Biden's $2tn infrastructure plan includes massive broadband rollout, equates internet access with water and power as essential utilities

Plus $50bn pledge to boost chip R&D and fabbing in Land of the Free


A new national infrastructure plan outlined by US President Joe Biden on Wednesday equates fast internet access – broadband – with other utilities including water and power.

“President Biden’s plan invests in the infrastructure necessary to finally deliver the water, broadband, and electricity service that Americans deserve,” reads a summary of the $2tn blueprint.

There is much more in the plan, including money for developing chip tech in the United States, restoring crumbling physical infrastructure such as road and pipes, and efforts to push toward new, cleaner energy sources in an effort to combat climate change, but the focus on broadband comes after years of talk and promises by the US government on internet access that have amounted to little.

An estimated $100bn will be put into a high-speed broadband rollout, largely through tax credits and grants: the same amount set aside for updating the electric grid and pushing clean energy.

The goals, according to a lengthy briefing document, is to “bring affordable, reliable, high-speed broadband to every American, including the more than 35 percent of rural Americans who lack access to broadband at minimally acceptable speeds.”

Indicating that the Biden Administration is clearly listening to broadband advocacy groups that have long argued internet access needs to be viewed as a utility with its provision equivalent to the rollout of electricity back in the 1930s, the briefing notes:

Generations ago, the federal government recognized that without affordable access to electricity, Americans couldn’t fully participate in modern society and the modern economy. With the 1936 Rural Electrification Act, the federal government made a historic investment in bringing electricity to nearly every home and farm in America, and millions of families and our economy reaped the benefits. Broadband internet is the new electricity. It is necessary for Americans to do their jobs, to participate equally in school learning, health care, and to stay connected.

It also acknowledges comparisons with other countries that the United States government has long sought to ignore or downplay, and recognizes that the current rollout of internet access has deepened societal splits by focusing on profit over provision.

“The United States has some of the highest broadband prices among OECD countries,” the briefing notes, “millions of Americans can’t use broadband internet even if the infrastructure exists where they live. In urban areas as well, there is a stark digital divide: a much higher percentage of White families use home broadband internet than Black or Latino families. The last year made painfully clear the cost of these disparities, particularly for students who struggled to connect while learning remotely, compounding learning loss and social isolation for those students.”

Futureproof

The overall goal is a lofty one: “High-speed broadband infrastructure to reach 100 per cent coverage.” The plan will also “prioritize building ‘future proof’ broadband infrastructure in unserved and underserved areas” – which is code for making sure the federal dollars aren’t used to strengthen the oligopoly that the current cable companies, who control much of the US broadband market, enjoy.

The wording suggests that the federal government will seek to pay companies to lay fiber networks that internet service providers can then offer their services on top of, similar to the municipal networks that have been growing across the US. If that is the intent, the Biden Administration can expect a vast lobbying effort from the likes of AT&T and Comcast that would be strongly opposed to not having control of the physical lines; an approach that defines their entire business model.

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The plan also foresees “price transparency and competition among internet providers, including by lifting barriers that prevent municipally-owned or affiliated providers and rural electric co-ops from competing on an even playing field with private providers, and requiring internet providers to clearly disclose the prices they charge.”

That approach will also hit extremely heavy resistance from Big Cable which has long relied on opaque pricing and dubious claims of market competition to maintain its profits.

As for the cost of fast internet access, the briefing notes that “while the President recognizes that individual subsidies to cover internet costs may be needed in the short term, he believes continually providing subsidies to cover the cost of overpriced internet service is not the right long-term solution for consumers or taxpayers.”

Instead, it argues that pressure has to be brought to bring down the cost, rather than allow the high cost of broadband to continue and reduce it for some: another position that has long been pushed by broadband advocates.

“Americans pay too much for the internet – much more than people in many other countries – and the President is committed to working with Congress to find a solution to reduce internet prices for all Americans, increase adoption in both rural and urban areas, hold providers accountable, and save taxpayer money.”

And now the lobbyists

Taken overall, it is clear that The White House is listening to groups that have long pointed out the problems with the current market for internet access and has identified many of the issues that reinforce the current oligopoly, and which explain why broadband rollout has been so patchy and underwhelming across America.

But before any such plan can be approved, it will have to run the gamut of the cable industry who have been among the top three industries in terms of dollars spent on Washington lobbying for several decades. It will be very difficult to get the plan passed.

As to where the money to pay for it will come from, the Biden Administration is proposing tax increases on large corporations and extremely wealthy individuals – something that has, somewhat inevitably, already led to push back from those corporations and business groups.

The $2tn price tag would likely mean 15 years of higher taxes, with the corporate tax rate increased to 28 per cent from the current 21 per cent; a rate that was cut from 35 per cent by President Trump just a few years ago.

Business groups are supportive of the idea of updating America’s infrastructure but aren’t keen on having to pick up the bulk of the cost of it through higher taxes.

“We strongly oppose the general tax increases proposed by the administration, which will slow the economic recovery and make the US less competitive globally — the exact opposite of the goals of the infrastructure plan,” the US Chamber of Commerce said in a statement.

The infrastructure plan will have to be approved by Congress, which is just about controlled by the Democrats, before it can be implemented. It's hoped the proposals can be transformed into a law bill that can be signed by the President between July and September.

CHIPS Act

Among other interesting aspects of the infrastructure plan is support for a new “CHIPS Act” that would invest $50bn in semiconductor manufacturing and research.

The plan summary notes: “President Biden believes we must produce, here at home, the technologies and goods that meet today’s challenges and seize tomorrow’s opportunities” – and semiconductors are a key part of that.

This comes after Biden ordered a probe into the ongoing global chip drought, which is holding up the manufacture of cars, computers, and suchlike. ®


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