On January 13, Americans for Tax Reform President Grover Norquist responded to a letter from Senator John Thune (R-SD), providing comments on pivotal questions regarding federal broadband spending. Norquist’s letter strongly urges Congress “to preserve private-sector competition by avoiding overbuilding and to protect taxpayers from these inefficient and duplicative programs by stretching each federal dollar far as possible.” Norquist’s answers will provide Senator Thune and the rest of Congress with concrete suggestions on how to untangle the “Byzantine mess” that has plagued America’s broadband regulatory structure.
In response to Senator Thune’s question about the effectiveness of government-owned networks (GONs), Norquist calls them the “least-effective ISPs that deliver broadband.” According to Norquist, GONs “have a history of driving private competitors from the market by offering service at a lower rate, taking on their private competitors’ customers and then going bankrupt just a few years later.”
Essentially, these operations abuse their taxpayer funds to create business models with which no private entity could reasonably compete, and then ask taxpayers to bail them out once their disastrous business model accumulates massive debt. GONs give consumers fewer options and ask taxpayers to foot the bill after they ransack the broadband industry within their local markets. For these reasons, “ATR opposes any federal money going to GONs for broadband expansion.”
Senator Thune also asked for input regarding what additional actions Congress could take in light of concerns that broadband funding is conditioned upon some form of rate regulation. Norquist recommends that federal rate regulation remain prohibited, as it has been by text of the Infrastructure Investment and Jobs Act (IIJA). However, Congress may need to use their “oversight and appropriations powers to force the NTIA to follow the law as written and prevent rate regulation” in light of concerning NTIA regulations requiring states to establish a “middle class affordability plan.” These requirements may incentivize states to develop a rate regulation policy. To prevent this problematic price fixing arrangement from plaguing the market, Norquist suggests that “Congress might consider strengthening the existing rule of construction in subsection (h)(5)(D) that prohibits rate regulation by adding a provision to the law that prohibits state-level rate regulation as a condition of receiving the grant.”
In another insightful inquiry, Senator Thune asked what reforms and constraints should be implemented to prevent Congress from conditioning broadband services on the establishment of any net neutrality mandates. Norquist describes net neutrality as an “ill-conceived, outdated and overbearing approach to internet regulation that should be consigned to the ash heap of History.” He dispels the conventional myths on net neutrality by noting that there is “no evidence” that the 2010 Open Internet Order, which first imposed net neutrality, changed anything in internet service. However, he notes the great risks that come from such a policy, as it “could significantly hamper innovation by prohibiting providers from charging market rates for internet service.” To prevent any similar overreaches from federal agencies to impose these economically foolish regulations on businesses, Norquist recommends that “Congress should use all available levers of power at its disposal to prevent agency lawlessness in trying to reimpose this antiquated big-government solution in search of a non-existent market problem.”
The 118th Congress has the opportunity to not repeat the mistakes of the past and to tread a new path forward in broadband regulations. Norquist’s recommendations from this letter will help Congress avoid establishing yet more economic snare traps of municipal broadband networks that will exact higher taxes and deliver worse internet service to Americans. Instead, Congress should promote free market activity within the industry and enable more opportunities for private ISP growth through fewer regulations and lower taxes.
Click here to read Norquist’s full response and here to read Senator Thune’s full letter.