Biden’s $100 billion broadband plan raises four big questions
After much discussion, President Biden finally released the general outlines of his $2 trillion infrastructure plan, of which $100 billion will be devoted to broadband services.
Whether Biden will be able to get his proposal through Congress remains to be seen. But if he is successful, his proposal could dramatically alter the contours of the US broadband industry by injecting more federal money into the space than ever before.
However, it’s not clear exactly how Biden’s plan will work. As usual, the devil is in the details. Here are four questions that need to be answered to properly vet the president’s bold broadband plan.
1. What is broadband?
While this question might seem hyperbolic or rhetorical, it’s neither. A mostly reliable 25Mbit/s downlink is much, much different from an always-on, symmetrical 1Gbit/s connection. The first can be achieved relatively easily over most mobile networks today, while the other would almost undoubtedly require fiber.
Based on the handful of paragraphs Biden’s plan devotes to broadband, it appears the president is leaning toward fiber because of his calls for a “future proof” infrastructure. Tom Wheeler, President Obama’s FCC chairman, similarly argued for a “future proof” approach to broadband, writing in recent House testimony that prioritizing symmetrical 1Gbit/s capacity “is to prioritize a ‘fiber first’ policy.”
If a “future proof” network must support 1Gbit/s on both the uplink and downlink, then today’s wireless and cable network operators would be ineligible for government subsidies. Further, the situation also raises the possibility that Biden’s plan would actually finance fiber-powered 1Gbit/s alternatives to existing cable and wireless networks.
Meaning, Biden’s infrastructure plan might actually fund competitive challenges to Comcast’s cable network or T-Mobile’s fixed wireless efforts.
“The tone [of Biden’s proposal] sets a negative view toward the industry,” wrote the financial analysts at Cowen, pointing out that shares of cable providers like Comcast, Altice USA and Cable One declined during the week of Biden’s proposal even while the overall stock market rose.
Others, though, aren’t so worried: “We are skeptical that a majority of the Congress wants to allocate billions to subsidize fiber networks to compete with cable,” wrote the financial analysts at New Street Research in their assessment of Biden’s plan.
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