Biden’s Broadband Bust

W ith elections behind us, the incoming Trump administration will take stock of the failures of their predecessor’s policies and consider how to reform or abolish them. One to which they owe some attention is the Broadband Equity, Access, and Deployment (BEAD) program. According to U.S. Census data, an estimated 11.5 million U.S. citizens still do not have access to the internet, despite billions of taxpayer dollars earmarked to correct this.

Anyone who follows FCC commissioner Brendan Carr on X knows that 1,079 days after Vice President Kamala Harris was put in charge of the BEAD Program (one of her many czar roles), not one home has been connected with internet service. And given the mess of competing priorities that went into designing the program and the partisan red tape that the Biden administration piled on, the program was doomed to failure from the start.

I should know. I helped write it.

I had the honor of spending four years working on Capitol Hill. During my stint, I had the opportunity to work on the Infrastructure Investment and Jobs Act’s broadband title. I had a front-row seat at the negotiations that turned what started as a straightforward state block-grant program into a contradictory labyrinth of competing interests.

Senators who signed their names to the package had competing — and sometimes contradictory — broadband needs. Almost any agreement reached in negotiations on technical standards that worked for most states did not work for Alaska, where vast distances and permafrost make deployment more expensive. Urbanized states like Rhode Island wanted just as much money as rural states like Maine, even though urban areas already have internet service. The experience called into question the very idea of a national broadband expansion plan since no national strategy could possibly work in such a geographically diverse country.

To address geographic diversity, Republican negotiators advocated a block-grant program so states could flexibly design their programs to meet specific local needs. Democrat staff preferred more centralization, even pushing for requirements that states should give priority to government-owned networks (GONs), favoritism for union labor, and a national scheme of price controls known as “rate regulation” despite falling broadband prices.

I remember one staff-level call in the summer of 2021 discussing allowing the National Telecommunications and Information Administration (NTIA) to set rates for all internet service providers (ISPs) that participated in the grant program. As one of the most junior staffers on the call, I was intimidated by the seasoned aides with master’s degrees in public policy looking back at me on Zoom. This feeling evaporated when I casually mentioned that price-fixing creates shortages and was met with blank stares.

Putting aside the failure of our elite universities to educate policy-makers in basic economics, common sense tells us that price fixing creates shortages. It either forces sellers to clear inventory at too fast a pace when prices are set too low or prevents them from selling inventory fast enough when they are too high. In the case of internet service, ISPs must spend money on infrastructure, maintenance, and upgrades as technology changes. ISPs must be able to react to changes in their costs and revenue to stay in business. Rate regulation undermines the entire purpose of the broadband-access program.

Meanwhile, GONs, usually owned by cities or counties, do not have to turn a profit and can undersell private-sector competitors, driving them out of the market. GONs then scoop up the orphaned customers and impose government-controlled internet on their local area. Inevitably, these networks run out of money and ask the state for a bailout. If this is replicated all over the country, states will begin asking the federal government for GON bailouts. This will effectively nationalize the internet in the United States as a constellation of GONs dependent on federal money.

Congress recognized the folly of these positions and included a provision in the final infrastructure law that prohibited the NTIA from regulating rates for broadband while leaving out the other diktats. NTIA, however, was given the power to approve each state’s deployment strategy before making their allotted funds available.

Under this setup, the Biden NTIA could leverage the approval process to force the policies Congress rejected on states through “guidance.” In their original Notice of Funding Opportunity, NTIA resurrected no fewer than seven partisan proposals and conditioned states’ grants on compliance with these extralegal requirements.

States were told their grants would be scored according to whether they fixed prices at $30 per month, gave preference to GONs, and funneled money to unions. To cap it off, they created a byzantine review process to enforce all their partisan preferences that were not enacted into law.

As a result, the program has collapsed under its own weight. Nearly three years on, NTIA has not finished approving state plans. The BEAD program also requires that most of the work be completed within five years of the law’s effect. At the current pace, most of the projects that are to reach unserved areas will blow past that deadline.

Given the perverse incentives — both built into the original concept and added by NTIA — it comes as little shock that not even one home has been connected with internet service as a result of this program, despite President Biden signing it into law in November of 2021. If the first three years are any indication, BEAD will end up like so many broadband programs before it: billions wasted, pockets lined, and zero homes connected.