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President Biden’s $65 billion program to expand broadband to poor urban and rural communities comes with a catch: Cable providers must lower prices for service.
Critics say this is the first step towards 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 was not particularly controversial and garnered bipartisan support to bring broadband to areas with broadband internet service.
But conservatives have raised the alarm about demanding companies that pocket taxpayer funds to offer customers a low-cost option, albeit possibly at slower speeds.
Under the new law, the low-cost plan must be cheaper than what the government has set as the price of regular plans.
“This is the definition of government intervention. “Instead of letting the market set prices, we will 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 equality.”
The decision as to whether the rates are low enough will be made by the federal government, namely the National Telecommunications and Information Agency. The agency is currently headed by Evelyn Remaley, assistant secretary of communications and information for the Department of Commerce and acting NTIA director.
Under the program, broadband money will go to states that will do so. States will also make the initial determination as to whether low-cost plans are cheap enough and whether companies can offer lower speeds for those plans.
But NTIA will have the final word. Ms. Remaley may judge that companies must lower their prices further if they want broadband money.
Greg Guice, director of government affairs at Public Knowledge, a centre-left advocacy group that advocates greater regulation of the broadband industry, said federal oversight can help align rates applied from state to state.
“Five southern states may decide to offer internet service to people for $30 a month,” he said. “But if another state had an offer of $70. The NTIA might say, ‘Stop, it looks a little high compared to other states.
According to Mr. Guice, the mission will make it easier for more customers to get internet service at a time when the pandemic has shown how important it is to be online to go to school or go to the doctor.
NCTA – The Internet and Television Association, the cable industry’s main lobbying group, remains silent on the need.
But forcing companies to charge less than they want can backfire. According to economists, it may not only reduce the research companies do to improve broadband service, but also hurt their incentives to offer broadband in more areas.
Despite concerns about the broadband program, the infrastructure package received the support of 19 Republicans in the Senate and 13 in the House.
Louisiana Senator Bill Cassidy, who was among the Republicans negotiating the broadband portion of the infrastructure deal, did not respond to a request for comment.
The Biden administration is taking further steps to enforce greater government control over the internet industry.
Unable to get bipartisan support to include other progressive ideas for lowering prices in the infrastructure package, federal agencies have only just moved forward and implemented them as regulations.
Mr. Biden’s infrastructure wishlist, released in March, included a plan to prioritize municipalities and nonprofits such as agricultural cooperatives to receive broadband funding – a move that the NCTA and other critics say will lead taxpayers to spend their dollars on lower-quality state-run broadband. idea.
Progressives argued that access to high-speed internet has become essential for modern life and should be treated as a public service. They said that having more cities and towns offer broadband service would create more competition and force companies to lower their rates.
The final package did not give priority to municipalities, but only made them eligible to benefit from the funds. Undecided, in September, the Treasury Department said states, U.S. territories and tribes that received $3.9 billion for broadband in the American Recovery Plan are expected to use the money in projects involving local governments and nonprofits.
The Treasury did not respond to requests for comment.
Mr Long of the Free State Foundation objected to the ministry’s continued progress despite the absence of a bipartisan agreement, calling city-run broadband a “risky undertaking” as local governments lack the expertise to implement broadband service.
The Ministry of Agriculture followed suit in October. The agency gave preferential treatment to states and companies when applying for funding in the ReConnect rural broadband program by offering a cost-effective plan and involving local governments in the delivery of the service.
“It gives some organizations an unfair advantage that can have the effect of removing the most qualified broadband providers from the field when the ultimate goal is to build and deliver the best broadband service to all consumers,” said NCTA spokesperson Brian Dietz.
“It is setting up ReConnect to fail in its mission to deliver universal broadband service across the US,” the department said.
A Ministry of Agriculture spokesperson said the ministry wanted to create “an incentive to further engage the local population in the rollout of the broadband solution.”
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