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Bipartisan Bill Boosts Corporate Giants

In broadband and other areas, the corporate dominance that has been an
impediment to progress emerges unscathed.

 

Travis Sheetz, a worker with the Mason County Public Utility District,
installs fiber optic cable, August 4, 2021, while working with a team to
bring broadband service to homes in a rural area surrounding Lake
Christine, near Belfair, Washington. (Ted S. Warren/AP Photo)

 

****

**** If Tuesday's passage of the Infrastructure Investment and
Jobs Act leads to even a significant portion of President Biden's
Build Back Better agenda through budget reconciliation, it will herald a
new age of government investment and intervention in the economy, and a
reversal of decades of pullbacks in public spending. But in another
sense, the IIJA-and potentially the companion reconciliation
bill-also carries on a tradition from the Clinton and Obama years of
sidestepping big fights with corporate interests. It is not enough for
Democratic lawmakers to have relearned how to spend money if they also
continue to shy away from breaking power.

One of the clearest examples of this is how broadband is treated in the
IIJA. On the surface, a $65 billion investment in broadband, with an
emphasis on getting low-income and rural households connected and
closing the digital divide, is an unalloyed positive. But how much of
that money will actually go toward meeting these goals, and how much
will funnel into the coffers of incumbent telecom companies that for
decades have resisted spending much money on rural and low-income
deployment?

The initial Biden proposal

in the American Jobs Plan, which gave $100 billion to broadband, would
have structurally reshaped the U.S. broadband market
.
It vowed to blanket the nation with coverage, increasing the minimum
speeds that constitute "broadband" internet. Importantly, it promised to
"prioritize support for broadband networks owned, operated by, or
affiliated with local governments, non-profits, and co-operatives,"
which are less constrained than the telecoms by the profit motive and
more willing to commit to universal service. And it stated it would
override a series of laws on the books in nearly two dozen states that
prevent co-ops or municipal broadband networks from competing with
established incumbents.

Unfortunately, none of this made it into the final proposal. The $42.45
billion in state-level grants is prioritized to "unserved" areas,
defined as areas with no access to broadband with at least 25/3 megabits
per second (Mbps), which has been the standard minimum since 2015
.
"Underserved" areas, by contrast, are set at 100/20 Mbps, which is the
level grantees are supposed to hit; the original proposal sought a
higher speed. Because "unserved" areas get the money first, areas where
the incumbent telecoms already operate, "even if underserved," are
unlikely to qualify for much funding.

**Read all of our infrastructure coverage here**

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Smaller nonprofits, electrical co-ops, and muni broadband operations do
not get priority; the new language

pointedly states that "the program does not favor particular companies
or providers," and the bill text confirms that

on page 2,058. Even worse, the bill does not nullify any state laws that
restrict municipal broadband.

So AT&T and Comcast can capture this pot of money, as they have in the
past, without meaningful broadband adoption in unserved or underserved
areas. As I wrote in my book

**Monopolized**, the Connect America Fund and the Federal Communications
Commission (FCC) provided at least $4.6 billion in subsidies for
broadband deployment between 2015 and 2020, yet this had little effect
on expansion. The IIJA grants ten times that, but monopoly telecoms have
been skilled at picking and choosing neighborhoods to build out, only
capturing the more profitable pockets.

A provision that mandates the FCC to prevent "digital redlining" (i.e.,
that picking and choosing) did make the bill, along with $14.2 billion
for a voucher program of $30 per month to help low-income users pay for
broadband, and $2.75 billion for teaching untrained people how to use
the internet. Of course, such subsidies and training will also benefit
the existing telecom firms offering broadband. The requirements for
grantees to offer a "low-cost" price (with no actual dollar figure
attached to that) and disclose their broadband rates are nice, but
it's hard to comparison shop when there's only one carrier, as is
often the case in many communities.

Maybe a little less money will be wasted when compared to previous
federal broadband efforts. But without the competition elements,
you're still hoping that the broadband operators that snag the state
grants-and given the lobbying that will go into it, incumbents would
have to be favored-actually get the job done. The giant telecom
companies have pronounced themselves

happy with the bill
,
after initially fighting it
.
That's because the structure of the heavily monopolized market remains
intact; Congress failed to engage in any meaningful structural reform.

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In one sense, this is the price Democrats paid for a bipartisan
infrastructure bill-and it was a price extracted in other areas as
well. Despite the initial plan to offset spending with rises in the
corporate tax rate, practically no industry or wealthy individual will
see taxes go up by a penny. (The only one that might, cryptocurrency
brokers, made a huge stink and got a compromise

that didn't make it into the bill due to procedural complications, but
will probably be implemented down the road.) Climate measures were
rolled back and transit funding cut, in an assist to the oil and gas
industry. The larger effort to privatize infrastructure was mercifully
curtailed, but the management consultant industry won a lucrative
mandate

to write up reports on large-scale transportation projects. The $66
billion granted to Amtrak

won't help much if the monopoly freight railroads

that control many of the corridors aren't challenged.

It would be more concerning if this trend followed in the Democrats-only
reconciliation package. If the Democrats stick to their guns, at least
$1.75 trillion in offsets-tax increases on corporations and the
wealthy, savings from letting Medicare bargain for prescription drug
prices-must be found. Free community colleges strike at the business
model of the for-profit college industry, whose profile of prospective
students resembles that of the community colleges. In other cases,
corporate America will line up for some of the potentially $3.5 trillion
in public spending. The private equity industry in particular now
controls a stunning amount of the care economy-not only nursing homes

but hospice care, home health care, and child care facilities. I've
heard that they're lining up in meetings to seek their share of the
bounty. Indeed, almost 2,000 companies and organizations have already
lobbied on some aspect of the infrastructure bills, according to a
Center for Responsive Politics analysis
.

None of this is to say that it's bad to spend $3 to $4 trillion on
restoring public investments, rebuilding infrastructure, and helping
families. The recognition that government can play an important role in
improving productivity, promoting the general welfare, and helping to
solve the climate crisis is a genuine breakthrough, on a level we
haven't seen since the Great Society and New Deal initiatives. But
many of these investments have been crafted to sidestep real questions
of corporate power that have captured smaller such initiatives for
decades. Federal money that gets shifted to consultants and large
incumbent industries won't deliver on its promises.

This problem is something that all of the groups that cheered the
selection

of various anti-monopoly appointments now must wrestle with. The Biden
administration has been willing to bare teeth against corporate power
with personnel, but not with legislative policy. The broadband
provisions stuck on page 2,058 might not be as sexy as slogans about
breaking up Google and Facebook. But they're far more important to the
question of whether large corporations will continue to dominate our
economy and our lives.

 

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