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Biden’s infrastructure plan could push more cities to offer internet service directly

Under the surface of Washington’s negotiations over infrastructure – and buried in jargon like "municipal networks" and "overbuilding" – is a debate about how Americans may get their internet in the years ahead.

Will your broadband bill come from a purely private company or will it be more like a public utility?

The Biden administration wants to at least nudge the country toward the latter.

The effort is being led by Vice President Kamala Harris and one aspect of the administration's plan would encourage government-owned broadband networks. In other words, they want to prod more cities to set up shop and offer service directly.

As of January, there are more than 560 communities served by some form of a municipal network with many operating alongside private service providers.

A fact sheet released by the White House in March suggests that number could rise with passage of the American Jobs Act. The plan “prioritizes support for broadband networks owned, operated by, or affiliated with local governments, non-profits, and co-operatives,” and would move toward “lifting barriers that prevent municipally-owned or affiliated providers and rural electric co-ops from competing on an even playing field with private providers.”

“I'm very proud to lead our administration's effort to get this done,” Harris said at an event Monday at the White House, of the overall plan.

AT&T (T) CEO John Stankey has concerns, though. In an interview with Yahoo Finance, he cast doubt on plans to “overbuild existing infrastructure that’s already in place with taxpayer-funded money, expecting that somehow a local municipality might be better positioned and more capable of running a broadband network” than the private sector.

John Stankey, CEO of WarnerMedia poses as he arrives at the WarnerMedia Upfront event in New York City, New York, U.S., May 15, 2019. REUTERS/Mike Segar
John Stankey, is the CEO of AT&T Inc. (REUTERS/Mike Segar) (Mike Segar / reuters)

Jonathan Spalter, president and CEO of USTelecom, put a finer point on it. “Buyer beware,” he said. “If we are going to go down this government-owned network path, there will be lots of potential pain and not a lot of broadband gain."

USTelecom is a Washington-based group that represents broadband and technology companies; members include AT&T, Verizon (VZ), the parent company of Yahoo Finance, and scores of smaller network providers. In a paper on the issue, USTelecom argued that “government broadband deployments at all scales frequently have struggled to remain solvent,” and haven’t been able to keep up with technical advancements.

Advocates for municipal networks have their own examples of the positive effects of competing municipal networks. Christopher Mitchell, director of the Community Broadband Networks Initiative, has noted that “when a community starts offering a service, the prices typically drop.”

Spalter says that the business community is supportive of partnerships between government and private companies, especially when it comes to the hardest-to-reach areas, but he remains firmly opposed to encouraging new municipal networks where a private company already has a foothold.

Broadband overbuilding and other policy decisions "could really have a chilling effect on what I think is the dawn of an amazing connectivity, investment, and technology cycle we're about to see,” said Stankey.

[Read more: AT&T CEO John Stankey explains bullish financial targets for new media company]

‘We must act’

All told, the Biden administration wants to spend $100 billion on rural broadband as part of the American Jobs Plan with many Republicans saying the cost should be more in the ballpark of $20 billion.

The effort includes both things like new networks as well as programs to make existing broadband more affordable and has a goal of 100% coverage for Americans.

The White House often notes that – even after years of various efforts to subsidize rural telephone companies and spur increases in broadband reach – over 30 million Americans don’t have access to broadband infrastructure “that provides minimally acceptable speeds.”

Vice President Harris noted this week that the government assumed responsibility for ensuring all Americans got electricity in the 1930s. "Today, I believe we must act again, and act in that way” when it comes to broadband, she said.

“Broadband is critical infrastructure,” she added.

Spalter is confident that the administration’s goal of 100% coverage is achievable with a combination of encouragement for existing broadband providers and public/private partnerships for hard-to-reach areas. “But the way to do that is not to create, as some have suggested, preferences or priorities for government owned networks to do this work on their own,” he said.

WASHINGTON, DC - MAY 24: U.S. Vice President Kamala Harris hosts a listening session on the country's digital divide in the South Court Auditorium of the Eisenhower Executive Office Building on May 24, 2021 in Washington, DC. In a discussion with students, parents and advocates, Harris drew a parallel between rural electrification projects in the early 20th century and the current efforts to bring affordable, high-speed internet using the Biden administration's American Jobs Plan. (Photo by Chip Somodevilla/Getty Images)
Vice President Kamala Harris hosts a listening session on the country's digital divide on May 24, 2021 at the White House. (Chip Somodevilla/Getty Images) (Chip Somodevilla via Getty Images)

Many Republicans, such as Sen. Marsha Blackburn of Tennessee, have stated their opposition to “flooding the country with federal dollars in the name of universal broadband.” Other Republicans are even pushing plans to largely ban municipal networks, arguing that doing so would help encourage private investment.

Advocates for internet providers also note that private companies have long invested more than the government in network development, almost $2 trillion over the last 25 years by one measure.

The larger infrastructure negotiations have dragged in recent weeks with Democrats and Republicans seemingly unable to reach agreement on key issues like how to pay for it or even the definition of what qualifies as infrastructure. Democrats are likely to decide in the coming weeks whether to try and go it alone using the Senate budgetary process known as reconciliation.

The question – in either a bipartisan bill or in a Democrats-only effort – is whether final negotiations shape the final bill in a way that’s more palatable to elements of the business community.

Stankey, for his part, notes that “I’ve certainly been spending my time and energy over the last several months ensuring that we get down and sit down with the most inquisitive members of Congress to explain these issues and help them understand what's going on.”

“I'm heartened by what I'm hearing and seeing on both sides of the aisle,” he said.

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

Read more:

$3.2 billion is now available to give some Americans a break on their internet bills

‘Over half’ of older workers don’t have jobs that can be done remotely

'As essential as roads': How one of America's most rural states became a broadband leader

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