American Enterprise Institute

We have had what appears to be the world’s most expensive and ineffective universal service program. Until now. The Federal Communications Commission is taking significant steps to dismantle the traditional system and replace it with something world class. In 2018, the FCC launched a new approach that uses a reverse auction to force companies to compete for subsidies. A reverse auction begins with a maximum subsidy the FCC is willing to pay for someone to expand broadband service in a rural area. Companies compete by bidding the amount down.

Ultimately, the ping-pong match of network neutrality will not be resolved by political struggles over control of the Federal Communications Commission. A lasting solution can only come from bipartisan legislation, which will involve compromise. Identifying the points of compromise, places where each side is willing to give ground, is impossible if the two sides see each other as enemies worthy of contempt rather than basically good people who can reasonably disagree, even about important issues.

Many complain about the price of cable, but few realize that key culprits can be state and local franchising authorities (LFAs), whose taxes, fees, and surcharges on top of the basic price can account for 20 percent or more of the total price. Operators need to secure a franchise agreement to build and run cable service, and that can entail acceding to all types of demands from LFAs over and above the franchise fees that operators have to pay under federal law.