The Farm Bill and Broadband Access

I know what you’re thinking: what does a piece of legislation guiding American agriculture programs have to do with broadband access? And you’re right to be asking that question since the answer should be: nothing. As we’ve frequently written, the USDA has long run a program to hand out taxpayer-subsidized loans to rural broadband companies. This time, however, some lawmakers are finally questioning the program’s value.

Little positive can be said about USDA’s Rural Utilities Service broadband loans. With a budget that hovers around $800 million, the program has a long history of waste, fraud, and abuse. The USDA’s Inspector General has reported at least five times that the program strayed from its statutory mission of subsidizing rural providers in under- and un-served areas with little to no broadband service. One study found that 85 percent of homes serviced by a subsidized company already had access to three or more broadband providers. The loans are crony capitalism, used to overbuild and crowd out privately funded companies. Worst of all, companies reliant on taxpayer-backed loans often go belly up and have cost taxpayers tens of millions of dollars – all for naught.

So, with the Senate in the midst of debate over the Agricultural Reform, Food, and Jobs Act, which would reauthorize the RUS broadband loans, Senator Mark Warner (D-Va.) is pushing an amendment to scale back the program. Amongst other things, the Warner amendment would require that loans go to areas where at least 25 percent of households are completely unserved and would require loan recipients to report on their progress. Ideally, the RUS broadband loan program would be scrapped entirely, but the Warner takes a small step to scaling it back that could be palatable enough to entice other Senators to join the cause.

So what is the best way to get broadband access to the last 5 percent of American homes that go without? For one thing, more focus should be put on wireless options, such as mobile and satellite broadband. That however requires the Federal Communications Commission (FCC) to do significantly more to free spectrum for mobile and satellite use. As AT&T CEO Randall Stephenson recently argued in the Wall Street Journal, there are large quantities of unused and inefficiently used spectrum that must be put on the market. Spectrum is the most necessary infrastructure for wireless broadband and – with mobile data usage doubling annually – a lack of adequate spectrum could cause prices to rise, download speeds to slow, and service to degrade. On the satellite side, this requires the FCC to approve satellite and ground networks, like those proposed by LightSquared and Dish Network.

Yet instead the federal government goes about subsidizing broadband through programs like that contained in the farm bill, killing mergers like AT&T/T-Mobile that would have used spectrum more efficiently, squashing new satellite broadband businesses like LightSquared, and (thus far) stalling deals like Verizon-SpectrumCo that would bring new spectrum online. If our goal is more access to broadband, the federal government has yet to really start helping.