Over 40 Republican Senators Tell FCC to Say No to Net Neutrality

In a letter that was released earlier today, Senators John Thune (R-SD), ranking member of the Commerce Committee's Subcommittee on Communications, Media, and Broadband, and Ted Cruz (R-TX), ranking member of the Commerce Committee, called FCC Chairwoman Jessica Rosenthal's proposal to subject broadband Internet access services to public utility regulation under Title II of the Communications Act a "historic mistake."

More than forty GOP Senators, including the entire Senate Republican leadership team, added their names to the letter.

In the letter, the Senators warn that "[r]e-imposing heavy-handed, public-utility regulations would threaten the progress our country has made since 2017, and it would steer our country out of the fast lane and into a world of less competition, less choice, less investment, slower speeds, and higher prices."

They also emphasize that, because "the FCC lacks this statutory authority over broadband internet access," any attempt to reclassify broadband under Title II "will not survive judicial review."

In a September 26, 2023, press release posted to the FSF Blog, Free State Foundation President Randolph May characterized Chairwoman Rosenworcel's proposal as "foolhardy," made similar predictions regarding its ability to survive application of the "major questions doctrine," and cautioned that, despite claims to the contrary, it inevitably would result in rate regulation.

GAO Reiterates Broadband Funding Coordination Concerns

On May 10, 2023, the Government Accountability Office (GAO) released "Broadband: A National Strategy Needed to Coordinate Fragmented, Overlapping Federal Programs," a Statement addressing the status of federal broadband subsidy efforts. It echoes the findings set forth in a May 2022 GAO Report that I summarized in a post to the FSF Blog – and that Senator John Thune (R-SD) underscored in prerecorded remarks delivered to the Free State Foundation's Fifteenth Annual Policy Conference on March 28, 2023.

Troublingly, it also indicates that little has changed over the past twelve months.

As Senator Thune noted, the May 2022 GAO Report concluded that "there are more than 130 federal broadband programs that are administered by 15 federal agencies" – a scenario he characterized as a "spiderweb of bureaucracy." The Statement, meanwhile, focuses on a subset of that total: the 25 programs whose "main purpose" is broadband, 13 of which "overlap because they can each be used for the purpose of broadband deployment," as illustrated in the chart reproduced below.

The Mosaic of 25 Federal Programs with Broadband as a Main Purpose,
as of November 2021, by Purpose Category

Continuing, the Report expressed concern that "[t]his patchwork of programs could lead to wasteful duplication of funding and effort." It therefore made the following recommendations:

• That the National Telecommunications and Information Administration (NTIA), in consultation with other relevant agencies, "present to Congress a report that identifies the key statutory provisions that limit the beneficial alignment of broadband programs and offers legislative proposals to address the limitations, as appropriate."
• That the "Executive Office of the President … develop and implement a national broadband strategy with clear roles, goals, objectives, and performance measures to support better management of fragmented, overlapping federal broadband programs and synchronize coordination efforts."

The publication of the Statement coincided with the appearance of Andrew Von Ah, GAO's Director, Physical Infrastructure, at a hearing held the same day by the House Energy and Commerce Committee's Oversight and Investigations Subcommittee entitled "Closing the Digital Divide: Overseeing Federal Funds for Broadband Deployment." (Indeed, it served as his official witness testimony.)

In terms of updates, the Statement reveals that little concrete progress on those recommendations has been made over the last year:

• NTIA's report to Congress remains in the planning stage – and is not expected until May 31, 2026.
• In May 2022, "the Executive Office of the President was considering if a national strategy was needed. As of this testimony, it has not developed a national strategy for broadband."

As I illustrated in "Wasteful Duplication by Design: A Case Study on Overlapping Federal Broadband Subsidies," a recent Perspectives from FSF Scholars, the status quo unacceptably – and seemingly intentionally – opens the door to redundant grants from multiple sources and the overbuilding of privately funded networks.

GAO once again has raised the alarm and proposed solutions. It is high time that the Biden Administration and Congress respond with meaningful coordinating measures.

Senators Thune, Luján Urge GAO to Revisit Broadband Funding

In a letter dated April 24, Senators John Thune (R – SD), ranking member of the Commerce Committee's Subcommittee on Communications, Media, and Broadband, and Ben Ray Luján (D – NM), subcommittee chairman, request that the Government Accountability Office (GAO) "conduct an additional review of federal, state, and local broadband efforts to determine the effectiveness of each program."

