More Subsidies Alone Won't Fix What Ails U.S. Broadband

from the time-is-a-circle dept

For decades, U.S. taxpayers have thrown countless subsidies, tax breaks, and other perks at entrenched broadband monopolies, hoping that this time we'd finally put that pesky "digital divide" to bed. And while there certainly are countless communities that have been helped by taxpayer-funded projects, there are just as many examples where this money was effectively wasted by unaccountable telecom monopolies, which often receive millions to billions in handouts in exchange for fiber networks that are routinely only half-deployed.

The reason for our failure should be fairly obvious by now. More often than not, telecom giants face little real scrutiny for their subsidy spending decisions by federal or state lawmakers, most of which are in these monopolies' back pockets. The end result: state and federal lawmakers and regulators that tend to downplay the scope of U.S. telecom market failure, refuse to hold telecom monopolies accountable, and refuse to acknowledge that boring, ordinary corruption is truly why, decades in, American broadband is some of the slowest, patchiest, and most expensive in the world.

Under the Trump administration, this corruption problem was personified to almost comedic effect, with federal regulators literally often indistinguishable from telecom lobbyists. While it shouldn't be hard for a Biden administration to outperform the mindless Comcast, AT&T and Verizon ass kissing that was Trumpism, whether the administration will have the courage to stand up to U.S. telecom monopolies remains to be seen. What is clear is that the incoming administration will be making throwing more subsides at the industry one of its highest priorities:

"Their first major opportunity could come as part of a new coronavirus stimulus package, a top priority for Biden as he prepares to enter the White House in January. The president-elect previously endorsed a House-passed relief bill that includes $4 billion in emergency funds to help low-income Americans stay online in a pandemic that has left tens of millions out of work and strapped for cash. Biden also reaffirmed his commitment to universal broadband on Tuesday as part of a broader preview of his economic-recovery agenda."

To be clear, including some broadband help that actually reaches end users would be a good thing. And subsidies by and of themselves aren't necessarily bad. But while the original CARES Act may have been well-intentioned, it included some unrealistic timelines that forced many areas to either rush to spend taxpayer money in haphazard ways, or return it to the government. A follow up proposal that brings some relief to Americans and smaller broadband providers would be welcome. COVID-19 has, after all, brought the issue of broadband into stark relief to those (for whatever reason) who hadn't yet realized that the technology is essential, and our efforts so far have been decidedly half-assed:

"Students can’t go to school without it. Patients can’t engage in telehealth without it. Governments can’t reach all their citizens with the services people expect unless there is access to it,” said Brad Smith, the president of Microsoft, in an interview. “If there is a silver lining in 2020, it is that all of this has become clear to people. The problem was here before; it just wasn’t as understood as it is now."

Again though, more subsidies doesn't do a whole lot if you're not effectively tracking where broadband is or isn't available, or where subsidies are spent. We've noted more times than we can count that the FCC's broadband maps are (often by industry lobbying design), effectively useless for actually measuring U.S. broadband; more subsidies can't fix a problem if you don't know what the problem is.

More subsidies don't really address the fact that more than half of Congress is literally a rubber stamp to every fleeting whim of AT&T, Comcast, Verizon, Charter, and T-Mobile. Nor can it fix the fact that in many states, corruption is so rampant that telecom giants literally and routinely write anti-competitive telecom law, or state ordinances that hamstring communities' right to make local telecom infrastructure decisions for itself.

More subsidies can't fix the Trump FCC's net neutrality repeal, which effectively neutered the agency, making it harder than ever for it to hold incumbent telecom monopolies accountable for much of anything. In fact, if Congress rushes to confirm Nathan Simington, then blocks the appointment of a Democratic Commissioner, the FCC could remain gridlocked at 2-2, and effectively impotent for at least two years. More subsidies can't fix that.

More subsidies don't address the fact we routinely, repeatedly, rubber stamp competition and job killing megamergers that all but ensure Americans continue to pay some of the highest-prices in the world, something that was already a problem before a massive economic and public health crisis. More subsides don't fix our broken antitrust enforcement mechanism that whistles while looking the other direction as merger after merger is gleefully approved, and the resulting domination crushes innovative smaller companies.

Telecom giants have a complete and total stranglehold over telecom policy making on the state and federal level. Yet year after year, we refuse to address or tackle this corruption, let monopolies dictate the lion's share of U.S. telecom policy, and then stand around with an idiotic look on our faces wondering why the U.S. remains a broadband backwater after throwing so much damn money at the problem.

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Filed Under: broadband, digital divide, subsidies, taxpayers


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  • identicon
    Melvin Chudwaters, 30 Nov 2020 @ 6:35am

    Unless the telecoms are forced, via legislation, to be telecom companies and nothing else... this will never be fixed. They keep wandering away, mesmerized by the idea of becoming some lucrative televsion outfit, or some highly-profitable advertising conglomerate.

