Elizabeth Warren’s rural broadband plan repeats historical mistakes

Senator and presidential candidate Elizabeth Warren (D-MA) has a plan for rural America. All of America should be concerned, because it reflects a fundamental misunderstanding of economics and business.I’ll focus on the rural broadband plan. The overarching theme is that private businesses cannot be trusted, and neither can consumers (except maybe when they are voting for Senator Warren), so government officials should take control. Other takeaways:

• Greater city control of poles and conduit would slow broadband deployment. As my American Enterprise Institute colleague Roslyn Layton has explained, city governments often use their control of rights-of-way and poles to delay private investment and extract money from private telecommunications providers. Why? It’s a way to add money to government coffers without having citizens recognize that they are the ones paying via delayed service and higher prices.
• Most research in top economics journals and most applied studies find that net neutrality regulations stifle broadband deployment. The research isn’t unanimous, but there is also anecdotal evidence of net neutrality regulations being antithetical to broadband investment.
• The grant programs would likely depress broadband expansion. The broadband grants would be available only to “electricity and telephone cooperatives, non-profit organizations, tribes, cities, counties, and other state subdivisions.” Experiences with such government grant programs have not been good. The wasted money and the tendencies of governments to bias regulations to favor their own enterprises would adversely impact broadband.

These policies appear to reflect nostalgia for the Gilded Age and the Great Depression.