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Capping months of inter-chamber legislative wrangling, President Joe Biden on Nov. 15 signed the $1 trillion Infrastructure Investment and Jobs Act (also known as the bipartisan infrastructure framework, or BIF), which sets aside $65 billion of federal funding for broadband projects. While there is much to praise about the package’s focus on broadband deployment and adoption, whether that money will be well-spent  depends substantially on how the law is implemented and whether the National Telecommunications and Information Administration (NTIA) adopts adequate safeguards to avoid waste, fraud, and abuse. 

The primary aim of the bill’s broadband provisions is to connect the truly unconnected—what the bill refers to as the “unserved” (those lacking a connection of at least 25/3 Mbps) and “underserved” (lacking a connection of at least 100/20 Mbps). In seeking to realize this goal, it’s important to bear in mind that dynamic analysis demonstrates that the broadband market is overwhelmingly healthy, even in locales with relatively few market participants. According to the Federal Communications Commission’s (FCC) latest Broadband Progress Report, approximately 5% of U.S. consumers have no options for at least 25/3 Mbps broadband, and slightly more than 8% have no options for at least 100/10 Mbps).  

Reaching the truly unserved portions of the country will require targeting subsidies toward areas that are currently uneconomic to reach. Without properly targeted subsidies, there is a risk of dampening incentives for private investment and slowing broadband buildout. These tradeoffs must be considered. As we wrote previously in our Broadband Principles issue brief:

  • To move forward successfully on broadband infrastructure spending, Congress must take seriously the roles of both the government and the private sector in reaching the unserved.
  • Current U.S. broadband infrastructure is robust, as demonstrated by the way it met the unprecedented surge in demand for bandwidth during the recent COVID-19 pandemic.
  • To the extent it is necessary at all, public investment in broadband infrastructure should focus on providing Internet access to those who don’t have it, rather than subsidizing competition in areas that already do.
  • Highly prescriptive mandates—like requiring a particular technology or requiring symmetrical speeds— will be costly and likely to skew infrastructure spending away from those in unserved areas.
  • There may be very limited cases where municipal broadband is an effective and efficient solution to a complete absence of broadband infrastructure, but policymakers must narrowly tailor any such proposals to avoid displacing private investment or undermining competition.
  • Consumer-directed subsidies should incentivize broadband buildout and, where necessary, guarantee the availability of minimum levels of service reasonably comparable to those in competitive markets.
  • Firms that take government funding should be subject to reasonable obligations. Competitive markets should be subject to lighter-touch obligations.

The Good

The BIF’s broadband provisions ended up in a largely positive place, at least as written. There are two primary ways it seeks to achieve its goals of promoting adoption and deploying broadband to unserved/underserved areas. First, it makes permanent the Emergency Broadband Benefit program that had been created to provide temporary aid to households who struggled to afford Internet service during the COVID-19 pandemic, though it does lower the monthly user subsidy from $50 to $30. The renamed Affordable Connectivity Program can be used to pay for broadband on its own, or as part of a bundle of other services (e.g., a package that includes telephone, texting, and the rental fee on equipment).

Relatedly, the bill also subsidizes the cost of equipment by extending a one-time reimbursement of up to $100 to broadband providers when a consumer takes advantage of the provider’s discounted sale of connected devices, such as laptops, desktops, or tablet computers capable of Wi-Fi and video conferencing. 

The decision to make the emergency broadband benefit a permanent program broadly comports with recommendations we have made to employ user subsidies (such as connectivity vouchers) to encourage broadband adoption.

The second and arguably more important of the bill’s broadband provisions is its creation of the $42 billion Broadband Equity, Access and Deployment (BEAD) Program. Under the direction of the NTIA, BEAD will direct grants to state governments to help the states expand access to and use of high-speed broadband.  

On the bright side, BEAD does appear to be designed to connect the country’s truly unserved regions—which, as noted above, account for about 8% of the nation’s households. The law explicitly requires prioritizing unserved areas before underserved areas. Even where the text references underserved areas as an additional priority, it does so in a way that won’t necessarily distort private investment.  The bill also creates preferences for projects in persistent and high-poverty areas. Thus, the targeted areas are very likely to fall on the “have-not” side of the digital divide.

On its face, the subsidy and grant approach taken in the bill is, all things considered, commendable. As we note in our broadband report, care must be taken to avoid interventions that distort private investment incentives, particularly in a successful industry like broadband. The goal, after all, is more broadband deployment. If policy interventions only replicate private options (usually at higher cost) or, worse, drive private providers from a market, broadband deployment will be slowed or reversed. The approach taken in this bill attempts to line up private incentives with regulatory goals.

As we discuss below, however, the devil is in the details. In particular, BEAD’s structure could theoretically allow enough discretion in execution that a large amount of waste, fraud, and abuse could end up frustrating the program’s goals.

