U.S. Commerce Department’s Shakedown 

of Virginia Broadband

By Michael O’Rielly

Virginia is extremely blessed with magical landscapes.  With a short drive, residents can reach her urban centers, ocean coastal areas, Blue Ridge Mountains, central farmlands, Carolina border, and more.  The Commonwealth’s diverse geography coupled with a dispersed population, however, can make it incredibly expensive to bring broadband – an important tool in today’s economy – to those Virginians without access to the service.  Progress is being made to overcome inherent broadband deployment challenges, but the Biden Administration is trying to thwart recent successes by erecting a major new obstacle. 

To put it generously, Commerce Secretary Raimondo and her assistants at the Herbert Hoover Building are holding hostage billions in needed broadband funding in order to force Virginia to succumb to an unnecessary, intellectually bankrupt policy.  The existing controversy has been fairly well-documented via letters, agency filings, and even part of a congressional hearing.  Without a change in the Secretary’s mindset, Virginia citizens lacking broadband likely will face years of added delays and increases in deployment costs.

As a former commissioner at the Federal Communications Commission and nearly twenty-year congressional staffer, including years working for the late U.S. Representative Tom Bliley (R-VA, ret.), I had the privilege of travelling throughout the Old Dominion to hear directly about the persistent lack of broadband availability in certain areas.  I often visited the unserved parts of the state, sometimes only a few miles from the I-95 or I-81 corridors.  Heartbreaking stories from families were seared into memory, causing me to demand provider relief and reform of the existing subsidy programs.  After I departed the FCC, Congress allocated hundreds of billions in taxpayer funds in the infrastructure law and other efforts designed, in part, to end once and for all the nationwide lack of broadband access.  In Virginia, Governor Youngkin and Commonwealth leaders took up the baton by aggressively seeking funding, coordination, and creative problem solving. 

Virginia was an early pioneer in creating a state broadband office and targeting unserved areas with its own state money. So, it was well-suited to become the frontrunner in setting up its plan to spend the federal funds made available to Virginia under the Commerce Department’s Broadband, Equity, Access and Deployment Program, or BEAD.  Within the Congressionally mandated structure, Virginia stands to receive approximately $1.482 billion for broadband builds to cover the estimated 162,000 locations remaining without requisite access.  After diligently filing the necessary paperwork ahead of every state and territory but one, its application suddenly became stuck in Rhode Island quicksand.

So why would the Commerce Department intentionally slow down Virginia’s broadband advancements and its builds?  The answer is simple: it is demanding Virginia’s low-cost BEAD broadband offerings establish a specific price.  Despite repeated public reassurances by the Secretary and select staff that BEAD implementation would reject setting specific broadband rates -- an act prohibited by provisions of the infrastructure law -- that’s exactly what is this underhanded attempt is all about.  Contrary to claims being made, setting a price is ratemaking.  And by putting Virginia’s application in purgatory, Secretary Raimondo is trying to bend the state to Commerce’s will.    

Commerce’s foolhardy attempt to set broadband rates may stem from an elitist, it-knows-better mentality.  Knows better than the providers offering such services.  Knows better than the free-market system that would otherwise determine rates.  Knows better than consumers in need of the services. Knows better than the state that has already successfully awarded several rounds of broadband funding. But more likely, Commerce is deviously trying to set this rate because it will help establish a de facto rate across all low-cost broadband tiers, even those outside BEAD.  In other words, few providers will be able to buck Commerce’s “approved rate,” even when the economics show otherwise.  This will inappropriately distort the market, skewing rates for all subscribers.  If you love what Obamacare is doing to America’s health care system, just imagine what the same approach will do for broadband.

Additionally, Commerce doesn’t want any other state to arrive at the notion that it may have much autonomy.  The infrastructure law might have adopted certain state flexibilities, but Commerce is making clear that it has the ultimate say on key matters, the law be damned.  And other states that have followed Commerce’s directive must be shocked to find their applications moved to the top of the pile for final approval.  What serendipity. 

Admittedly, the BEAD program is government funding that naturally comes with some strings.  For good or bad, Congress required a low-cost broadband tier be part of a funding recipient’s offering to consumers.  What Commerce is attempting to do with Virginia far exceeds this provision.  Indeed, it is comparable to the Department of Transportation telling electric vehicles makers, who are similarly subsidized by the infrastructure law, that they can’t charge more than $5,000 for low-cost models.  Such a move would generate immeasurable outrage.   

Ironically, Congress’s goal with the infrastructure law of bringing broadband access to all Americans will be stymied in Virginia, if Commerce’s objections persist.  Virginia’s allocated funding will sit idle, or worse be diverted elsewhere, and plans to build broadband for those unserved will go unmet.  

*    *    *

Near universal support exists for ensuring that all Americans have access to all the benefits of broadband service.  For those families living in Virginia without adequate access to broadband service, your government seems to be abandoning your interests in favor of a harmful policy mandate.  Hopefully, clearer heads will prevail, and Secretary Raimondo will see the wisdom of Virginia’s vision on broadband.  Absent that, perhaps the Biden Administration will realize the citizens from a politically important battleground state won’t appreciate the Old Dominion being punished for rejecting flawed initiatives.