The Biden administration thrust the issue of rural broadband into the spotlight when it released the $2 trillion “American Jobs Plan,” which seeks to upgrade America’s physical and digital infrastructure. Included in the White House’s plan is a provision spending $100 billion to ensure “100 percent high-speed broadband coverage.” Although the administration has not published the details of its spending proposals, a large sum of this money will likely be provided as subsidies to broadband providers. While the administration’s goals are laudable, past experience shows that subsidies are less effective than competition in expanding broadband access. More recent developments also suggest broadband access could be greatly expanded without wasting taxpayers’ money.
Before providing another $100 billion in subsidies, the administration should review previous subsidy programs and the extent to which they have been successful in improving broadband connectivity. Citing poor profit-making incentives in rural America, telecommunications companies and ISPs have long sought federal financial support. In response, the U.S. government has provided substantial subsidies to broadband providers. Since 1995, the Federal Communication Commission’s (FCC) Connect America Fund (CAF) has provided $84 billion in assistance to ISPs and telecommunications companies serving rural areas. Likewise, the Department of Agriculture has also provided $7 billion in loans and grants for internet providers, while the National Telecommunications Agency has provided another $4 billion.
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