Friday, January 06, 2023

Letter to Senator John Thune Regarding Oversight of Broadband Subsidies


 Free State Foundation President Randolph May sent a letter today to Senator John Thune, former Chairman of the Senate Commerce Committee, in response to Senator Thune's request for responses to a wide-ranging set of questions relating to the implementation of the Infrastructure Investment and Jobs Act (IIJA) and other programs disbursing funds to advance broadband deployment, as well as questions focused more generally on broadband issues. The letter's Introduction is below:



The Free State Foundation's big-picture position regarding broadband deployment is that the role of marketplace innovation and competition, fueled by over $2 trillion in private capital investments since 1996 and $86 billion in 2021 alone, should be acknowledged, protected, and encouraged. And in those increasingly limited locations where challenging economic realities justify targeted government intervention to close remaining digital divides, marketplace competition should be replicated to the greatest extent possible to maximize overall consumer welfare while promoting fiscal responsibility.

In practical terms, first and foremost, this means that taxpayer dollars should never be used to subsidize the "overbuilding" of existing, privately funded networks that are already meeting consumer needs. Government subsidies should be applied judiciously solely to unserved areas. Then, and only then, should subsidies be directed to areas properly deemed "underserved." And in no event should subsidies be awarded in a manner that artificially tilts the competitive landscape toward government-preferred service providers, whether municipal or cooperative systems, or providers that choose to deploy fiber (or both). In other words, to the maximum extent possible, economic efficiency should serve as the overarching guiding principle so that all Americans can reap the benefits that accrue from the operation of marketplace forces.

In addition, great care must be taken to prevent waste, fraud, and abuse. Unfortunately, the scattershot nature that defines the current multi-agency, multi-program approach to disbursing broadband subsidies inevitably invites such abuse. Meaningful oversight, such as this effort you have initiated, is essential to achieve a coordinated, government-wide approach that helps avoid waste and ensures that taxpayer dollars are expended prudently. Effective oversight also will help inform efforts by law enforcement officials to hold parties accountable for fraud and other abuse of subsidy dollars.

Moreover, it is important that Congress require the FCC to continue to remove obstacles that delay deployment of broadband infrastructure and raise the costs of deployment. This may require granting the FCC more explicit authority to preempt various state and local regulations and practices relating to infrastructure siting that continue to pose unnecessary impediments to rapid deployment of both wireline and wireless services, including small cell 5G broadband facilities. It also may require measures to streamline infrastructure siting on federal lands.

And Congress should require the FCC to complete in a timely fashion its ongoing pole attachment proceeding and ensure that the final rules require prompt resolution of pole attachment disputes. Furthermore, Congress should eliminate the existing exemption from FCC-imposed limits on rates for attachments to poles owned by municipalities and electric cooperatives.

Finally, efforts spearheaded by Congress to expand broadband connectivity should not be allowed to be waylaid by extraneous supposed policy priorities, such as preferences for labor unions, "net neutrality," or various forms of rate regulation, however disguised or denominated. Attempts to impose these controversial extraneous policy preferences through the conditioning of federal broadband subsidies only serve to distract, delay, and drive costs higher. They are even more harmful now given the inflationary pressures currently wreaking havoc on projected price estimates.