Congress’s Free Netflix Plan

Members want to extend a monthly pandemic subsidy for broadband.

WSJ editorial. 

"Maine Sen. Angus King demanded free Netflix during Covid lockdowns, and Congress naturally grabbed the idea and created an “emergency” broadband entitlement. The pandemic ended long ago, but Members of both parties now want to renew this streaming subsidy for another season. 

Congress created the broadband subsidy with other Covid handouts in the December 2020 omnibus bill. Its supposed goal was to help low-income Americans stay connected to the internet during lockdowns. But there’s no such thing as a temporary subsidy.

The 2021 infrastructure bill provided $14.2 billion to extend the $30 a month broadband discounts, and these funds are expected to run out this month. Biden officials warn that millions of Americans could lose internet access. Forget that most subsidy recipients paid for their own broadband before the pandemic.

Some 23 million households receive broadband subsidies, which is more than the number on food stamps. Households qualify if they earn 200% or less than the poverty line or participate in other welfare programs such as Medicaid. This includes relatively affluent households with public-school students in localities like New York City that provide universal free school meals.

Broadband providers have said in recent earnings calls that they don’t expect to lose many subscribers once the program ends. Some even expect to benefit by poaching subscribers from competitors. Altice Chief Financial Officer Marc Sirota called the subsidy’s expiration “a potential tailwind and an opportunity to attract new customers.”

Liberty Broadband-owned GCI CEO Ron Duncan recently noted the program’s end could help his company, which offers cheaper plans than its bigger rivals. What do you know? Subsidies may have increased prices since customers had less incentive to shop around for lower-cost plans. The program’s expiration could force providers to compete more vigorously.

Yet some 230 House Members, including 24 Republicans, have co-sponsored legislation to spend $7 billion to extend the subsidies. Five Senators, including Republicans Kevin Cramer and Roger Marshall, are sponsoring a companion bill.

The $7 billion cost tag is an accounting ruse designed to draw more GOP support. Once this pot runs out, the program’s supporters will demand more. Don’t expect a future President Trump to show any more spending restraint than in December 2020 when Congress passed the $900 billion Covid blowout.

By the way, these subsidies are in addition to the infrastructure bill’s $42.5 billion for providers to build out broadband networks. In return for the federal largesse, providers are required to offer low-cost plans that run around $30 a month. This is a de facto price control, which combined with the subsidies would make the internet free for millions of Americans.

Americans aren’t binging Netflix like they did during the pandemic. Why can’t Congress quit its spending binge?"