By Bret Swanson

The US government is preparing to spend tens of billions of dollars on broadband networks as part of its new infrastructure plan. It is also reviewing the business of broadband as part of the White House’s expansive executive order (EO) on competition in a wide range of industries. Upgrading America’s basic infrastructure is a legitimate (even urgent) priority, and top-down hyperconcentration in some industries is indeed a problem worth combating. But when it comes to US communications networks, we already know what works and what doesn’t.

Just look at the American internet’s pandemic performance. In December 2019, the internet video-calling service Zoom had 10 million daily meeting participants. By April 2020, this number exploded to 300 million — a 30-fold increase in four short months. Between the fourth quarters of 2019 and 2020, Zoom reported revenue growth of 369 percent. When offices and schools closed due to COVID-19 in early 2020, tens of millions of people moved work and education online — all at once. We still do not fully appreciate how amazing it was that the internet worked under such a crush.

Microsoft’s rival video-calling service Teams enjoyed similar growth. In December 2019, Teams had 20 million daily users, generating $800 million in annual revenue. In 2020, Teams’ annual revenue rocketed to $6.8 billion and, today, Teams boasts 145 million daily active users. This revolutionary move to online remote work dumped exabytes of new traffic on networks already coursing with untold YouTube, Netflix, Instagram, FaceTime, and TikTok streams. And yet the nearly instantaneous transition went smoothly — especially in the US.

The reason networks could absorb this capacity wave was because US broadband and mobile firms had invested nearly $2 trillion in their infrastructure and technology over the previous two decades. Around 95 percent of Americans have excellent access to these fast networks. But some sparsely populated, high-cost geographies remain un- or underserved. Some low-income citizens and students have trouble affording broadband and were left behind when the rest of the world went remote. Programs to extend networks to the last 5 percent and help people afford broadband are thus warranted. Solutions to these supply and demand challenges, however, must be narrowly targeted and must not interfere with or sidetrack America’s most robust piece of infrastructure and most successful industry: the internet.

My colleague Daniel Lyons applauded the portion of the Senate’s bipartisan infrastructure plan that sends broadband money
to states, who better understand their own needs and can target unserved geographies.
But he also questioned the decision to place the National Telecommunication and
Information Administration in charge of implementation. The Federal
Communications Commission (FCC) has more experience with these programs, is
marginally less political, and just completed a mostly successful reverse auction to award subsidies under the Rural Digital Opportunity Fund.
But as Lyons notes, the act “declines to require funds be distributed through a
reverse auction,” despite evidence that past reverse auctions encouraged competition
and reached targeted areas at a far lower cost than initially predicted.

On the affordability side, the FCC’s Universal
Service Fund (USF)and Lifeline programs are wildly out of date. They were devised
for the telephone era, but neither the funding sources (a tax on telephone
lines) nor the service itself (voice) are relevant in a broadband internet
world. And both have radically shrunk, so a tax on a negligibly narrow base is
supposed to fund an outdated service. We need a broader base of funding to
support a wider array of communications services.

FCC Commissioner Brendan Carr recently argued the services that place the heaviest loads
on networks should help support the USF. These are Big Tech companies like
Google, Facebook, Amazon, and Netflix, whose content makes up some 75 percent
of network traffic. From an economic efficiency perspective, Carr’s argument
makes some sense. And it would only be a drop in the very large buckets of
these tech giants’ bottom lines. Carr offers a creative proposal to modernize
the USF and help solve the access dilemma.

But do we really want these firms more involved in our
communications networks and policies?

This gets us to the White House’s EO and its call to
reestablish the short-lived Title II “net neutrality” regulations of the Barack
Obama Administration. It also hints at price regulation. The Big Tech firms
pushed for this heavy-handed policy over the last 15 years, but mostly failed —
thank goodness. We avoided their suggested hyper-regulatory framework, and the
result was massive investments in broadband and mobile infrastructure and the
spectacular success of America’s free and open internet. No one benefited from the
failure of Big Tech’s favored network policy framework more than Big Tech.

I’ll say it again: When it comes to the internet, we cannot
snatch defeat from the jaws of victory. It is simply too important.

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