Scott Wallsten

Elon Musk recently blasted the federal government’s decision to deny a nearly billion-dollar subsidy for rural connectivity that had been previously awarded to his satellite broadband company, Starlink. No matter what you think about him, Musk’s outburst points to an uncomfortable reality: new technologies are rendering America’s policy for promoting and subsidizing broadband telecommunications outdated and counterproductive.

In these comments we explain why Title II classification is unnecessary and potentially harmful.  Specifically, we make the following points: 

We write to provide economic insight to help states maximize the benefits of its Broadband Equity Access and Deployment (BEAD) and other funds for its residents. Several economic concepts are critical to maximizing the benefit of the BEAD money for state residents.  

On September 26 at the National Press Club, Federal Communications Commission Chairwoman Jessica Rosenworcel laid out her arguments for reclassification. Among them was a claim that the lack of broadband competition makes Title II necessary. One can make coherent and serious arguments supporting Title II and net neutrality. But Title II because of the state of competition? No. The Chairwoman is right that areas actually served by only one provider and likely to continue to be served by only one provider really do require more oversight than areas with more competition.

The US Treasury just gave California more than half a billion dollars to fund broadband buildout. This money may help reduce the digital divide. It also might not.

The Universal Service Fund (USF) is inefficient, ineffective, and funded by a regressive tax mechanism. Several reforms could improve the program:

Studies exploring the relationship between technology in the classroom and students’ outcomes have yielded mixed results. We contribute to the debate by examining the effects of broadband subsidies to schools on school performance measures in Florida. Specifically, using a nearly universal panel of Florida schools in the period 2016-2019, we assess the effect of federal broadband subsidies to schools via the E-Rate program on school grades.

A recent story in the Texas Tribune discussed how Texas’s broadband map shows service in some areas that residents say doesn’t exist.

The Broadband Connectivity Index (BCI) measures overall internet connectivity and compares it across areas. The BCI uses principal components analysis of the availability of internet service, how many people have internet service at home, and the speed of internet service. The BCI is adjusted to range from zero (worst) to one (best), by county.

We’ve all been told to put more fiber in our diets. But we also know what happens with too much fiber in your diet. It isn’t pretty. The same is true for broadband policy. As US policymakers at every level of government look to spend tens of billions of dollars to connect Americans to high-speed internet, aka broadband, they are far too focused on using a single technology to get the job done: fiber optic cable.