Investigation

Biden Revives Obama Broadband Boondoggle

The administration plans to sink billions into the failed experiment of government-run broadband.

   DailyWire.com
Detail of a mans hand pressing the Netflix button on a TV remote control, with Netflix streaming on a television in the background, taken on March 6, 2020.
Phil Barker/Future Publishing via Getty Images

In the latest page President Biden has taken from the Obama playbook, the administration is investing eye-popping dollar amounts into government-run broadband infrastructure, reviving a multi-billion-dollar effort that sputtered and eventually trailed off under the Obama administration.

Biden’s American Rescue Plan Act, the mammoth $1.9 trillion coronavirus relief bill passed last month, includes $350 billion for state and local governments, with the option to spend some or potentially all of those funds on broadband infrastructure. The bill states that the $219.8 billion for states and $130.2 billion for localities, split evenly between cities and counties, can be used for assistance to households, small businesses, and nonprofits or for “necessary investments” in water, sewer, or broadband infrastructure.

It remains unclear how much of the bill’s aid to states will ultimately be set aside for broadband, but some states are already looking at devoting substantial amounts of their federal relief dollars to building and enhancing their broadband infrastructure.

“We’re talking about a massive overbuilding of government-run broadband whether or not the community is unserved or underserved. It just lets them spend it with no guardrails,” Tom Schatz, president of the government watchdog Citizens Against Government Waste, said in an interview with The Daily Wire.

In Montana, for example, Republican Governor Greg Gianforte has proposed putting $350 million of the $910 million his state received from last month’s coronavirus relief bill toward broadband infrastructure. As much as $500 million in relief funds could potentially be put toward the effort, according to one state lawmaker.

Meanwhile, Biden has proposed tacking another $100 billion for broadband onto his $2.25 trillion infrastructure package. The massive infrastructure plan gives preference to government-run broadband networks and makes it unlikely that providers that turn a profit will be able to access the funds.

We have been down this road before. Biden appears to be taking up the mantle of his former boss, who approved federal funding for broadband infrastructure as part of his economic stimulus plan amid the throes of the Great Recession.

In February 2009, former President Obama signed the American Recovery and Reinvestment Act, a $787 billion stimulus package that included $7.2 billion for broadband grant and loan programs.

The purpose of Obama’s broadband stimulus funding was to provide reliable high-speed Internet access to Americans in unserved and underserved areas of the country as well as to stimulate economic growth and job creation, the bill stated. More than a decade later, the Obama administration’s investments in broadband have turned out to be largely disastrous after a small federal agency, the Rural Utilities Service (RUS), was found to have mismanaged billions of dollars.

Of the broadband funds in the Obama stimulus, $4.7 billion was set to be distributed through the “Broadband Technology Opportunities Program,” run by the Commerce Department’s National Telecommunications and Information Administration. The other $2.5 billion was the purview of the Agriculture Department, under which the RUS operates. Both funding blocks were grossly mismanaged.

In 2011, Jonathan Adelstein, the administrator of the RUS at the time, promised that the agency would use the federal stimulus money to connect nearly seven million rural Americans.

That never happened. Instead, a Politico investigation found that by the summer of 2015, about half of the nearly 300 broadband projects RUS approved thanks to stimulus funding had not yet drawn down all of their awarded funds. More than 40 of the projects had never even begun. Additionally, the broadband projects already underway at the time were fast approaching a September 2015 deadline to draw down all of their cash or they would have to forfeit up to $277 million in federal funds that had not yet been spent, essentially wasting the stimulus funds.

The RUS ended up spending at least $3 billion on the broadband program, making many expensive errors along the way. The agency at some points built infrastructure for high-speed Internet in well-populated areas rather than in the rural areas it was meant to focus on. At other points, the RUS refused to make any loans, and some projects failed due to poor management.

Even prior to the Obama administration, some government broadband projects had proven ill-starred and costly.

In Utah, for example, Google stepped in to essentially bail out the city of Provo’s failed experiment in government-run broadband, paying the Provo City Council just $1 for the city’s fiber-optic network, which the government spent $39 million building in 2004. Even with Google’s purchase, Provo was still obligated to pay off its construction loans.

City officials said the network had become unsustainable. Residents of the small city south of Salt Lake City had been paying $5.35 a month on their utility bills whether they used the internet service or not. The city was requiring a $700 activation fee for basic internet service; Google Fiber lowered that fee to $30.

“Once the government invests, what is their incentive to upgrade? Plus you’ve got maintenance,” Schatz remarked. “Having the government do it is just going to be a waste of money … It’s a business the government has no business being involved in.”

Some states have already allocated money for broadband projects from the $150 billion Democrats negotiated for states and localities in the CARES Act, the $2.2 trillion coronavirus relief package Congress approved in March of last year. The federal relief, which Republicans panned as “bailout” cash for Democrat-run states and cities, was intended, ostensibly, for unexpected pandemic-related costs.

There is also limited transparency around the recent coronavirus fiscal aid to states and localities. The Obama administration attempted to provide some accountability for stimulus funds through its now-archived Recovery.gov website. The CARES Act established a special inspector general and other supplemental oversight, but the exact destinations of much of the pandemic relief remain fuzzy.

Meanwhile, about a trillion dollars in federal aid has not yet been spent, according to policy experts and Republicans on the House Oversight and Reform Committee.

“It’s not physically possible to spend this much money this quickly in an efficient and cost-effective manner,” Schatz remarked. “Even for the federal government, this is a lot of money.”

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