Billions set aside in the infrastructure bill could lead to discounts on your internet bill
The new infrastructure legislation sets aside $65 billion for America’s spotty broadband system, the culmination of a years-long effort to make changes to how Americans get online.
And the money may mean a break on your internet bill as well as the promise of new providers and faster speeds, especially in rural areas.
It's "certainly pretty significant considering we haven’t seen these kinds of stimulus support in this industry ever,” Charlie Vogt, CEO of DZSi, a telecommunications company based in Plano, Texas, told Yahoo Finance Live.
Commerce Secretary Gina Raimondo will oversee much of the broadband money. She recently told reporters the focus now is on “implementing this in partnership with our partners on the ground” to “achieve the president's goal of making sure that every American, regardless of where they live or the color of their skin or their income, has access to broadband.”
It represents “a generational and hopefully transformational investment,” the head of US Telecom, an industry group, said about the provisions.
Relief on your internet bill
The $65 billion is divided into a few areas, including $42.45 billion for grants to states for broadband projects and $14.2 billion for a program to provide vouchers. There are billions more for things like digital inclusion projects and rural broadband programs.
As Raimondo has noted on the new voucher program, "affordability is just as important as access [because] it does a family no good if there's broadband in their community but they can't afford it."
The program will create a permanent $30-a-month-subsidy program to give low-income Americans a break on their internet service expenses. It will replace a temporary program, which offers up to $50-a-month for some Americans.
The previous program, called the Emergency Broadband Benefit Program, was signed into law by then-President Trump in 2020 and has enrolled over 6 million households this year. It allocated $3.2 billion for vouchers. The new infrastructure bill puts aside over 4 times more for that purpose.
The money is designed to flow through existing internet providers which will pass along the savings to customers. Raimondo said “everyone who gets a penny of this money is required to offer a low-cost, affordable plan,” and be more transparent about pricing.
In a recent statement, the National Consumer Law Center praised the provisions. “This bill makes great strides in closing the digital divide,” said Olivia Wein, staff attorney for the NCLC.
A push to have cities offer internet service directly
The bill includes $42 billion for grants to states, that they can then use for a broadband projects like laying new or better cables to provide access or higher speeds.
Data from Microsoft has found that somewhere around 120 million Americans – even those who have a nominal connection – don’t currently use the internet at broadband speeds, defined as download speeds of 25 mbps and upload speeds of 3 mbps.
Vogt highlighted how the bill is structured to direct money to the least-connected states. While every state gets $100 million automatically for broadband programs, that “leaves $37 billion to be allocated based on each state’s justified need.”
Jonathan Spalter, president and CEO of USTelecom, has said the deal “recognizes the private model of broadband deployment in the United States – with targeted public support in unserved or hard to reach communities – is the key to achieving 100 percent connectivity.” USTelecom is a Washington-based group that represents broadband and technology companies like AT&T (T), Verizon (VZ), and scores of smaller network providers.
The group also calculated in a recent Broadband Capex report that private companies invested about $80 billion in broadband and networks in 2020, approximately twice the amount the infrastructure bill has set aside for deployment in coming years.
Raimondo promises to work closely with business, and said “we have to make sure that we don't spend this money overbuilding,” referencing an industry concern that an influx of government money could end up creating duplicate networks.
The money will be managed by states and overseen by the Commerce Department, and is expected to support private companies.
Some voices are calling for more government-run providers, and the funds could spur new city-run internet services. According to the latest data, there are more than 600 communities currently served by some form of a municipal network and an effort led by Vice President Kamala Harris would encourage more of them.
Advocates for municipal networks have examples of positive effects when a municipal network competes with a private company. Christopher Mitchell, director of the Community Broadband Networks Initiative, has noted in the past that “when a community starts offering a service, the prices typically drop.”
The debate essentially boils down to whether the Biden administration’s goal of 100% coverage is achievable through existing broadband providers and strategic public/private partnerships for hard-to-reach areas.
As Spalter noted, “the nitty gritty implementation details will matter – a lot.”
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.
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