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The Biden administration wants to prove that government can do everything better than the private sector, which often means creating solutions to problems that do not exist. And proving that point is a lot easier when the private sector is simply removed from the equation. Consider the administration’s proposal to spend $100 billion or more on broadband infrastructure. It would limit the funds to one specific broadband technology while prioritizing government-owned networks, effectively kicking private providers to the curb. It is shaping up to be one of the most wasteful government endeavors in history.
The goal of connecting all Americans to the internet is laudable after the pandemic caused tens of millions of people across the country to hunker down and find ways to work, attend school, and access healthcare remotely. Thanks to $1.8 trillion in private investment since 1996, U.S. broadband networks held up extraordinarily well. Data from Ookla shows that even with a 20-40 percent increase in usage, average download and upload speeds increased during the pandemic. Meanwhile, in Europe, where private sector capital investments have lagged far behind the U.S., the internet faltered, and regulators had to call upon companies like Netflix, YouTube, and other streaming video providers to degrade their video quality to prevent the networks from collapsing.
An April 21, 2021, US Telecom report shows that providers in the U.S. invest more than three times the capital per household as their counterparts in the European Union (EU). The report also shows that Americans, on average, enjoy faster internet speeds than EU residents. This private-sector investment, along with mostly light-touch government regulation, resulted in only 4-5 percent of the country currently lacking access to broadband, according to Federal Communications Commission (FCC) data. In Europe, the digital divide is far greater, despite the continent being twice as densely populated as the U.S.
Unfortunately, as evidenced by a May 6, 2021, House Energy and Commerce Committee hearing on broadband equity, some members of Congress and activists continue to use misleading data to justify price controls and a government takeover of broadband through “community networks,” a code word for government-owned broadband. Several Democrats all but ignored the success of private-sector networks to push a narrative that government taking over the broadband industry would make internet access “more affordable.” Never mind that government-run networks have done virtually nothing to reduce prices while saddling local taxpayers with piles of debt.
There is bipartisan agreement that government can play a positive role in helping bring internet access to those who don’t have it, either by building infrastructure in unserved areas or providing financial assistance to those who cannot afford service. And many committee members acknowledged that the Lifeline program, and the recently-enacted Emergency Broadband Benefit program, can help low-income individuals adopt the internet. But spending tens of billions of taxpayer dollars so that local governments can try their hand at the broadband business is a waste of money that could be better spent bringing networks to rural areas or helping low-income Americans get connected.
Private sector-led innovation and investment in broadband have led to massive internet speed increases and lower costs. If the federal government takes over the world’s most successful broadband industry, networks will be frozen in time. Government-owned broadband has time and again proven to be a huge boondoggle that undermines private investment, wastes taxpayer money, and fails to bring more Americans online.
Broadband funding should be directed in a technology-neutral way that allows a variety of private-sector providers to compete for scarce taxpayer resources while providing service in a cost-effective manner. This is the only sensible way to get more Americans connected. But this is not what the Biden infrastructure proposal has planned or what his allies on the House Energy and Commerce Committee are suggesting. Rather, their proposals expressly limit the ability for private sector companies to access the funding and set the stage for only one type of technology (fiber) and one type of vendor (government) to build out broadband networks.
Rather than turning America’s internet into the heavily regulated and poorly maintained European model, the Biden administration should focus on bipartisan solutions to bridge the digital divide. Otherwise, Americans who are used to high-speed service, innovative products, and better quality should brace themselves for an internet as innovative and efficient as the local department of motor vehicles.