US to splurge $45 billion on affordable Internet

The US government has launched an ambitious new broadband funding scheme with the stated aim of closing the digital divide by the end of the decade.

With a hefty budget of $45 billion, the bipartisan ‘Internet for All’ initiative is part of the $1 trillion national Infrastructure Bill, and comprises three programmes that together will extend last-mile network coverage, upgrade middle-mile infrastructure, and improve digital literacy. The initiative is being managed by the National Telecommunications and Information Administration (NTIA), which is part of the Commerce Department.

“In the 21st century, you simply cannot participate in the economy if you don’t have access to reliable, affordable high-speed Internet,” said commerce secretary Gina Raimondo, in a statement late last week. “Thanks to President Biden’s bipartisan infrastructure law, Americans across the country will no longer be held back by a lack of high-speed Internet access. We are going to ensure every American will have access to technologies that allow them to attend class, start a small business, visit with their doctor, and participate in the modern economy.”

According to Cable.co.uk’s most recent broadband pricing survey, the US ranks 134th in the world for fixed broadband affordability, with the average tariff costing $55. By comparison, the UK averages $39, while in France and Germany it costs around $29 and $28 per month respectively. In addition, figures published last September by Pew Research show the median hourly wage in the US was $22 in the second quarter of last year. So, it’s not cheap, and what’s more, according to figures published last May by comparison company Broadband Now, an estimated 42 million Americans do not have access to fixed or fixed wireless broadband.

T-Mobile US took aim at the fixed broadband market earlier in May when it launched its 5G-based fixed wireless service. CEO Mike Sievert described fixed broadband customers as “the least satisfied in America”, and said the fees, contracts and price hikes are “ridiculous”.

It seems there is plenty of room for improvement, which goes some way to explaining the huge sum of money the government is prepared to spend.

The vast majority of the budget – some $42.5 billion – has been allocated to the Broadband Equity, Access, and Deployment (BEAD) programme, which will extend nationwide last-mile coverage. For states and other eligible entities, the first step to applying for funding involves submitting a letter of intent and a planning funds budget. That will unlock an initial $5 million to help cover the cost of drawing up a five-year action plan. The NTIA said each state is guaranteed at least $100 million to fund network deployments, with additional funding made available based on forthcoming coverage maps from the Federal Communications Commission (FCC).

Connecting all those local access networks back to the core doesn’t come cheap in a country the size of the US, which is why the Internet for All initiative includes $1 billion for an Enabling Middle Mile Broadband Infrastructure programme. This scheme will award grants on a technology-neutral, competitive basis to eligible entities for the construction, improvement, or acquisition of middle-mile infrastructure.

Furthermore, the US wants to ensure citizens have the skills needed to make best use of the Internet. To make that happen, $1.5 billion of the $45 billion will fund the Digital Equity Act programme, which will provide digital literacy training, for rural communities, communities of colour, and older Americans.

As with all big-budget national broadband plans, the danger is that the process for allocating subsidies will ultimately decide the winners and losers in the rural broadband market. This could leave end users with a dearth of choice of ISPs, which could then have knock-on effects for prices and affordability. The US government aims to go some way to tackle this by mandating affordable tariffs for low-income households.

“The resources in President Biden’s bipartisan Infrastructure Law will allow us to bring broadband infrastructure to every corner of our country, make service affordable for everyone, and ensure users have the devices and digital skills they need,” said deputy commerce secretary Don Graves. “But in order to succeed, we need a whole-of-government and whole-of-nation approach – everyone who has a stake in our connected future should get involved now.”

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