Benton Urges FCC to Reject Proposal that Would Harm Competition and Consumers

On July 1, 2019, the Benton Foundation urged the Federal Communications Commission to dismiss a proposal that would require E-Rate program participants to pay more than is required by mandating less competition than is available. The FCC's E-Rate program makes broadband and telecommunications services more affordable for schools and libraries around the country. A petition filed by three Texas carriers calls on the FCC to prohibit E-Rate subsidies from going toward building or extending networks in areas where fiber already exists. Benton opposes the proposal:

• The proposed E-Rate rule changes contemplate circumstances in which the most cost-effective solution is the “special construction” of fiber, rather than use of an incumbent network. But the petitioners’ would bar the most cost-effective solution in order to protect their own interests, which would force the E-Rate program to pay more than it needs to pay. That is the outcome that would be wasteful.
• The petition calls on the FCC to “discourage overbuilding.” There’s a better word for the construction of new networks than “overbuilding.” The word is “competition.” “Overbuilding” is an engineering concept; competition is an economic concept that helps consumers by shifting the focus from counting broadband networks to counting the dollars that consumers save (or schools and the E-rate program save) when they have competitive choices.

The FCC previously considered and rejected similar requests in 2014 as a part of its E-Rate Modernization Order. There are no new laws, facts, or substance that merit a new rulemaking, nor is there a need for new safeguards.