Is the Senate Infrastructure Bill the First Step to Broadband Price Controls?

By: Andrew Regitsky

The Senate recently approved the Infrastructure, Investment and Jobs Act (IIJA), which if passed by the House of Representatives would allocate $65 billion to achieve the goal of universal broadband access.  The IIJA is unique in that it largely bypasses the FCC and instead would require the National Telecommunications and Information Administration and the states to turn policy into specific actions.  It’s unique also because it would award broadband funds based on grants rather than reverse auctions. The IIIJA would consist of four parts:

First, as mentioned above, the Act would provide $65 billion toward broadband deployment, with $42.5 billion specifically appropriated to the states to fund network deployments, while prioritizing areas currently lacking a network capable of offering a 25 Megabits per second (Mbps) download and 3 Mbps upload service.

Second, to help low-income Americans, the IIJA would appropriate $14.25 billion to fund a $30 per month subsidy to purchase broadband service, which could become permanent.

Third, the FCC would have 30 days after the IIJA becomes law to begin a proceeding to update the Universal Service Fund (USF) to ensure that broadband is provided in all rural areas.  A report would be due in nine months.  Hopefully, the Commission will use this opportunity to fix the USF contribution methodology and/or increase the types of fund contributors.

Fourth, the IIJA will provide additional funding for digital training and improved literacy for the American public.

While the ISPs have not yet gone beyond making general comments about the IIJA, there is one requirement they will certainly follow with trepidation.  IIJA fund recipients would be required to offer a low-cost broadband option as determined by the NTIA.  This would be in addition to the low-cost options already made available by most ISPs.  Although, the IIJA does state that prices of the mandatory services will not be regulated by the NTIA, this option will certainly include price maximums and speed minimums.  

The top Republican on the Commerce Committee that oversees broadband legislation, Senator Roger Wicker said the bill’s language opens the door to rate regulation.  He voted against advancing the IIJA and may offer a broadband amendment.  The fear of broadband price regulation is exacerbated by net neutrality, which is looming as soon as President Biden chooses, and the Senate confirms, a fifth FCC commissioner.  While a return to net neutrality will not be immediate and will slowly work through the federal courts, a return to the Internet conduct rule would give the FCC total control over all Internet service offerings, including all low-priced IIJA mandatory services.  

Former FCC Chairman and current President and CEO of the Internet and Television Association (NCTA) already has spoken out about possible broadband price controls.

In the heat of the COVID national emergency, Congress began to see the wisdom of helping low-income Americans afford broadband by providing subsidies to consumers.  This is a smart and targeted way to get support quickly to the people who need it most. The Biden Plan rejects further subsidies and instead floats the ambiguous idea of having the government regulate broadband rates. This approach is misguided.  Low-income citizens need subsidized broadband rates that are lower than any reasonable price that would result from a drawn-out government rate regulating process.  Such a process would be a thorny, lengthy morass of complexity that would drag on for years at regulatory agencies and through the courts, further delaying the help that is needed.  (Michael Powell, April 6, 2021, Blog, at NCTA website).

Lindsay Lewis, executive director of the Progressive Policy Institute, is in full agreement.

Worse, price controls have a long and sorrowful history of not working, failing to anticipate technological advances, and sidelining infrastructure investment. Applied to the U.S. broadband marketplace, price controls could upend the investment engine that has already delivered faster speeds, more reliable and resilient networks, and more widespread deployment in rural areas than we see in Europe. It’s the big reason why speeds continue to accelerate each year even as prices at any given speed level keep falling. (Lindsay Lewis. July 27, 2021, Article on The Hill website.).

The IIJA is not yet law, and, in fact, Democrats in the House are attempting to allocate even more funds to broadband deployment. While thrilled with more money for broadband, ISPs should be wary of any law that even hints at price controls by the FCC, NCTA, or states.