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Why cable hates Biden’s $100B internet plan

Monitoring Desk

WASHINGTON DC: President Joe Biden has a $100 billion plan to ensure all Americans have high-speed internet, but some of the key companies that provide those connections are already balking.

Why it matters: Democrats on the Hill will have to overcome industry lobbying and Republican opposition to make this part of Biden’s multi-trillion-dollar infrastructure program a reality.

Driving the news: Some key details of the broadband measures in the American Jobs Plan have internet service providers up in arms.

  1. The plan prioritizes spending for government-run or nonprofit networks. Such providers have “less pressure to turn profits” and “a commitment to serving entire communities,” according to a White House fact sheet.
  2. Biden’s plan also prioritizes “future-proof” infrastructure — which providers fear means the government will fund new fiber networks in areas where broadband companies already have customers.
  3. The plan calls for making internet service more affordable by finding ways to bring prices down, instead of giving government subsidies to service providers so they can charge some consumers less.

What they’re saying: “I thought that it was really out of character the degree to which they embraced this sort of unfounded faith in government-owned networks to own, build and run this program,” Michael Powell, CEO of cable trade group NCTA and a former Republican chairman of the Federal Communications Commission, told Axios.

  • “The idea that the private sector and profit incentives are intrinsically unsuited to do the job” is “surprisingly Soviet,” Powell added.
  • The focus on deploying fiber networks will leave rural households behind because companies will first upgrade networks in suburbs and areas that already have some service, he argues.

The other side: A Biden administration official told Axios that “future proofing” ensures rural areas aren’t left with stop-gap solutions, and that the proposal focuses on underserved areas.

  • “If we are going to put billions of public dollars behind this effort, we want to do it in a way that sets us up for decades to come,” the official said.
  • Involving community networks is a key piece of Biden’s goal of reaching 100 percent access, but the private sector will play a role as well, the official said.
  • “Having communities in the driver’s seat with this funding means that those communities have a stake, not only in articulating what the digital divide looks like on the ground, but what type of network will work best to meet their needs,” Kathryn de Wit, manager of the broadband access initiative at The Pew Charitable Trusts, told Axios.

Between the lines: Republicans were quick to oppose Biden’s plan, and moderate Democrats may also be uncomfortable with some of the measures as well.

  • “We are skeptical that a majority of the Congress wants to allocate billions to subsidize fiber networks to compete with cable,” Blair Levin, a New Street analyst and former FCC official wrote in a research note.

What’s next: The FCC is about to roll out a new subsidy program, the Emergency Broadband Benefit, to give low-income consumers $50 off their monthly internet service bill during the pandemic. More than 300 providers have been accepted into the program so far.

  • But the White House says subsidies are not a long-term solution, and cheaper service is the answer. A study from New America’s Open Technology Institute finds that Americans pay more than Europeans for internet service at comparable speeds.
  • “We’re going to drive down the price for families who have service now, and make it easier for families who don’t have affordable service to be able to get it now,” Biden said in announcing the American Jobs Plan on Wednesday.

The intrigue: The potential paths forward for reducing internet prices are not particularly appealing to providers.

  • One way would be increased competition — through government funding of competing networks. Another is government regulation of internet prices.

Courtesy: Axios

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