policy think tank.
The Biden administration called the program “broadband equity.”
The National Telecommunications and Information Administration will determine whether the rates are low enough. The agency is headed by Evelyn Remaley, the acting Commerce Department assistant secretary of communications and information and acting NTIA administrator.
The money will go to states, which will make initial determinations about whether broadband costs are low enough and whether companies can offer slower speeds for those plans.
The NTIA will have the final say. Ms. Remaley will have the authority to order states to lower broadband rates further in exchange for federal grants.
The federal oversight could help align rates charged from state to state, said Greg Guice, government affairs director for Public Knowledge, a left-of-center group that advocates for greater regulation of the broadband industry.
“Five Southern states could decide to offer people internet service for $30 a month,” he said. “But if another state’s proposal was $70, NTIA could say, ‘Hold up. That seems a little high compared to the other states.’”
Mr. Guice said the mandate will allow more customers to afford broadband service after the COVID-19 pandemic illustrated the need for internet access to go to school or see a doctor.
NCTA — The Internet & Television Association, the cable industry’s main lobbying group, is staying silent on the requirement.
Pressuring internet service companies to charge less than they want could backfire. Economists say it could reduce research on ways to improve broadband service and give less incentive to expand access.
Despite the concerns about the broadband program, the infrastructure package received the support of 19 Republicans in the Senate and 13 in the House.
Sen. Bill Cassidy of Louisiana, who was among the Republicans who negotiated the broadband portion of the infrastructure deal, did not respond to a request for comment.
The Biden administration is taking other steps to exert more government control over the internet industry after failing to get bipartisan support for other liberal ideas in the infrastructure package. Federal agencies have gone ahead and implemented the proposals as regulations.
Mr. Biden’s infrastructure wish list, released in March, included a plan to prioritize municipalities and nonprofits such as farm cooperatives for receiving broadband funds. NCTA and other critics said that would result in spending taxpayer dollars for poorer-quality, government-run broadband.
Liberals said access to high-speed internet has become essential to modern life and should be treated as a public utility. Expanding broadband service to more localities would increase competition and force companies to lower their rates, they said.
The final package did not prioritize municipalities but simply made them eligible for the funds. Undeterred, the Treasury Department in September said states, U.S. territories and tribes receiving a share of the $3.9 billion for broadband in the American Rescue Plan are expected to use the money for projects involving local governments and nonprofits.
Treasury did not respond to requests for comment.
The Free State Foundation’s Mr. Long objected to the Treasury’s move without a bipartisan agreement in Congress. He called city-run broadband a “risky venture” because local governments don’t have the expertise to operate internet service.
The Agriculture Department followed in October. The agency gave states and companies preferential treatment in applying for funding in the ReConnect rural broadband program if they involved local governments in running the service and by offering low-cost plans.
NCTA spokesman Brian Dietz said it “gives some organizations an unfair advantage, which could have the effect of taking the most qualified broadband providers off the field when the end goal should be to build and deliver the best broadband service to all consumers.”
The department, he said, is “setting up ReConnect to fail in the mission of accomplishing universal broadband service across the U.S.”
An Agriculture Department spokesperson said the department wanted to create “an incentive to get the local population more involved in delivery of the broadband solution.”
