Trump Unbreaks the Internet

Did economists underrate the harm of the Biden regulatory outpouring? ace reason the U.S. Economy is outperforming expectations may be that the Trump Administration’s deregulation is offsetting tariff harm. Consider how it has uncorked broadband investment and saved taxpayers billions by slashing the Biden team’s red tape.

Congress appropriated $42 billion in the 2021 infrastructure bill for states to expand broadband to “unserved” and rural communities. The spending was unnecessary since satellite services like SpaceX’s Starlink and 5G fixed wireless services were rapidly closing the so-called digital divide. Upward of 99% of households already had high-speed internet.

But Democrats wanted the money, and the Biden team then used it in an attempt to micromanage broadband nationwide. States receiving funds had to consult with unions, native American tribes and “local community organizations” on their plans to expand broadband. This gave liberal special interests a veto and let them extort developers.

States also had to submit plans for Commerce Department review, explaining how they would make broadband “affordable” for middle-class consumers. Biden-era guidance suggested that states hand out subsidies to consumers or use “their regulatory authority to promote structural competition”—i.e., industrial policy.

Providers applying for funds were also advised to offer “low-cost” plans and provide “nondiscriminatory access to and use” of their networks on a “wholesale basis to other providers. . . At just and reasonable wholesale.” This was a back-door way to impose utility-style rate regulation on internet providers.

The Biden crowd also stipulated that broadband providers give hiring preferences to “underrepresented” groups, including “aging individuals,” prisoners, racial, religious and ethnic minorities, “Indigenous and Native American persons,” “LGBTQI+ persons,” and “persons otherwise adversely affected by persistent poverty or inequality.”

Fiber projects were also given heavy preference over satellite and fixed wireless services, even though the latter could be installed faster and at a fraction of the cost. These requirements delayed projects, raised costs, and added uncertainty across the industry.

Enter the Trump team, led by assistant Commerce secretary Arielle Roth, which removed nearly all of the Biden mandates and prioritized projects in which private operators put up more capital so they would have more skin in the game. Ms. Roth said this month the Administration’s deregulation is on track to save taxpayers $21 billion.

The average cost for each new household or business connected in Louisiana fell to $3,943 from $5,245. Louisiana’s most expensive project had run at $120,000 per connection under the Biden rules—almost as much as a starter home—but the Trump team brought the cost down to $7,547 per connection. Similar savings have occurred in other states.

The broadband program illustrates how the Biden combination of spending and regulation created market distortions and raised costs. It would be better if Congress let markets allocate capital, but the Trump Administration is ensuring taxpayer funds are spent in a more cost-effective way that does less economic harm.

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