Aug 10, 2021 - Technology

Big Telecom comes out on top in $65B broadband upgrade

Illustration of ethernet cables arranged to look like the U.S. flag

Illustration: Annelise Capossela/Axios

The White House-backed infrastructure bill now moving toward Senate approval divvies up $65 billion in broadband funding in ways that largely please the big cable and telecom companies.

The big picture: President Biden's spending blueprints and talking points stoked alarm in the industry over the prospect of price regulation or government-backed networks, but the legislation that's moving forward is much more to its liking.

Driving the news: The bipartisan infrastructure bill would devote funding to both broadband deployment and adoption.

The deployment side includes:

  • $42.45 billion in grants to states to be used for broadband projects with speeds of at least 100/20 mbps, to be first spent in locations without high-speed internet.
  • $2 billion each to support a rural broadband construction program called ReConnect run by USDA and to the Tribal Broadband Connectivity Program from NTIA.
  • $1 billion in grants to build so-called "middle mile" infrastructure to connect local providers to the larger internet access point.

On the adoption side:

  • $14.2 billion to provide a $30-a-month voucher to low-income Americans to pay for internet service, replacing the current $50-a-month Emergency Broadband Benefit program but increasing the number of Americans who will be eligible and giving consumers more choice on how to spend the benefit.
  • Requiring that providers who receive money from the state grants offer a low-cost plan, although the bill does not specify a price.
  • $2.75 billion for digital inclusion grants, such as projects to improve digital literacy or online skills for seniors.

Why telecom likes it: The bill doesn't include measures that President Biden championed as part of his early infrastructure proposal, the American Jobs Plan.

  • The bill will prioritize funding broadband in areas that lack high-speed service, so existing providers will largely avoid the threat of a government-backed competitor, and the money will be available to a larger pool of providers than just those who offer fiber service.
  • While municipal broadband projects could still receive funding, those networks will not be prioritized when the money is allocated, as Biden's plan originally proposed, and the bill will not eliminate state laws that restrict municipal broadband projects.

What they're saying: "We are encouraged that the bipartisan infrastructure deal directly addresses two critical elements of reaching universal connectivity — dedicating funding first and foremost to those regions without any broadband service, and providing financial assistance to help low-income Americans subscribe to this critical service," cable trade group NCTA spokesman Brian Dietz said in a statement.

  • Consumer groups also praised the $14 billion affordability program, as well as measures directing the Federal Communications Commission to require broadband providers to disclose service information as part of a "broadband nutrition label" and collect more pricing data.
  • “It’s really a good first start, but we have to do more," Jonathan Schwantes, senior policy counsel for Consumer Reports, told Axios. "There’s much more room here to keep advancing broadband accessibility and affordability. Candidly, we have to do more on competition.”

The other side: A White House official highlighted the new subsidy program, measures on price transparency and a proposal requiring the FCC to develop rules against digital "redlining" — discrimination based on factors like income level or race.

  • "I think we're going to be able to look back on this and say that we helped drive down prices for folks, helped increase the quality of internet service that millions of people could get, and that we ended up connecting millions of new people to the internet, because we made it affordable for them," the official told Axios. "So I think it's a win."
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