Sen. Cruz: Federal Govt. Must Prioritize Americans’ Prosperity Over Regulatory Control of the Internet

May 2, 2024

WASHINGTON, D.C. In his opening statement at today’s Senate Commerce Subcommittee on Communications, Media, and Broadband hearing titled “The Future of Broadband Affordability,” Ranking Member Ted Cruz (R-Texas) highlighted how the Biden administration and the Federal Communications Commission have sabotaged their stated goal of making high-speed Internet more affordable with burdensome, unnecessary mandates and billions of dollars spent on inefficient programs that made no dent in connectivity rates but caused Internet bills to rise.

Here are Sen. Cruz’s remarks as prepared for delivery:

“Thank you, Chairman Lujan and Ranking Member Thune and to our witnesses today.

“The United States is the standard bearer for high-speed internet connectivity. During the pandemic, American internet providers significantly outperformed our more highly regulated European counterparts, with faster and more competitive service.

“Yet, this highly functioning industry is under attack by the Biden administration. Despite being handed a generational opportunity to connect all Americans, the administration has made it clear they would prefer to assert government control of the internet. This was epitomized by last week’s FCC party-line vote to subject the broadband industry to an oppressive regulatory regime under the pretense of so-called “net-neutrality.” This follows the FCC’s “digital equity” power grab late last year, in which the agency asserted control over nearly every aspect of the broadband business and opened providers to expansive, indeterminate, and crippling liability under a “disparate impact” standard.

“The Biden administration claims it wants to improve broadband affordability for American families. But the FCC is sabotaging these goals. What happens when companies need to divert significant resources towards complying with woke Biden priorities over customers? Prices go up, investment and innovation decline, and Americans suffer. And we know this from experience. When the Obama FCC imposed Title II on broadband in early 2015, capital expenditures fell by $500 million that year and by another $2.7 billion in 2016.

“We see similar trends in the Biden administration’s mismanagement of Congress’s massive broadband investments—over $125 billion in just the last four years. The Biden NTIA has prioritized woke social policies, union mandates, tech biases, and price controls at the expense of delivering high-speed internet to unserved Americans. The largest of these programs, a $42 billion broadband infrastructure program, is already being waylaid. Biden administration officials are withholding and delaying funding from states like Virginia, where Governor Youngkin’s team is standing up to coercive, ultra vires demands.

“Likewise, the Affordable Connectivity Program is not working as Congress intended: to assist those for whom cost was the barrier to gaining internet access. ACP, which gives a $30 monthly subsidy for internet service and $75 per month if you’re on tribal lands, was given a record $14 billion dollar budget. This was anticipated to last several years, but the FCC deliberately oversubscribed the program, blowing through the money in record time.

“We have heard from the White House and Chairwoman Rosenworcel that this welfare program should be considered a success—because 23 million households enrolled in it. But it turns out the vast majority of those people already had high-speed internet.

“Here’s an FCC survey showing just 22 percent of the households receiving the taxpayer subsidy were previously unsubscribed to broadband. This means that for every household that didn’t subscribe to premium internet, the federal government is subsidizing four households that did.

“Beyond this inefficiency, reports have also found — unsurprisingly — that ACP has had inflationary effects on the price of internet. One of our witnesses, Paul Winfree, analyzed the data and found that in places where ACP enrollment is the highest, we see higher prices. A less technical, but no less telling report from the National Review used archive records from the internet to show that companies treat the $30 subsidy as the new price floor. Companies that used to offer broadband plans for $10-15 a month now charge $30 for the same or marginally upgraded service. History has shown that when the federal government starts subsidizing demand—in higher education, in agriculture—the subsidy gets capitalized and prices go up. After all, why would corporations ever leave free money on the table? While those who receive the subsidy may realize an immediate cost reduction, the market price rises for everyone else. This rising price creates a call for more subsidies and higher taxes to fund that subsidy—and eventually government takeover of the internet to provide it for free.

“To the extent there are truly indigent people who cannot afford connectivity, there is a program for them. It’s called Lifeline. If it’s not working well, we should look to improve it—not impose higher taxes on millions of hardworking Americans to cover the internet bills of their neighbors who were already willing and able to pay for it themselves. I’m open to a discussion on these reforms.

“The road to broadband as a publicly regulated utility is not one Americans can afford. To ensure all Americans can access and benefit from high-speed connectivity, the administration must reverse course. Abandon toxic regulatory mandates, remove unnecessary barriers to investment, and ensure federal broadband subsidies are working as Congress intended. An innovative and affordable broadband future can only be achieved if the federal government prioritizes Americans’ prosperity over its urge to assert regulatory control.”