Lessons from the pandemic for broadband and internet policy

By Matt Au and Bret Swanson

In January, before the US had its first confirmed case of COVID-19, we wrote two blog posts looking at key tech policy issues for 2020. We discussed the end of the “decades-long halo effect in which Silicon Valley could do no wrong” as debates over privacy, antitrust, and online speech had mounted in 2019, and expressed hope that successful light-touch regulatory approaches for telecommunications and tech would continue.

Months later, the coronavirus pandemic has radically altered life as we know it, including our relationships with technology and, possibly, the future of tech policy. On internet regulation and broadband specifically, COVID-19 offers lessons that policymakers would do well to learn from for the future.

After the Federal Communications Commission’s (FCC) 2017 repeal of its 2015 “net neutrality” rules, some commentators predicted that the FCC had “crippled” the internet. It is now clear that these predictions were wrong: Network investment in the US increased after the FCC restored its light-touch regulatory approach, and US broadband has thrived (perhaps even a little too much).

In 2010, just 10 percent of US households had access to broadband with download speeds of 100 megabits per second. By 2019, that number had jumped to 91 percent for all of America and to an amazing 98 percent in non-rural areas. Access to 1-gigabit broadband connections exploded to 85 percent of households in 2019 from zero in 2010.

The pandemic has validated the historical US approach to broadband that values private investment over government regulation. Facing unprecedented increases in demand of 20 to 40 percent during COVID-19 quarantines, American networks and network operators responded admirably, while European regulators had to ask Netflix, YouTube, and Amazon to reduce the quality of their video streams to ease demand on networks.

Our AEI colleague Bronwyn Howell has argued that the comparative resilience of US networks may also be traced back to the US choice to:

eschew the type of access regulation practiced in Europe, the UK, and most other Organisation for Economic Co-operation and Development countries, such as Australia and New Zealand, [whereby] network operators [must] ‘unbundle’ components of their network and services and provide them at regulated prices.

While access regulation may have boosted “competition” in retail markets, the resulting distortions in network investment and financial risk allocation became apparent during COVID-19 lockdowns globally.

It is true that the pandemic highlighted the remaining holes in the broadband map and reinforced the need to close the digital divide. But again, the results thus far show that we are on the right policy path. As we allow facilities-based competition to successfully deliver broad coverage and fast speeds to some 95 percent of the country, we should narrowly and intensely target underserved people and geographies with infrastructure subsidies and, possibly, for those where cost is the chief impediment, with vouchers. The FCC’s Rural Digital Opportunity Fund program, which dedicates $20 billion to these high-cost areas, is a good approach.

The next step is to reform the antiquated Lifeline program, which subsidizes (and is funded by a tax on) traditional telephone lines. So we’re taxing the wrong people (the shrinking population of landline telephone users) to fund the wrong technology. Instead, we should focus this program on broadband, perhaps using an approach more akin to the Supplemental Nutrition Assistance Program (food stamps).

For policymakers, the lessons for future broadband policy are clear. Instead of attempting to reverse policies that have been good for US networks, the economy, and consumers, it would be far more productive to focus on the FCC’s efforts to improve access to broadband in rural areas and for low-income families, ensure adequate spectrum is available for the 5G future, and welcome innovative solutions such as Elon Musk’s Starlink broadband service. Perhaps the sterling performance of American networks during this time will reduce any temptations to waste taxpayer dollars on subsidizing “ultra-fast” broadband in the future as well.