How much broadband will Americans get for the $75 billion that Congress committed in 2021? That’s enough money to equip an additional 17 million households with broadband, taking the US to 99 percent broadband coverage, according to a Federal Communications Commission (FCC) staff paper and data from the Census Bureau. Whether taxpayers get that much broadband for their $75 billion will depend on government officials avoiding past mistakes.
Congress provided the $75 billion through two pieces of legislation: the American Rescue Plan Act of 2021 (ARP) and the 2021 Infrastructure Investment and Jobs Act (IIJA). These bills added funds to some existing broadband programs and created new ones. The programs are overseen by the National Telecommunications and Information Administration (NTIA), the FCC, the Department of the Treasury, the Department of Agriculture’s Rural Utilities Service (RUS), and the Internal Revenue Service. About 75 percent of the $75 billion is for expanding broadband. The remainder is for affordability and equity programs and administration. NTIA is responsible for about 70 percent of the money.
The authors of the ARP and IIJA followed well-worn paths in choosing their programs. Unfortunately, these were paths to programs that failed to produce. For example, the American Recovery and Reinvestment Act of 2009 (ARRA) provided $7.2 billion for similar programs administered by the NTIA and RUS. The NTIA’s program was called the Broadband Technology Opportunities Program (BTOP) and cost $4.7 billion.
The most rigorous examination I have found of BTOP’s effects could not find good evidence that it increased broadband adoption. Indeed, the study found instances where BTOP spending appeared to decrease broadband adoption. The study’s authors found NTIA’s accountability and evaluation procedures to be inadequate and advised that government officials require funded projects to include meticulous evaluations of their outcomes.
RUS awarded about $3.5 billion in grants and loans for its program. (This is $1 billion more than the ARRA provided, but the Federal Credit Reform Act of 1990 allows RUS to make awards that exceed its budgetary authority.) Research by Politico and the Government Accountability Office (GAO) examined this program’s performance. They found that 40 out of the 297 approved projects never started; more than $137 million of the approved loans had incomplete or inaccurate applications; money was wasted on duplicating existing broadband networks; and numerous awardees failed to perform, including a company that actually went out of business before ever receiving its money. Politico and GAO were hindered in their investigations by RUS ceasing to provide oversight information once the statutory obligation expired. (Note: During the Trump administration, RUS worked to improve its procedures.)
The IIJA affordability programs also follow in the footsteps of programs that have had little effect. IIJA’s programs focus on providing price discounts for low-income households to purchase broadband. Price discounts are the approach used for decades to encourage low-income households to adopt phone service. Research consistently found that the discounts had little impact, with one paper finding nearly 90 percent of subsidy recipients were subscribing even without the subsidy. About a decade ago, the FCC ran an experiment to see what held low-income households back from subscribing to broadband and found that prices had little to do with it. Indeed, the most successful low-income broadband program appears to be one conducted by Comcast called Internet Essentials, which aligned service offerings and outreach efforts with how low-income households view broadband and assistance programs. A study of this effort found that two-thirds of those buying the service package offered would not have had broadband absent Internet Essentials.
Given that the ARP and IIJA set government officials on paths that went nowhere in the past, what can be done to ensure that the $75 billion of taxpayer money isn’t wasted? That will be the subject of our December 7 panel “Follow the Money: Ensuring Accountability in Broadband Initiatives.” Experts that have studied the legislation and past broadband efforts, and who are in the trenches trying to implement the bills, will discuss how lessons from the past can inform current efforts, which metrics can be used to track the effectiveness of current efforts, and how elected officials and citizens can hold those who distribute or receive taxpayer money accountable.
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