How (Not) to Waste A Crisis

In 2008, with the economy in free-fall, then-chief of staff to president-elect Barack Obama, Rahm Emanuel, told the Wall Street Journal, “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.” 

The line has become a witty aphorism turned Washington maxim. And it underlines a cynical truth about politics: sometimes, only tragedy can jolt the lumbering wheels of government into action.

Emanuel’s comments came as the American economy cratered to depths not seen since the Great Depression — and he and his boss used the crisis to full effect. President Obama’s first act was signing an $800 billion “stimulus bill” — passed without a single Republican vote. The legislation offered tax and unemployment benefits to respond to the economic crisis, but it was curiously packed with longtime Democratic party priorities that had little to do with easing Americans’ economic pain, including utopian high-speed rail projects and subsidies for solar energy. In other words, the bill used economic recovery as a smokescreen to push through agenda items that likely wouldn’t pass muster without the crisis.

Joe Biden was Vice President when that bill was drafted and enacted, and, as president, he seems to have taken a page from the Emanuel-Obama playbook when it comes to the issue of expanding Internet access. 

The coronavirus pandemic put a spotlight on a real problem: millions of Americans lack access to high-speed Internet. When lockdowns and pandemic-induced restrictions pushed much of daily life online, Americans and their representatives were outraged that many disconnected families couldn’t access jobs, healthcare, education, and financial tools. That frustration spurred a rare area of bipartisan agreement, as leaders at all levels of government became determined to close the “digital divide” once and for all.

The divide has two components: access and adoption. In many rural and remote regions of the country, consumers lack access to broadband infrastructure because it is simply cost-prohibitive to build and maintain absent government subsidies. In urban and suburban areas where home broadband is ubiquitous, many Americans don’t adopt the service due to a variety of factors, which I’ll discuss further in this piece.  

President Biden has spoken the right applause lines about solving access and adoption — but his policy agenda doesn’t match his talking points. For instance, he is pushing local governments to build their own broadband networks — but doing so in well-connected urban areas. The goal? Get the government to compete with and capture market share from private-sector providers. The theory is that new government-funded networks will spur competition and drive down prices.

It’s an attractive theory, but it’s only that. Consider cost as a barrier to adoption. To listen to left-leaning activists and the White House tell it, people don’t subscribe to broadband because greedy telecom companies charge too much for the service. But this ignores basic facts about the market itself. For one thing the vast majority of Americans have access to broadband providers that already offer low-income services in the range of $10 to $20 per month — far below the average that Americans spend on broadband. Second, the FCC’s Affordable Connectivity Program offers a $30 per month subsidy to low-income consumers, which enables them to get free broadband or subscribe to higher speed tiers, if needed, at cut-rate prices.

In other words, the government is already in the low-cost broadband business, albeit indirectly. And yet, in spite of that, these programs are significantly undersubscribed, with millions of eligible Americans not enrolled. Why? Because the dynamics of broadband adoption are more complicated than one-liners from West Wing speechwriters would indicate. 

Cost makes for a reliable left-wing bogeyman — but it’s only one factor in a broader socio-economic reality. Research from Boston Consulting Group shows that, even when broadband is offered for free, consumer adoption is limited by a variety of factors, including a lack of awareness about available programs, confusion about enrollment processes, mistrust of free services, and an unwillingness to share personal information with companies. Further, if a prospective user is in a complex or unstable housing situation, subscribing to a fixed broadband connection at a single address makes little sense.

A new, government-run broadband network in a city does nothing to address these systemic inequities in education and housing. Instead, it simply adds another costly network that users may not adopt, at taxpayer expense. 

Simply put, building new networks where broadband already exists won’t get more Americans online. All it will do is scratch the itch of some left-leaning activists, whose ideology prefers the Internet be a government service — not a private-sector one. COVID-19 created fertile ground for skewing funding and priorities, and advocates for government-run broadband seized the moment. Rahm Emanuel would be proud.

Fittingly, the source of funding for this crisis-turned-opportunity comes from Biden’s $1.9 trillion stimulus bill, the American Recovery Plan Act (ARPA) of 2021. Like its predecessor, the bill passed without a single Republican vote. The legislation included $350 billion for states and cities to spend on COVID response, loosely defined, including on broadband. But rather than target the funds to either access or adoption, the Administration, at the behest of activists, has enabled cities to spend the money wily-nily, including building broadband in places that already have high-speed Internet service.

This is worse than duplicative, unnecessary infrastructure — because this Internet bridge to nowhere will actually worsen the digital divide. Providers face a workforce shortage, supply chain disruptions, and inflation. In that tough climate, the Administration has chosen to direct precious resources to the broadband haves at the expense of the have-nots. Resources will naturally flow to denser cities for the same reason the access divide exists in the first place — the economics of Internet access are more profitable in urban centers.

What’s surprising is that we have a model for better legislation on this front. When Congress passed the bipartisan infrastructure bill, the Infrastructure Investment and Jobs Act, it included $65 billion for broadband adoption efforts and deployment in unserved and underserved areas. Representatives rightly included important guardrails to ensure funds go to unserved areas first by using accurate data — specifically the forthcoming FCC map of broadband availability.

Contrast that with the ARPA funds, for which Biden’s Treasury Department gave wide latitude to cities to make “necessary” investments using “any available data.” In other words, duplicative broadband networks will break ground before rural projects can apply for funding. As workers and equipment get tapped for utterly unnecessary urban builds, rural projects will wither. It’s difficult to determine exactly how long this will delay rural connectivity, but the laws of economics, and current market conditions, point to a gloomy forecast.

If the goal was to ensure that cities could have their second, third, or fourth helping of broadband before millions in rural America saw their first, then the Biden Administration’s policy makes sense. But for the politicians who claim they really want to see all Americans online, the lesson is simple: if you want funds to go where they’re needed most, don’t allow a federal agency to haphazardly open them up to the entire country.

For sounder guidance, we must return to the “never let a crisis go to waste” quip. Emanuel may not have been the first to utter the phrase. It’s also been attributed to Winston Churchill, who purportedly said the same as he worked to build the United Nations amid the “crisis” of World War II. In that instance, the Churchillian application made real sense: He was using the opportunity to solve an actual problem — ending the war and securing peace. 

As broadband dollars flow, state and local governments must make a choice: Will they show restraint and direct these dollars to efforts that actually improve Internet connectivity? Or will they squander the funds on unnecessary networks, seeking ribbon cuttings and activists plaudits? Will they take up the dictum in the mold of Churchill or Emanuel? Time will tell, but the outcome will affect the Internet connectivity of millions. Here’s hoping that our leaders choose wisely.  

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