In a recent post to the FSF Blog describing an effort led by Senator Thune to compel the National Telecommunications and Information Administration (NTIA) to align with statutory intent its rules for the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program, I pointed out that in prerecorded remarks delivered to the Free State Foundation's Fifteenth Annual Policy Conference, he cited a May 2022 GAO report cautioning that "there are more than 130 federal broadband programs that are administered by 15 federal agencies."

As I noted in a June 2022 post to the FSF Blog, the GAO concluded that "[t]his patchwork of programs could lead to wasteful duplication of funding and effort" and therefore recommended that the "Executive Office of the President … should develop and implement a national broadband strategy with clear roles, goals, objectives, and performance measures."

To date, no such national broadband strategy has emerged. Fortunately, however, Senator Thune's ongoing broadband funding oversight activities maintain a bright spotlight on this multi-agency, multi-program recipe for duplication, waste, fraud, and abuse.

For instance, his December 2022 oversight letter, to which FSF President Randolph J. May helpfully provided a comprehensive response, brought focused attention to the GAO report's findings. Yesterday's letter to the Honorable Gene L. Dodaro, Comptroller General of the United States, treads a similar path.

Specifically, Senators Thune and Luján request that the GAO investigate a number of topics, including:

• Whether each of the 133 (and counting) federal subsidy programs "were … established in line with Congress' directive on the funding's intended purpose";
• The "statutory basis" for each program;
• The extent to which these programs have met their "specific policy goals";
• The frequency with which – and how – "federal programs' funding [has] overlapped other federal programs";
• The effect of "the fragmented and overlapping approach the federal government [has] taken" on the ability of these programs to accomplish their intended goals;
• Whether the goals set forth in the May 2022 Memorandum of Understanding between the FCC, Department of Agriculture, NTIA, and Treasury Department have been achieved; and
• The extent to which "federal agencies [have] coordinated their broadband programs with state and local broadband funding programs."

As the letter rightly concludes, "[a]ddressing weaknesses in each of these broadband programs will help ensure more Americans are connected to reliable broadband services."

Senator Thune Spearheads Call to Revise BEAD Program Rules

In a letter released earlier today, a group of eleven Republican Senators, led by John Thune (SD), ranking member of the Senate Commerce Committee's Subcommittee on Communications, Media, and Broadband, and including Senate Commerce Committee ranking member Senator Ted Cruz (TX), urged National Telecommunications and Information Administration (NTIA) head Alan Davidson to bring in line with congressional intent the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program's rules.

Specifically, the letter pressed Assistant Secretary Davidson to remove several provisions from the May 2022 Notice of Funding Opportunity (NOFO) that "divert resources away from bringing broadband service to rural America and are inconsistent with NTIA's statutory authority in the Infrastructure Investment and Jobs Act (IIJA)."

The letter targets the following extraneous and counterproductive policy priorities not found within the IIJA yet championed by the NOFO:

• Labor requirements inappropriately designed "to achieve targeted social outcomes";
• A "misguided" bias in favor of government-owned networks;
• A fiber-focused failure to heed "Congress' technology neutral stance in the IIJA" with regard to other viable broadband distribution platforms;
• Affordability and other requirements inconsistent with specific language in the IIJA prohibiting NTIA from '"regulat[ing] the rates charged for broadband service";
• Climate change mandates "not envisioned by Congress" that raise costs; and
• "Buy American" mandates that threaten untimely delays absent "a consistent waiver process."

Senator Thune stepped up his broadband-funding oversight efforts late last year with the release of a letter soliciting input on a wide range of topics, including many of those listed above.

In "Senator Thune's New Broadband Oversight Initiative," a December 2022 post to the FSF Blog, Free State Foundation President Randolph May welcomed the arrival of Senator Thune's oversight letter and wrote that he "couldn't agree more on the need for congressional oversight of the various programs providing funds for broadband."

Mr. May submitted a thorough response, referencing dozens of related FSF scholarly papers, on January 6, 2023.

In prerecorded remarks addressing the FSF Fifteenth Annual Policy Conference on March 28, 2023, Senator Thune emphasized the importance of congressional oversight and highlighted the Free State Foundation's substantive contributions to those efforts:

On rural broadband oversight, as many of you know, Congress has allocated an unprecedented amount of money in federal broadband investments. And there are more than 130 federal broadband programs that are administered by 15 federal agencies. That spiderweb of bureaucracy is exactly why I began an effort last year to ensure there is stringent oversight of how these taxpayer funds are being spent. And I greatly appreciate the Free State Foundation taking the time to provide thoughtful responses to my oversight request.

