top of page

MooTube: Biden’s Fiber-Optic Ambitions for Rural America.

TL;DR: In a rare act of unity, the U.S. government forked over $65 billion to bring high-speed internet to every nook and cranny of America, from city skyscrapers to rural barnyards. But two years and countless budget overruns later, the nation is wrestling with some hard questions. With some rural projects costing up to $50,000 per household—compared to just $2,000 for urban connections—where do we draw the line? Is broadband a universal right or an unsustainable luxury? The experts are divided: economists see a modern-day New Deal that could rejuvenate small-town America, while skeptics wonder if we're paving the road to financial ruin. Satellite internet hovers over the debate like a forgotten option, but fiber optics continue to win out in Washington's eyes. Depending on your economic lens, this ambitious endeavor is either a long-overdue investment in America's future or an inflated gamble that could put us further in the red. Either way, the clock is ticking on a decision that could redefine America's digital landscape.

Betting The Farm - The Congressional Infrastructure Plan.

In 2021, the U.S. government did the unthinkable: it worked together to pass a bipartisan bill. I'm referring to the highly publicized, yet unexcitingly named, "Infrastructure Investment and Jobs Act," commonly known as the "Bipartisan Infrastructure Act." The name doesn't exactly set your imagination on fire, does it?

As you might expect, this act primarily included plans and funding for revitalizing American infrastructure. This encompasses everything from our creaky railways and crumbling roads to "hold-your-breath" bridges and other elements of our dilapidated infrastructure that make the world's richest country feel more akin to the developing world than the developed.

What came as a late, surprising addition to the bill, however, was a plan to allocate roughly $65 billion to bring high-speed internet to every corner of America—from bustling cities to sleepy towns, remote villages, and even far-flung ranches. On the surface, this seemed like a mere facet of a broader vision for future America. But two years in, after billions spent and steadily escalating budget overruns, politicians are grappling with where to draw the line on funding. Some rural projects are clocking in at more than $50,000 per household.

Today, we're going to delve into this project, assess its benefits and drawbacks, and try to determine whether high-speed internet is a luxury we can't afford or a necessary new addition to our national infrastructure.

All Animals Are Created Equal - Internet For Everyone.

First, let's examine what the Internet Appropriation aims to accomplish. According to a direct briefing from the White House:

High-speed internet is no longer a luxury—it's a necessity for Americans to do their jobs, participate equally in school, access health care, and stay connected with family and friends. Yet, more than 8.5 million households and small businesses are in areas where high-speed internet infrastructure is absent, and millions more grapple with limited or unreliable internet options.

To meet this goal, funding has been pulled from a diverse array of sources and is being channeled through multiple programs, rather than a single centralized one. First, there's the $42 billion investment via the Bipartisan Infrastructure Law. Then there's an additional $23 billion coming from various other sources, such as generous contributions from the FCC's Emergency Connectivity Fund (which facilitates broadband access for schools and libraries) and the FCC's Rural Digital Opportunity Fund—a competitive grant program designed to aid rural communities with internet access. Even the USDA has thrown its hat into the ring with the "ReConnect Program," offering loans and grants to enhance broadband capabilities in rural areas.

However, as with any complex initiative, it's becoming increasingly clear that not all programs—and their associated costs—are created equal. Projects like those from the FCC can cost as little as $2,000 per household or even less. In contrast, some efforts—such as a specific program for Indian reservations—have recently surged to costs as high as $53,000 per household, with many other programs falling somewhere in between. In Montana, there are expectations that some home hookups could cost as much as $300,000 per connection.

The tough conversation happening now revolves around the question, "Where do we draw the line?" Who should receive fully subsidized access to reliable internet? Moreover, with alternative technologies like satellite available, is shelling out $50,000+ per household really a judicious use of public funds?

The Cow Goes Moo - Expert Opinions.

As is often the case, the court of public—and expert—opinion offers a mix of views. Economists and research institutions are generally bullish on the plan's potential to catalyze economic growth and job creation. They contend that broadband isn't a mere luxury but a business imperative, capable of leveling the playing field for rural enterprises. This could potentially lure people back to small towns at a time when American cities are becoming overcrowded and pricey, and small-town America is desperately in need of economic revitalization. Writing for The Council on Foreign Relation, Robert Kanke summed up this argument, saying “like electricity, water, and sewer services, high-speed, fiber-based internet access lines should be considered a utility that needs to be connected to every home.”

