As Virginia finally stands at the threshold of building broadband out to unserved areas, the Biden administration department charged with deploying infrastructure funding is blocking the way with bureaucratic demands that will ultimately leave to broadband consumers worse off.
This is consistent with many of the administration’s economic policies that have walloped consumers with inflation and interest rates we have not seen since the ’70s.
Worse, many of these policies fly in the face of the law. Whether it is the Department of Education ignoring a Supreme Court ruling on college loan forgiveness, the SEC’s unlawful attempts to regulate cryptocurrency, or the FTC’s failed enforcement actions based on legally vacant antitrust theories, the White House continues to tacitly decree it will decide what the law is.
Now the public has a front-row seat to the little-known National Telecommunications and Information Agency (NTIA) bullying the commonwealth of Virginia over expanding broadband access to rural areas and making no bones about the fact that in doing so, it is openly violating its statutory authority.
The Virginia Office of Broadband (VOB) has access to $1.5 billion in federal grants as part of the Broadband Equity, Access and Deployment program (BEAD), which requires the state to propose a “low-cost” option for broadband that participating commercial providers will offer to less-affluent residents. This seems simple enough, but the NTIA does not want “simple,” it wants power.
Though the federal statute authorizing the grant money expressly forbids the NTIA from regulating rates through a preset price or formula, NTIA is doing exactly this — insisting on a preset price, and rejecting VOB’s entirely rational proposal to define a “low cost” option to broadband through data-driven and applicable market conditions.
VOB is entirely correct. Adopting the “light touch” regulatory approach the law specifically requires will result in the most efficient use of the grant money, and will maximize benefits to unserved consumers.
Rate regulation, as NTIA is attempting here, is nothing more than garden-variety government price-setting, a practice that has an extensive track record of economic disaster. When government attempts to set prices in any industry, as we have seen both in the U.S. and every socialist country, the resulting interference into the marketplace invariably leads to higher costs and fewer choices for consumers. Congress understood this economic reality when it banned rate regulation in the BEAD program.
In demanding a set price or formula, NTIA is not only abandoning sound economics and the law, it is also ensuring the low-cost option will not align with market realities. By definition, fixed-price structures are either too high and therefore unaffordable for poorer Virginia residents, or too low, resulting in fewer commercial enterprises willing to build out new broadband infrastructure.
The light-touch framework, with bureaucrats on the sidelines and not dictating service plans and setting prices, is exactly the approach Washington has taken toward all things Internet since the ’90s, and it has succeeded in spectacular fashion. Broadband fiber grew by 12% and added 9 million more homes last year, and the U.S. has over a half a million miles of fiber deployed today.
The BEAD program was intended to help bridge the digital divide for the 42 million Americans who don’t have access to broadband. That progress is threatened by NTIA’s lawless attempt to set prices from Washington.
NTIA’s demands in Virginia are clear evidence of where the Biden administration is heading: regulated rates for Internet service nationwide. The Federal Communications Commission has moved to place internet service providers under the old Ma Bell telephone regulations that — you guessed it — empower the FCC to regulate rates nationwide.
If the Biden administration’s bully tactics succeed, Virginians will be forced into the broken economics of government fiat; and, as always, it will be consumers who take the hit.