The other signatories to the letter to NTIA Administrator Davidson are Senators Ted Cruz (TX), Marsha Blackburn (TN), Ted Budd (NC), Shelley Moore Capito (WV), Deb Fischer (NE), Eric Schmitt (MO), Dan Sullivan (AK), J.D. Vance (OH), Todd Young (IN), and Roger Wicker (MS). 

Senate Broadband Oversight Focuses on Department of Agriculture

With the Department of Agriculture's ReConnect Program poised to distribute this fiscal year an additional $1.5 billion in broadband infrastructure subsidies and amid reports that the 2023 farm bill could provide that agency with even more construction funding, I am encouraged by the news that a bipartisan group of Senators is taking action to prevent (1) waste, fraud, and abuse, and (2) the use of federal dollars to overbuild existing, privately financed networks.

On January 30, 2023, Senators John Thune (R-SD), Ben Ray Luján (D-NM), Amy Klobuchar (D-MN), and Deb Fischer (R-NE), all members of the Senate Committee on Agriculture, Nutrition, and Forestry, reintroduced legislation designed to "streamline and bolster U.S. Department of Agriculture (USDA) Rural Development broadband programs and ensure that their funding is being targeted to rural areas that need it the most."

Seth L. Cooper, Free State Foundation Director of Policy Studies and Senior Fellow, detailed the specific provisions of the Rural Internet Improvement Act of 2022 in a December 2022 post to the FSF Blog. The Rural Internet Improvement Act of 2023, like the 2022 version, would combine Rural Utility Service (RUS) broadband loan and grant programs, specify that no more than 10 percent of locations targeted by a funded project already have access to broadband, encourage greater broadband provider participation, improve the challenge process, and promote greater interagency coordination with the FCC and NTIA.

The RUS manages multiple broadband subsidy programs, the largest being the ReConnect Loan and Grant Program, which to date has distributed more than $3 billion. In a recent interview, RUS administrator Andrew Berke stated his expectation that the ReConnect Program will dole out an additional $1.5 billion in 2023.

In addition, news reports indicate that the next farm bill could appropriate still more money to RUS – Representative David Scott (D-GA), ranking member of the House Committee on Agriculture, identified as his top priority that "[w]e must ensure that appropriate funding is given to USDA to help us bridge the digital divide between rural and urban America" (emphasis added) and argued that "USDA knows what works for our rural communities better than many other Federal agencies."

Considering that (1) tens of billions in taxpayers dollars have been appropriated for the expansion of broadband infrastructure but not yet put to use, and (2) the vast majority of those subsidies will flow to rural areas – after all, at this point in the rollout of broadband "unserved" and "rural" are virtually synonymous – regardless of the distributing agency, it is not at all clear that any additional funding is "appropriate" at this time.

In "Absent Oversight, the Broadband Funding Faucet Likely Will Overflow," a November 2022 Perspectives from FSF Scholars, I drew attention to the concerning potential that, given the large amount of money involved and absent better interagency coordination and oversight, the number of different agencies sharing responsibility for government-led efforts to extend broadband connectivity to those areas that remain unserved could lead to substantial waste and inefficiencies.

But as Mr. Cooper wrote, it is equally true that "intra-agency coordination of broadband deployment subsidy programs through streamlined processes or merging of disparate programs is no doubt essential to ensure that precious tax dollars are spent wisely and that duplicative efforts and other forms of fraud, waste, or abuse are avoided" (emphasis added).

As you may recall, Free State Foundation President Randolph May received a letter from Senator Thune on December 6, 2022, soliciting input on, among other things, the potential for waste, fraud, and abuse as a result of the sheer number of federal broadband subsidy programs, including those administered by the Department of Agriculture.

In his response, Mr. May wrote that "[g]iven the large number of separate programs, it seems self-evident that some of them should be combined and/or eliminated so that there are many fewer programs and fewer agencies disbursing subsidies. This would increase manageability and facilitate accountability and meaningful congressional oversight." He therefore referenced with approval the introduction the Rural Internet Improvement Act of 2022.

In addition, Mr. May drew attention to the fact that the ReConnect Program (1) opens the door to rate regulation via a preference for applicants that provide "at least one low-cost option"; (2) inappropriately encourages applicants to "commit to net neutrality"; and (3) permits grant and loan recipients to apply that assistance in areas where up to 50 percent of locations already are served, in many instances by privately funded networks, "thus disincentivizing further private investment." As noted above, the Rural Internet Improvement Act of 2023 would decrease that threshold to 10 percent.

