Clinton’s Tech and Telecom Agenda: Good News for Communications Act Reform?

by on June 29, 2016 · 0 comments

Yesterday, Hillary Clinton’s campaign released a tech and innovation agenda. The document covers many tech subjects, including cybersecurity, copyright, and and tech workforce investments, but I’ll narrow my comments to the areas I have the most expertise in: broadband infrastructure and Internet regulation. These roughly match up, respectively, to the second and fourth sections of the five-section document.

On the whole, the broadband infrastructure and Internet regulation sections list good, useful priorities. The biggest exception is Hillary’s strong endorsement of the Title II rules for the Internet, which, as I explained in the National Review last week, is a heavy-handed regulatory regime that is ripe for abuse and will be enforced by a politicized agency.

Her tech agenda doesn’t mention a Communications Act rewrite but I’d argue it’s implied in her proposed reforms. Further, her statements last year at an event suggest she supports significant telecom reforms. In early 2015, Clinton spoke to tech journalist Kara Swisher (HT Doug Brake) and it was pretty clear Clinton viewed Title II as an imperfect and likely temporary effort to enforce neutrality norms. In fact, Clinton said she prefers “a modern, 21st-century telecom technology act” to replace Title II and the rest of the 1934 Communications Act.

It’s refreshing to see that, regarding broadband and Internet policy, there’s significant bipartisan agreement that government’s role should be primarily to provide public goods, protect consumers, and lower regulatory barriers, not micromanage providers, deploy public networks, and shape social policy. (Niskanen Center’s Ryan Hagemann similarly agrees that, with the exception of Title II, there’s a lot to like in Clinton’s tech agenda.)  In fact, 85% of the text in Clinton’s broadband infrastructure and Internet policy sections could be copied-and-pasted to a free-market Republican presidential candidate’s tech platform and it would be right at home.

It’s difficult to know what to make of her pledge to defend and enforce Title II. I suspect it represents a promise she won’t reverse the Title II determination of the FCC, not that she’s particularly enamored with Title II. Clinton (and President Bill Clinton) seem to prefer a more hands-off approach to the Internet.

The Good

The document emphasizes that all types of broadband should be encouraged, including “fiber, wireless, satellite, and other technologies.” It’s nice to see this flexibility because many advocates are pushing a fiber optics-only agenda that is simply infeasible and tremendously expensive. (Professor Susan Crawford has said bluntly that governments should “refuse to fund last-mile solutions that aren’t primarily fiber.”)  The reality, acknowledged by Google and others, is that fixed wireless and satellite broadband are needed to affordably connect households in rural and suburban areas for the foreseeable future. A fiber-only policy, because it’s impractically expensive, would have rather regressive effects and Clinton’s all-the-above strategy is commendable.

There’s also a recognition in the document that broadband networks are not natural monopolies and can be competitive, especially if the federal government works to lower entry barriers. Government policy for several decades was that telephone and cable networks were natural monopolies. Increasingly, broadband is competitive, especially as consumers go wireless only, but we’re still living with the negative side effects of past policies. The Clinton document emphasizes the need to reduce local regulatory barriers, streamline permitting, and allow nondiscriminatory access to conduits, poles, and rights-of-way controlled by local governments.

Spectrum policy is critical to any technology agenda and it’s a priority for Clinton. She emphasizes the need for more spectrum and identifying and reclaiming underutilized federal spectrum, a subject I’ve written about. The federal government uses spectrum worth hundreds of billions of dollars and pays very little for that asset, so there’s significant consumer gains available.

Clinton’s call to reinvigorate antitrust enforcement in technology and telecommunications is also noteworthy. Though the DOJ and FTC can overreach, they are better equipped to handle broadband and tech competition issues than the FCC.

The Not So Good

In the “Close the Digital Divide” item, there are some problems. In a word: the right goal with the wrong tools. The legacy broadband subsidy programs, which Clinton wishes to retain and expand, are fragmented and poorly designed. They essentially function as corporate welfare programs and should be eliminated in favor of consumer-focused subsidies.

One item says that by 2020 “100 percent of households in America will have the option of affordable broadband.” Literally connecting all American homes to the Internet is impossible today because millions of Americans simply don’t want the Internet. According to Pew, 70% of non-adopters are just not interested, and many would not subscribe no matter the price. (Relatedly, after over a century of telephone’s existence and tens of billions in federal universal service funding, US phone subscribership has hovered around 95% for 20 years.)  

To accomplish the expansion of broadband access, Clinton promises to fund the FCC’s Connect America Fund (CAF), the Ag Department’s Rural Utilities Service Program (RUS), and the Broadband Technology Opportunities Program (BTOP). They differ somewhat in purpose and strategy but their major flaw is the same: they primarily fund and lend to broadband providers, not subscribers.

As I’ve noted before,

A direct subsidy plus a menu of options is a good way to expand access to low-income people (assuming there are effective anti-fraud procedures). A direct subsidy is more or less how the US and state governments help lower-income families afford products and services like energy, food, housing, and education. For energy bills there’s LIHEAP. For grocery bills there’s SNAP and WIC. For housing, there’s Section 8 vouchers. For higher education, there’s Pell grants.

By subsidizing providers, not consumers, there’s immense waste, corruption, and featherbedding. For instance, last year, Tony Romm at Politico published an in-depth investigation about the RUS program, funded by the stimulus. The waste in the RUS broadband program is appalling and the program will serve only a fraction of the subscribers that were promised. As one GAO researcher said about the program, “We are left with a program that spent $3 billion and we really don’t know what became of it.” “Even more troubling,” Romm explained “RUS can’t tell which residents its stimulus dollars served.”

Similarly, Clinton cites E-rate as a model for connecting “anchor institutions” like libraries and schools. E-rate likewise primarily benefits telecom and tech companies, not the intended recipients. As OECD researchers have found regarding EdTech government investment,   

The results…show no appreciable improvements in student achievement in reading, mathematics or science in the countries that had invested heavily in ICT for education.

Rather than the E-rate model, a smarter policy is to provide block grants to schools and institutions to give them more flexibility to optimize according to their own perceived technology and education needs. The federal government already started doing this to a limited extent with Section IV of the 2015 Every Student Succeeds Act, which allocates $1.6 billion annually in block grants to states for tech-focused education spending. Policymakers should eliminate the expensive, dysfunctional E-rate program, which is funded by regressive fees on telephone bills, and expand the block grants somewhat to make up the shortfall.

Altogether, there’s a lot to like in Clinton’s broadband infrastructure and Internet policy agenda. There are hiccups–namely Title II enforcement and retention of broken broadband and tech subsidy programs–and hopefully her advisors will reexamine those. Given Clinton’s past statements about the need for a modernized Communications Act in place of Title II, she and her advisors have developed a forward-looking telecom agenda.

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