The Bad

While the bill largely keeps the right focus of building out broadband in unserved areas, there are reasons to question some of its preferences and solutions. For instance, the state subgrant process puts for-profit and government-run broadband solutions on an equal playing field for the purposes of receiving funds, even though the two types of entities exist in very different institutional environments with very different incentives. 

There is also a requirement that projects provide broadband of at least 100/20 Mbps speed, even though the bill defines “unserved”as lacking at least 25/3 Mbps. While this is not terribly objectionable, the preference for 100/20 could have downstream effects on the hardest-to-connect areas. It may only be economically feasible to connect some very remote areas with a 25/3 Mbps connection. Requiring higher speeds in such areas may, despite the best intentions, slow deployment and push providers to prioritize areas that are relatively easier to connect.

For comparison, the FCC’s Connect America Fund and Rural Digital Opportunity Fund programs do place greater weight in bidding for providers that can deploy higher-speed connections. But in areas where a lower speed tier is cost-justified, a provider can still bid and win. This sort of approach would have been preferable in the infrastructure bill. 

But the bill’s largest infirmity is not in its terms or aims, but in the potential for mischief in its implementation. In particular, the BEAD grant program lacks the safeguards that have traditionally been applied to this sort of funding at the FCC. 

Typically, an aid program of this sort would be administered by the FCC under rulemaking bound by the Administrative Procedure Act (APA). As cumbersome as that process may sometimes be, APA rulemaking provides a high degree of transparency that results in fairly reliable public accountability. BEAD, by contrast, eschews this process, and instead permits NTIA to work directly with governors and other relevant state officials to dole out the money.  The funds will almost certainly be distributed more quickly, but with significantly less accountability and oversight. 

A large amount of the implementation detail will be driven at the state level. By definition, this will make it more difficult to monitor how well the program’s aims are being met. It also creates a process with far more opportunities for highly interested parties to lobby state officials to direct funding to their individual pet projects. None of this is to say that BEAD funding will necessarily be misdirected, but NTIA will need to be very careful in how it proceeds.

Conclusion: The Opportunity

Although the BIF’s broadband funds are slated to be distributed next year, we may soon be able to see whether there are warning signs that the legitimate goal of broadband deployment is being derailed for political favoritism. BEAD initially grants a flat $100 million to each state; it is only additional monies over that initial amount that need to be sought through the grant program. Thus, it is highly likely that some states will begin to enact legislation and related regulations in the coming year based on that guaranteed money. This early regulatory and legislative activity could provide insight into the pitfalls the full BEAD grantmaking program will face.

The larger point, however, is that the program needs safeguards. Where Congress declined to adopt them, NTIA would do well to implement them. Obviously, this will be something short of full APA rulemaking, but the NTIA will need to make accountability and reliability a top priority to ensure that the digital divide is substantially closed.

With the passing of Justice Ruth Bader Ginsburg, many have already noted her impact on the law as an advocate for gender equality and women’s rights, her importance as a role model for women, and her civility. Indeed, a key piece of her legacy is that she was a jurist in the classic sense of the word: she believed in using coherent legal reasoning to reach a result. And that meant Justice Ginsburg’s decisions sometimes cut against partisan political expectations. 

This is clearly demonstrated in our little corner of the law: RBG frequently voted in the majority on antitrust cases in a manner that—to populist leftwing observers—would be surprising. Moreover, she authored an important case on price discrimination that likewise cuts against the expectation of populist antitrust critics and demonstrates her nuanced jurisprudence.

RBG’s record on the Court shows a respect for the evolving nature of antitrust law

In the absence of written opinions of her own, it is difficult to discern what was actually in Justice Ginsburg’s mind as she encountered antitrust issues. But, her voting record represents at least a willingness to approach antitrust in an apolitical manner. 

Over the last several decades, Justice Ginsburg joined the Supreme Court majority in many cases dealing with a wide variety of antitrust issues, including the duty to deal doctrine, vertical restraints, joint ventures, and mergers. In many of these cases, RBG aligned herself with judgments of the type that the antitrust populists criticize.

The following are major consumer welfare standard cases that helped shape the current state of antitrust law in which she joined the majority or issued a concurrence: 

  • Verizon Commc’ns Inc. v. Law Offices of Curtis Trinko, LLP, 540 U.S. 398 (2004) (unanimous opinion heightening the standard for finding a duty to deal)
  • Pacific Bell Tel. Co v. linkLine Commc’ns, Inc.,  555 U.S. 438 (2009) (Justice Ginsburg joined the concurrence finding there was no “price squeeze” but suggesting the predatory pricing claim should be remanded)
  • Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., Inc., 549 U.S. 312 (2007) (unanimous opinion finding predatory buying claims are still subject to the dangerous probability of recoupment test from Brooke Group)
  • Apple, Inc. v. Robert Pepper, 139 S.Ct. 1514 (2019) (part of majority written by Justice Kavanaugh finding that iPhone owners were direct purchasers under Illinois Brick that may sue Apple for alleged monopolization)
  • State Oil Co. v. Khan, 522 U.S. 3 (1997) (unanimous opinion overturning per se treatment of vertical maximum price fixing under Albrecht and applying rule of reason standard)
  • Texaco Inc. v. Dagher, 547 U.S. 1 (2006) (unanimous opinion finding it is not per se illegal under §1 of the Sherman Act for a lawful, economically integrated joint venture to set the prices at which it sells its products)
  • Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28 (2006) (unanimous opinion finding a patent does not necessarily confer market power upon the patentee, in all cases involving a tying arrangement, the plaintiff must prove that the defendant has market power in the tying product)
  • U.S. v. Baker Hughes, Inc., 908 F. 2d 981 (D.C. Cir. 1990) (unanimous opinion written by then-Judge Clarence Thomas while both were on the D.C. Circuit of Appeals finding against the government’s argument that the defendant in a Section 7 merger challenge can rebut a prima facie case only by a clear showing that entry into the market by competitors would be quick and effective)