Senator Thune's New Broadband Oversight Initiative

I was pleased to receive a letter, dated December 6, 2022, from Senator John Thune, a longtime member of the Senate Commerce Committee and former chairman of the committee, seeking 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. 

As Senator Thune points out, "the Government Accountability Office (GAO) recently found that broadband funding is spread out over 15 separate agencies and more than 130 separate programs." As he rightly observes, the fragmented approach the federal government has taken to address the digital divide raises a number of concerns." Thus, Senator Thune states that "it is imperative Congress exercises its oversight responsibilities and seeks feedback on how best to expand broadband services in the most effective, efficient, and fiscally responsive manner so that we can close the digital divide once and for all."

 

I couldn't agree more on the need for congressional oversight of the various programs providing funds for broadband. Over the past year, Free State Foundation scholars have published many papers addressing many of the issues raised by Senator Thune in his letter. [For one recent example, see Andrew Long, "Absent Oversight, the Broadband Funding Faucet Likely Will Overflow," and the many other FSF papers cited therein published by Mr. Long, Seth Cooper, and me, on broadband funding-related issues.]

 

So, I applaud this timely, important congressional oversight effort initiated by Senator Thune, and I welcome the opportunity for the Free State Foundation and its scholars to provide responsive information throughout his inquiry.

Senate Passes MOBILE NOW Act

Yesterday, the Senate passed the MOBILE NOW Act, which is a vital step towards relinquishing spectrum to meet the increasing demand for mobile services and 5G technology. As it is discussed in an April 2017 Perspectives from FSF Scholars, the MOBILE NOW Act would require the National Telecommunications and Information Administration (NTIA) and the Federal Communications Commission (FCC) to relinquish necessary licensed spectrum. The legislation also would require the FCC to increase access to unlicensed spectrum and to streamline mobile deployment processes. 

Thank you to Chairman John Thune and Ranking Member Bill Nelson of the Senate Committee on Communications, Science and Transportation for their leadership on this bipartisan issue!

Sen. Thune, Commissioner Pai Urge Tax Moratorium Adoption

Yesterday, in a blog in this space, FSF's Michael Horney urged the Senate to follow the House of Representative's lead and promptly pass the Permanent Internet Tax Freedom Act ("PITFA"). The current moratorium on taxing Internet access services expires on November 1, so quick action is needed to prevent the imposition of new taxes.

As a follow-on, please see the op-ed in todays' Wall Street Journal [subscription required] by Senator John Thune and FCC Commissioner Ajit Pai urging the Senate to act promptly.

By the way, the Senate bill, with broad bipartisan support, already has 52 co-sponsors.

There is no reason why the Tax Freedom Act shouldn't be sent to President Obama for his signature before the next Congressional break.  

The Senate Should Pass the Internet Tax Freedom Forever Act Now

The Permanent Internet Tax Freedom Act (HR 3086), which would permanently ban state and local taxes on Internet access, passed the House of Representatives on Tuesday.  It is now the Senate’s turn to pass the Internet Tax Freedom Forever Act, and it should do so well before the current tax moratorium expires on November 1^st.

Senator John Thune (R-SD), a lead sponsor of the legislation, applauded the House for its passage of the Act, adding that “it’s time for Leader Reid to take up this bipartisan bill to ensure we continue to keep the Internet accessible to consumers across the country and encourage innovation and investment in our global economy.”  If the legislation does not pass and the moratorium expires, taxes levied on Internet Service Providers would raise the price of broadband for consumers.

Taxes imposed on any good or service raise the price, resulting in a decrease in the quantity demanded from consumers.  Whether taxes are shifted on consumers or businesses, the elasticity of demand and supply allows for both sides of the market to inherit the burden, ultimately leading to less economic activity and growth.

While all taxes are regressive in one way or another because the marginal value of a dollar is much higher the fewer dollars someone has, taxes on Internet access would be especially regressive because it is often the poorest people that do not adopt Internet in the first place.  A tax on Internet access could push the price of broadband beyond many of the poorest consumers’ willingness to pay.  Even if a person had not adopted prior to the tax being levied, the increase in price would make them less likely to adopt.  Allowing for a barrier to connecting the poorest citizens to the Internet seems counterproductive to ending the “digital divide.”

It is very important that the Senate quickly pass the Internet Tax Freedom Forever Act, so the economy can continue to see innovation and growth within the Internet.