Ted S. Warren/AP Photo
Travis Sheetz, a worker with the Mason County Public Utility District, installs fiber optic cable, August 4, 2021, while working with a team to bring broadband service to homes in a rural area surrounding Lake Christine, near Belfair, Washington.
If Tuesday’s passage of the Infrastructure Investment and Jobs Act leads to even a significant portion of President Biden’s Build Back Better agenda through budget reconciliation, it will herald a new age of government investment and intervention in the economy, and a reversal of decades of pullbacks in public spending. But in another sense, the IIJA—and potentially the companion reconciliation bill—also carries on a tradition from the Clinton and Obama years of sidestepping big fights with corporate interests. It is not enough for Democratic lawmakers to have relearned how to spend money if they also continue to shy away from breaking power.
One of the clearest examples of this is how broadband is treated in the IIJA. On the surface, a $65 billion investment in broadband, with an emphasis on getting low-income and rural households connected and closing the digital divide, is an unalloyed positive. But how much of that money will actually go toward meeting these goals, and how much will funnel into the coffers of incumbent telecom companies that for decades have resisted spending much money on rural and low-income deployment?
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The initial Biden proposal in the American Jobs Plan, which gave $100 billion to broadband, would have structurally reshaped the U.S. broadband market. It vowed to blanket the nation with coverage, increasing the minimum speeds that constitute “broadband” internet. Importantly, it promised to “prioritize support for broadband networks owned, operated by, or affiliated with local governments, non-profits, and co-operatives,” which are less constrained than the telecoms by the profit motive and more willing to commit to universal service. And it stated it would override a series of laws on the books in nearly two dozen states that prevent co-ops or municipal broadband networks from competing with established incumbents.
Unfortunately, none of this made it into the final proposal. The $42.45 billion in state-level grants is prioritized to “unserved” areas, defined as areas with no access to broadband with at least 25/3 megabits per second (Mbps), which has been the standard minimum since 2015. “Underserved” areas, by contrast, are set at 100/20 Mbps, which is the level grantees are supposed to hit; the original proposal sought a higher speed. Because “unserved” areas get the money first, areas where the incumbent telecoms already operate, “even if underserved,” are unlikely to qualify for much funding.
Smaller nonprofits, electrical co-ops, and muni broadband operations do not get priority; the new language pointedly states that “the program does not favor particular companies or providers,” and the bill text confirms that on page 2,058. Even worse, the bill does not nullify any state laws that restrict municipal broadband.
So AT&T and Comcast can capture this pot of money, as they have in the past, without meaningful broadband adoption in unserved or underserved areas. As I wrote in my book Monopolized, the Connect America Fund and the Federal Communications Commission (FCC) provided at least $4.6 billion in subsidies for broadband deployment between 2015 and 2020, yet this had little effect on expansion. The IIJA grants ten times that, but monopoly telecoms have been skilled at picking and choosing neighborhoods to build out, only capturing the more profitable pockets.
A provision that mandates the FCC to prevent “digital redlining” (i.e., that picking and choosing) did make the bill, along with $14.2 billion for a voucher program of $30 per month to help low-income users pay for broadband, and $2.75 billion for teaching untrained people how to use the internet. Of course, such subsidies and training will also benefit the existing telecom firms offering broadband. The requirements for grantees to offer a “low-cost” price (with no actual dollar figure attached to that) and disclose their broadband rates are nice, but it’s hard to comparison shop when there’s only one carrier, as is often the case in many communities.
Maybe a little less money will be wasted when compared to previous federal broadband efforts. But without the competition elements, you’re still hoping that the broadband operators that snag the state grants—and given the lobbying that will go into it, incumbents would have to be favored—actually get the job done. The giant telecom companies have pronounced themselves happy with the bill, after initially fighting it. That’s because the structure of the heavily monopolized market remains intact; Congress failed to engage in any meaningful structural reform.
AT&T and Comcast can capture this pot of money, as they have in the past, without meaningful broadband adoption in unserved or underserved areas.
In one sense, this is the price Democrats paid for a bipartisan infrastructure bill—and it was a price extracted in other areas as well. Despite the initial plan to offset spending with rises in the corporate tax rate, practically no industry or wealthy individual will see taxes go up by a penny. (The only one that might, cryptocurrency brokers, made a huge stink and got a compromise that didn’t make it into the bill due to procedural complications, but will probably be implemented down the road.) Climate measures were rolled back and transit funding cut, in an assist to the oil and gas industry. The larger effort to privatize infrastructure was mercifully curtailed, but the management consultant industry won a lucrative mandate to write up reports on large-scale transportation projects. The $66 billion granted to Amtrak won’t help much if the monopoly freight railroads that control many of the corridors aren’t challenged.
It would be more concerning if this trend followed in the Democrats-only reconciliation package. If the Democrats stick to their guns, at least $1.75 trillion in offsets—tax increases on corporations and the wealthy, savings from letting Medicare bargain for prescription drug prices—must be found. Free community colleges strike at the business model of the for-profit college industry, whose profile of prospective students resembles that of the community colleges. In other cases, corporate America will line up for some of the potentially $3.5 trillion in public spending. The private equity industry in particular now controls a stunning amount of the care economy—not only nursing homes but hospice care, home health care, and child care facilities. I’ve heard that they’re lining up in meetings to seek their share of the bounty. Indeed, almost 2,000 companies and organizations have already lobbied on some aspect of the infrastructure bills, according to a Center for Responsive Politics analysis.
None of this is to say that it’s bad to spend $3 to $4 trillion on restoring public investments, rebuilding infrastructure, and helping families. The recognition that government can play an important role in improving productivity, promoting the general welfare, and helping to solve the climate crisis is a genuine breakthrough, on a level we haven’t seen since the Great Society and New Deal initiatives. But many of these investments have been crafted to sidestep real questions of corporate power that have captured smaller such initiatives for decades. Federal money that gets shifted to consultants and large incumbent industries won’t deliver on its promises.
This problem is something that all of the groups that cheered the selection of various anti-monopoly appointments now must wrestle with. The Biden administration has been willing to bare teeth against corporate power with personnel, but not with legislative policy. The broadband provisions stuck on page 2,058 might not be as sexy as slogans about breaking up Google and Facebook. But they’re far more important to the question of whether large corporations will continue to dominate our economy and our lives.
