Critics blast Biden’s community-run Internet service plan as inefficient, costly

President Biden is proposing to transform how Americans get online by encouraging more cities to offer Internet service like any other utility, under a little-noticed provision in his mammoth $2.25 trillion infrastructure plan that is raising concerns about government competing with the private sector.

Mr. Biden is stepping into a decade-long battle between cities and advocacy groups on one side, and critics — and potential competitors — the nation’s major Internet companies on the other. 

Supporters say having more cities offering broadband would give consumers more choices in an industry dominated by a few large companies and would drive down prices.

But critics, including taxpayer watchdog groups, say government-run Internet service would be costlier and inefficient, and would hamper innovation by the private sector to make the Internet better and faster.

“It’s ridiculous,” Thomas Schatz, president of Citizens Against Government Waste, a conservative watchdog group, said of the proposal. “It’s an outrageous government power grab of a successful industry.”

The idea is also being attacked by the president of the main industry group for the nation’s cable broadband companies. 

Michael Powell, president and CEO of the Internet & Television Association and chairman of the Federal Communications Commission under President George W. Bush, did praise Mr. Biden for including $100 billion in his plan to expand Internet access to all areas of the country.

But Mr. Powell objected to a provision in the infrastructure plan that says the money to expand the availability of broadband will be prioritized for  “broadband networks owned, operated by, or affiliated with local governments, nonprofits and co-operatives.” 

In a jab at the broadband companies, the administration’s summary described those other entities as “providers with less pressure to turn profits and with a commitment to serving entire communities.”

Mr. Powell blasted the idea of using federal tax dollars to spur more Internet service provided by the government.

“The White House has elected to go big on broadband infrastructure,” said Mr. Powell, whose industry group includes Internet service providers such as Comcast NBCUniversal, Charter Communications and Cox Communications. “But it risks taking a serious wrong turn in discarding decades of successful policy by suggesting that the government is better suited than private-sector technologists to build and operate the Internet.”

Ratcheting up the controversy, advocacy groups on both sides of the debate agree that Mr. Biden appears willing to override laws passed by 22 states that bar or limit the ability of cities to start their own broadband service. The White House did not return a request for comment.

Supporters of more municipal broadband say having more cities provide access, in the same way as they now do water and electricity, would give consumers more options.

“The broadband market is an oligopoly dominated by just four companies — AT&T, Comcast, Verizon and Charter — leading to higher prices and network decay. The president’s proposal to legalize municipal and community-owned networks is a good start,” said the Open Technology Institute at New America, a liberal think tank in Washington.

According to recent FCC data, consumers have fewer choices, depending on their desired Internet service. For those subscribing to services with the slowest speeds, 84% had a choice of at least two providers at the end of 2019. But for those wanting the fastest speeds, 64% could not get it or had only one provider.

Greg Guice, director of government affairs for the advocacy group Public Knowledge, backed the idea of giving money to cities to build Internet service, especially in areas where private companies don’t see enough financial incentive to provide service. Cities could step in, “instead of continuing to rely on the profit motive” of the companies,” Mr. Guice said.

“Why not let cities take their destiny into their own hands?” he said.

According to the latest FCC data, 96% of the nation lives in an area with fixed Internet service, but that share drops to 83% in rural areas.

Whether cities should provide Internet as they do water or electricity has been a battle fought in state capitols and courtrooms for about a decade. In 2010, Chattanooga, Tennessee, started its own Internet service called EPB. Wilson, North Carolina, followed in 2012. 

But dozens of state legislatures have adopted laws, supported by broadband companies, to restrict or  outright bar municipalities from starting their own Internet service.  

In 2014, both Chatanooga and Wilson asked the FCC to override state laws in North Carolina and Tennessee barring them from expanding Internet service to areas outside of city limits with poor or no service. 

The FCC under the Obama administration agreed and pre-empted the state laws. But the states won a challenge in a federal appeals court to continue being able to enforce the restrictions, with the court ruling that nothing in federal law authorizes the FCC to override states.

As part of a $94 billion bill announced last month to increase access to the Internet, Sen. Amy Klobuchar, Minnesota Democrat, and  House Majority Whip James E. Clyburn, South Carolina Democrat, proposed authorizing the federal government to override state laws that erect obstacles to cities starting or expanding their own Internet service. 

Mr. Biden’s plan seemed to signal support for the federal government overriding the will of the states, said Joshua Stager, the Open Technology Institute’s deputy director for broadband and competition policy, as well as Jonathon Hauenschild. director for the American Legislative Exchange Council’s communications and technology task force. ALEC, a conservative Washington think tank, wrote model legislation restricting the creation of municipal broadband that was adopted by many states.

A fact sheet about the infrastructure plan said that when the proposal is released in detail, it would encourage competition by “lifting barriers that prevent municipally owned or affiliated providers and rural electric co-ops from competing on an even playing field with private providers.”

But critics such as Mr. Powell said the private sector is already providing the nation with reliable and fast Internet, and that Mr. Biden shouldn’t mess with a good thing.

“The rapid innovation in internet technology and services that Americans have seen over the past two decades is the direct consequence of massive and continuing private investment in networks across the country,” he said. “Government does have a critical role to play in getting networks to areas that lack service and helping low-income families afford it. However, those targeted, shared goals are not served by suggesting wrongly that the entire network is ailing and that the solution is either to prioritize government-owned networks or micromanage private networks.”

By controlling the money, the federal government and large cities will have too much influence over how people access the Internet, he said. And if subsidized Internet service drives down the prices that private companies charge, he said, they might have to cut back on the service they provide and the private market will be less able to invest money into making service better.