Even where she joined the dissent in antitrust cases, she did so within the ambit of the consumer welfare standard. Thus, while she was part of the dissent in cases like Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007), Bell Atlantic Corp v. Twombly, 550 U.S. 544 (2007), and Ohio v. American Express Co., 138 S.Ct. 2274 (2018), she still left a legacy of supporting modern antitrust jurisprudence. In those cases, RBG simply  had a different vision for how best to optimize consumer welfare. 

Justice Ginsburg’s Volvo Opinion

The 2006 decision Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc. was one of the few antitrust decisions authored by RBG and shows her appreciation for the consumer welfare standard. In particular, Justice Ginsburg affirmed the notion that antitrust law is designed to protect competition not competitors—a lesson that, as of late, needs to be refreshed. 

Volvo, a 7-2 decision, dealt with the Robinson-Patman Act’s prohibition on price discimination. Reeder-Simco, a retail car dealer that sold Volvos, alleged that Volvo Inc. was violating the Robinson-Patman Act by selling cars to them at different prices than to other Volvo dealers.

The Robinson-Patman Act is frequently cited by antitrust populists as a way to return antitrust law to its former glory. A main argument of Lina Khan’s Amazon’s Antitrust Paradox was that the Chicago School had distorted the law on vertical restraints generally, and price discrimination in particular. One source of this distortion in Khan’s opinion has been the Supreme Court’s mishandling of the Robinson-Patman Act.

Yet, in Volvo we see Justice Ginsburg wrestling with the Robinson-Patman Act in a way to give effect to the law as written, which may run counter to some of the contemporary populist impulse to revise the Court’s interpretation of antitrust laws. Justice Ginsburg, citing Brown & Williamson, first noted that: 

Mindful of the purposes of the Act and of the antitrust laws generally, we have explained that Robinson-Patman does not “ban all price differences charged to different purchasers of commodities of like grade and quality.”

Instead, the Robinson-Patman Act was aimed at a particular class of harms that Congress believed existed when large chain-stores were able to exert something like monopsony buying power. Moreover, Justice Ginsburg noted, the Act “proscribes ‘price discrimination only to the extent that it threatens to injure competition’[.]”

Under the Act, plaintiffs needed to demonstrate evidence of Volvo Inc. systematically treating plaintiffs as “disfavored” purchasers as against another set of “favored” purchasers. Instead, all plaintiffs could produce was anecdotal and inconsistent evidence of Volvo Inc. disfavoring them. Thus, the plaintiffs— and theoretically other similarly situated Volvo dealers— were in fact harmed in a sense by Volvo Inc. Yet, Justice Ginsburg was unwilling to rewrite the Act on Congress’s behalf to incorporate new harms later discovered (a fact which would not earn her accolades in populist circles these days). 

Instead, Justice Ginsburg wrote that:

Interbrand competition, our opinions affirm, is the “primary concern of antitrust law.”… The Robinson-Patman Act signals no large departure from that main concern. Even if the Act’s text could be construed in the manner urged by [plaintiffs], we would resist interpretation geared more to the protection of existing competitors than to the stimulation of competition. In the case before us, there is no evidence that any favored purchaser possesses market power, the allegedly favored purchasers are dealers with little resemblance to large independent department stores or chain operations, and the supplier’s selective price discounting fosters competition among suppliers of different brands… By declining to extend Robinson-Patman’s governance to such cases, we continue to construe the Act “consistently with broader policies of the antitrust laws.” Brooke Group, 509 U.S., at 220… (cautioning against Robinson-Patman constructions that “extend beyond the prohibitions of the Act and, in doing so, help give rise to a price uniformity and rigidity in open conflict with the purposes of other antitrust legislation”).

Thus, interested in the soundness of her jurisprudence in the face of a well-developed body of antitrust law, Justice Ginsburg chose to continue to develop that body of law rather than engage in judicial policymaking in favor of a sympathetic plaintiff. 

It must surely be tempting for a justice on the Court to adopt less principled approaches to the law in any given case, and it is equally as impressive that Justice Ginsburg consistently stuck to her principles. We can only hope her successor takes note of Justice Ginsburg’s example.