    They've got corporate attention spans of nanoseconds, and Congress needs to help them focus on what they're supposed to be doing. Nothing else will work.

    reply to this | link to this | view in chronology ]

    • identicon
      polloi, 30 Nov 2020 @ 7:28am

      Re: forced, via legislation

      no, the stated diagnosis is: "Telecom giants have a complete and total stranglehold over telecom policy making on the state and federal level. "

      So legislative solutions are impossible unless we eliminate the rampant corruption amomg sitting Congressmen and state legislators.
      This month's elections guaranteed continued status quo corruption that's thrived for decades in the government halls of power.

      There is hope, but not for us.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 30 Nov 2020 @ 8:38am

        Re: Re: forced, via legislation

        So legislative solutions are impossible unless we eliminate the rampant corruption amomg sitting Congressmen and state legislators.

        That just makes the problem intractable, that doesn't mean I'm wrong.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 30 Nov 2020 @ 12:00pm

          Re: Re: Re: forced, via legislation

          ok, but you neglected to mention any intractable obstacles to your solution.
          a fanciful solution is not a genuine solution.
          do you have some general roadmap to implement your solution?

          reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 30 Nov 2020 @ 8:02am

      Re:

      "Unless the telecoms are forced, via legislation, to be telecom companies and nothing else... this will never be fixed."

      That just raises the question of why other countries manage to have ISPs that are part of media conglomerates or act as providers of other services, but not have the same issues in terms of competition and service. My ISP in Spain also acts as a mobile provider, TV streaming provider, movie and TV production house, hell they've even been branching out into providing health insurance and home alarm installation. But, I can switch immediately to a competitor if I feel they offer the better internet deal.

      It ultimately comes down to the fact that overall regulation in the US is not only poor, but that the telecoms companies have been allowed to a certain degree to write the laws that regulate them.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 30 Nov 2020 @ 8:12am

        Re: Re:

        Who owns the infrastructure? Here in the UK, it is Openreach that owns and manages the infrastructure, up to the ISP/phone switches. That makes it easy to switch ISP's, and the same copper/fibre is used to connect to any of them.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 30 Nov 2020 @ 9:51am

          Re: Re: Re:

          The UK has a different history as our infrastructure was largely a legacy of having a national telco provider British Telecom (shock, horror, socialism!) which was then sold off and forced to open up to competition.

          Two of our main suppliers are Sky and Virgin - both also offer TV and telecoms. Actually, BT also offers TV and is an ISP so they are all at it.

          Another difference is that OFCOM (our telco watchdog) is not owned by the telcos and is more than happy to slap the telco's. As we have restricted spending on election campaigns (£30k per constituency), lobby donations have less effect (non zero but less) at the grass roots MP level - although party donations can still sway who gets contracts it does not produce the large-scale corruption that is obvious in the US.. just smaller scale corruption - hey, it's politics

          reply to this | link to this | view in chronology ]

        • icon
          PaulT (profile), 30 Nov 2020 @ 10:10pm

          Re: Re: Re:

          My understanding of the infrastructure is that it's still technically owned and operated by Telefonica / Movistar (the previous state-owned monopoly in a similar vein to BT), but they have to play fair and allow others to connect to their infrastructure at reasonable rates. But, others can install and extend as well, leading to expansion into areas that Movistar traditionally find unprofitable or lower priority. It seems to work quite well, especially as fibre expansion has become much more ubiquitous.

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 1 Dec 2020 @ 2:24am

            Re: Re: Re: Re:

            but they have to play fair and allow others to connect to their infrastructure at reasonable rates.

            Those were the conditions imposed on BT, but there were problems so OFCOM forced the split into BT operating phones and ISP services, and Openreach, a separate company for providing and managing the Infrastructure. Because of deeds on old rights of way, some of those are still technically owned by BT, but control has been handed to Openreach.

            Line rentals are collected by the ISP, who pass them on to Openreach, so you only get a single bill. Similarly when you contract with an ISP for a new service, an Openeach engineer does the Installation.

            reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 30 Nov 2020 @ 8:37am

        Re: Re:

        It does raise a question, I agree.

        Sometimes people/corporations/entities will do X. Then, some event or circumstance causes them to do Y.

        When the event/circumstance disappears, they won't revert to doing X... perhaps you can think of it as a bad habit they developed. They continue to do Y, even though circumstances would allow X again. Maybe it's not a habit, but their own behavior where they do Y makes it impossible for them to stop doing Y. It's a local minima trap.

        What event or circumstance caused them to do this, this time? Not sure it matters. Even if you can identify it and remove it, it's unlikely to get them to revert their behavior to what we need them to do.

        reply to this | link to this | view in chronology ]

        • icon
          PaulT (profile), 30 Nov 2020 @ 10:14pm

          Re: Re: Re:

          "Even if you can identify it and remove it, it's unlikely to get them to revert their behavior to what we need them to do."