Politicians, industry experts, and various commentators largely concur, leaning more towards viewing high-speed internet as a societal cornerstone rather than a luxury. Studies, like one review conducted by Brookings Institute, highlight the internet's ability to reduce poverty and improve access to education, healthcare, and career flexibility in rural settings. A particularly uplifting anecdote came from Tom Wheeler, the former FCC chair, who recounted meeting an ex-coal miner turned computer programmer in the quaintly named rural town of Hazard, Kentucky. This transformation was enabled, in part, by new access to high-speed internet.

However, not everyone is rolling out the red carpet. Some politicians, business leaders, and economists question the wisdom behind a pricey initiative that they believe has limited positive impact on a relatively small number of people. Speaking about the steep costs incurred by the Nebraska Winnebago Tribe, Blair Levin—a former communications policy official under both the Clinton and Obama administrations—commented, "If you're spending $50,000 to connect a very remote location, you have to ask yourself, would we be better off spending that same amount of money to connect [more] families?" And it would appear the American public feel the same way; when Pew Research polled Americans during Covid to see if they felt that the “government has a responsibility to ensure that all Americans have a high-speed internet connection at home,” only half of Urban residents agreed, and 35% of suburban residents. In rural areas, agreement came from just 29% of respondents.

Then there's the issue of the wildly fluctuating costs and allocation of funds. For instance, two separate projects by Blackfoot Communications in the Montana Rockies differ dramatically in costs: one funded under the FCC costs $4,000 per connection, while another funded by the USDA comes in at $15,000 per connection. Furthermore, a study by the Brookings Institution reveals that many rural communities—and even some state governments—lack adequate data on their current internet infrastructure. This data deficiency could lead to the misallocation of resources, negatively impacting already disadvantaged communities, and creating what Brookings terms a scenario where states must "creatively justify their use of federal funding."

Adding another layer of complexity, some economists—despite support from their peers—express significant reservations. They question the program's hefty $65 billion price tag and point to the government's history of inefficiently rolling out large-scale infrastructure projects. Most disconcerting is the idea that the plan might disproportionately benefit wealthier areas and companies at the expense of underprivileged communities, given the lobbying power that often accompanies affluence.

Only One Egg In The Basket - Why Satellite Isn’t On The Table.

Amidst the hefty expense of laying fiber optic cables across the nation, some might wonder if there has been a solution floating—quite literally—above our heads all along: Satellite Internet.

For many in rural areas, satellite internet has been the go-to option for quite some time, primarily due to its availability and relatively strong performance compared to other choices. In fact, many of the fiber optic projects at the heart of this program aim to serve communities that currently rely on satellite as their main internet source.

While some speculate that the government's—particularly the Democrats'—dismissal of satellite internet is a veiled snub against billionaires like Elon Musk and Jeff Bezos (both of whom operate satellite internet services), the real rationale appears to be far less sensational and much more technical. From the politicians' standpoint, fiber is simply a superior option to satellite, and current technology analyses seem to validate that perspective.

The Price Of The Prize Bull - Is The Program Really Worth It?

This is one of those rare instances where the answer largely depends on your own economic leanings and understanding of the role of government and public spending.

If you're an advocate for big government, influenced by figures like FDR and enamored with European-style infrastructure and governance, then you probably favor this program. You'll see the merit in subsidizing high-cost, quality infrastructure in the most remote corners of America. The argument is that this investment will keep us competitive and prevent our rural areas from falling behind, offering people growing up in less-developed regions the same educational and economic opportunities enjoyed by those in urban and suburban areas. It's a rationale akin to the one that propelled FDR's campaign to electrify rural America back in the 1930s.

On the flip side, if you're a small-government enthusiast, influenced by Austrian economics and subscribing to the belief that the government's role is to facilitate the private market, not compete with it, then you're likely skeptical of this initiative. You'd argue that the free market—especially with recent advances in technology like Starlink—was already offering a viable solution via satellite internet. From this perspective, government subsidies for fiber optic installation could be seen as kickbacks to large internet providers, undercutting American satellite companies that were succeeding on their merits. This is somewhat analogous to how the construction of interstate highways disrupted the train industry and handed car companies a significant advantage in the 20th century.

Both sides present compelling cases, but given the current state of America's national finances, and the generally lukewarm reaction to this initiative by the general public—especially the rural residents it is supposed to be helping—one has to question whether this kind of spending is truly prudent, especially without corresponding budget cuts elsewhere. Only time will reveal whether our new, shiny $65 billion internet infrastructure will prove to be a wise investment or, like many government projects before it, merely an expensive way for Washington to feel good about itself.

16 views0 comments


bottom of page