The Biden Administration’s Ridiculously Spendy Broadband Promises
When the Biden administration promised "internet for all" it didn't specify that it meant "at all cost." We should have assumed that was the case, though, given that it started off with a price tag in the tens of billions of dollars, bureaucratic additions to already chaotic federal broadband boondoggles, and subsidies for internet bills guaranteed to incentivize providers to raise prices. Now we learn that some acts of government broadband largesse cost taxpayers tens of thousands of dollars per hookup.
The $53,000 Broadband Connection
"Nebraska's Winnebago Tribe has long been stuck with sluggish internet service. The federal government plans to fix that by crisscrossing the reservation with fiber-optic cable—at an average cost of $53,000 for each household and workplace connected," The Wall Street Journal's Ryan Tracy reported this week. "That amount exceeds the assessed value of some of the homes getting hookups, property records show. While most connections will cost far less, the expense to reach some remote communities has triggered concerns over the ultimate price tag for ensuring every rural home, business, school and workplace in America has the same internet that city dwellers enjoy."
There's a reason rural and small-town dwellers have less access to the sort of fast internet connections that urban dwellers enjoy: It costs a lot of money to lay fiber-optic cable—"an average cost of $1,000 to $1,250 per residential household passed or $60,000 to $80,000 per mile," according to Dgtl Infra's Jonathan Kim. It's easier to limit and recover costs in densely populated areas where a lot of potential customers live along paved roads than in sparsely settled areas where there's rough terrain and empty space between each household served. Costs rise dramatically in rural areas.
"In a routine release last week, the U.S. Department of Agriculture (USDA) announced the latest group of grant winners for its ReConnect broadband deployment program," Fierce Telecom's Diana Goovaerts reported last September. "But hidden in the otherwise unassuming announcement were some startling figures. A prime example: The Alaska Telephone Company, which won a $33 million grant, is planning to run fiber to 211 homes and five businesses at a staggering cost of nearly $204,000 per passing."
The article noted that the connections could be made at lower cost with fixed wireless technology, which effectively provides fast-ish speeds without having to lay cable, but nobody applied for those sweet federal dollars with bids including the more economical technology. "Basically what that means is while it's feasible that another technology like fixed wireless access could have been cheaper, no other options were on the table for these areas," Goovaerts added.
Rural Areas Already Have Internet
In fact, wireless internet offering 10-50 Mbps and (increasingly) satellite connections such as HughesNet, Viasat, and Starlink are how we connect to the world in my piece of Arizona. It's a tradeoff you accept if you want open space around you. Well, you accept that tradeoff unless you can rope other people into paying the cost of laying cable.
"The problem is, money is not infinite," Blair Levin, a senior communications policy official in the Clinton and Obama administrations told The Wall Street Journal. "If you're spending $50,000 to connect a very remote location, you have to ask yourself, would we be better off spending that same amount of money to connect [more] families?"
But, as the availability of wireless connections and satellite offerings show (you can search for services in your area via the FCC), reasonably fast internet is available to people living even in sparsely settled areas. It's arguably "sluggish" compared to the connections offered in cities, but every lifestyle choice involves compromises. It really is possible to grow accustomed to streaming movies in SD instead of UHD, and much online activity—including my research and writing, my wife's medical records-keeping, and the classes my son took in the course of his homeschooling—doesn't require high-end connections.
"Not all online activities require the same speeds: For a group video call, 2.5 Mbps speeds suffice, while streaming videos may require 25 Mbps for high-definition quality," John Horrigan of the Technology Policy Institute commented in 2020 as internet use increased during pandemic social distancing. "More complex or technologically advanced tasks may require higher speeds."
Importantly, internet services that naturally evolved to serve more sparsely settled areas are paid for by customers without passing big bills to people living elsewhere. Politicians prefer to make everybody pay.
"President Biden's Bipartisan Infrastructure Law brought together Republicans, Democrats, and Independents to better connect the American people through roads, bridges, airports, and the internet," the White House boasted last year. "The law included a $65 billion investment to ensure all Americans can access affordable, reliable, and high-speed internet – Internet for All."
Pricey Federal Internet Chaos
The Biden administration's expensive ambition to run fiber-optic cable to every corner of America isn't the first federal attempt to extend the availability of fast internet connections. As Reason's Joe Lancaster noted last year, "the 2009 stimulus bill allocated more than $7 billion toward broadband grants for rural areas, and expenditures have grown since." They've grown without any rhyme or reason, I should add, as we've come to expect from government agencies.
"Federal broadband efforts are fragmented and overlapping, with more than 100 programs administered by 15 agencies," found a May 2022 Government Accountability Office report. "Despite numerous programs and federal investment $44 billion from 2015 through 2020, millions of Americans still lack broadband, and communities with limited resources may be most affected by fragmentation."
Of course, the Biden administration further larded its program with subsidies for Americans who may already have broadband internet.
"As part of the Bipartisan Infrastructure Law, President Biden and Vice President Harris worked with Democrats, Republicans, and Independents to create the Affordable Connectivity Program (ACP), which provides eligible households $30 per month off their internet bills," the White House promises. "ACP-eligible households can also receive a one-time discount of up to $100 to purchase a laptop, desktop computer, or tablet from participating providers."
That's not a $53,000 (or $200,000) broadband hookup, but across the population it's a big commitment. Subsidies are also an effective way to drive up the price that internet providers can charge since tax dollars make up the difference, just as subsidized college loans increase the cost of higher education. That worsens the problems and creates spiraling demand for even more subsidies.
Americans are perfectly capable of deciding for themselves where and how to live and which services they need or can do without, including broadband. They don't need taxpayers subsidizing their choices.
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