          Which is why effective regulation is important. Corporations will always do what's best for their bottom line, often at the expense of consumers. This includes things like defacto monopolies, platform lock in and price fixing. Which means that the free market no longer applies - if you have an unpopular/ineffective product, but no competition and a natural requirement to have the product, customers cannot shop around, thus will never stop using the product and there is no incentive to improve things. Regulation forces them to compete, not rip off consumers and ensure they always have a choice.

          It's no mystery why corporations do this, it's just a question of what you do to discourage it.

          reply to this | link to this | view in chronology ]

          • identicon
            Greg, 1 Dec 2020 @ 6:01am

            Re: Re: Re: Re:

            "....Corporations will always do what's best for their bottom line, often at the expense of consumers..."

            This is false in a capitalist societ. While i understand the sentiment and it seems to hold up the CONSUMER has all the power. Since we are in and have been in a crony capitalistic society for 20 years the company can do whatever is best for their bottom-line consumer be damned. Consumer still has the power but now it has to fight the crony system in bed with the regulator which makes it a tougher nut to split.

            Local regulation is the way out of this as the FEDS, for the most part, has proven time and time again to be the poison pill.

            reply to this | link to this | view in chronology ]

            • icon
              PaulT (profile), 1 Dec 2020 @ 6:27am

              Re: Re: Re: Re: Re:

              "While i understand the sentiment and it seems to hold up the CONSUMER has all the power"

              No that's why there's monopolies, price fixing, etc. Hence why most successful countries have something else to counter the worst of capitalism. Pure capitalism doesn't get you a free market, it gets you child labour and company scrip.

              "Consumer still has the power"

              Really? In markets where people need internet to work, can't find a job offline and have a local monopoly ISP, what power do they have?

              "the FEDS, for the most part, has proven time and time again to be the poison pill."

              In the US. The rest of the world mostly have this worked out. Why are you so uniquely bad at this if the consumer has all the power?

              reply to this | link to this | view in chronology ]

  • identicon
    Pixelation, 30 Nov 2020 @ 7:37am

    FTFY

    "which often receive millions to billions in handouts in exchange for laying people off."

    reply to this | link to this | view in chronology ]

  • identicon
    Annonymouse, 30 Nov 2020 @ 8:47am

    People keep harping on the corruption in government yet not a peep about the source of the putrescence..... the corporate heads and boards of these conglomerates.
    Untill such time as they all get thrown into a deep hole in Alaskan breaking big rocks into small rocks this kind of crap will continue. Also toss their lawyers in with them for aiding and abetting.as well as knowingly benefitting from the proceeds of crime.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 30 Nov 2020 @ 8:58am

      Re:

      The real problem is caused by political patronage to appoint the heads of regulatory agencies for short periods of time. This result is those appointed keeping an eye out for their next job, and networking with those likely to employ them. Until the heading of regulatory agencies becomes a permanent job, the agencies will be open to regulatory capture.

      reply to this | link to this | view in chronology ]

  • icon
    davetechdirt02 (profile), 30 Nov 2020 @ 8:52am

    Good news.
    Ajit Pai is gone on January 20,2021

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 30 Nov 2020 @ 9:06am

    Until those who keep giving tax payers money to these broadband companies, that then do as they like with that money, (which I am sure ends up in bosses pockets,) are held accountable, there wont be any changes! This, in my view, has been even more noticible since Trump has been potus, looking after his 'buddies', rather than the millions of citizens he should have been.

    reply to this | link to this | view in chronology ]

  • identicon
    Dave, 30 Nov 2020 @ 12:22pm

    More subsidies alone will just further enrich corporate executives and shareholders. Face it, you give money to big corporations, and they are guaranteed to eat it for breakfast.

    reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 30 Nov 2020 @ 12:41pm

    Its not fun.

    To think all the things trump and the republicans declare to be Fixed by the gov. (as if they werent supported by the corps) Like limiting gov. subsidies, cutting Unneeded services(they think), and deciding the difference between democracy and Socialism, and probably killing both.
    The Biggest hing they could have done was to get RID of a few subsidies. But in the end, I think, he has paid the corps off, tooth and nail, about every cent he could.
    With all the subsidies, and the Tax cuts over the years, as well as the ones he has given, Then the Bailout from the pandemic. I think all the poor are poorer for it.

    $29 billion to oil
    $19 billion to farmers?

    2016- https://www.thebalance.com/government-subsidies-definition-farm-oil-export-etc-3305788
    The House budget also proposed $180 billion in cuts to the farm subsidy program.8

     But $133 billion of the cuts were to the food stamp program, affecting 8 million consumers, not farmers.

    https://www.thebalance.com/government-subsidies-definition-farm-oil-export-etc-3305788

    Just read. Some I would think are fine if monitored, but MOST arnt.

    reply to this | link to this | view in chronology ]


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