The Biden administration’s requirement that broadband providers buy domestically made parts for infrastructure development is a misguided protectionist policy that will exacerbate current supply chain issues and delay efforts to close the digital divide.
President Joe Biden emphasized the “Buy American” mandate of the Infrastructure Investment and Jobs Act during his State of the Union address earlier this year. Biden said:
Buy American has been the law of the land since 1933. But for too long, past administrations have found ways to get around it. Not anymore. Tonight, I’m also announcing new standards to require all construction materials used in federal infrastructure projects to be made in America. American-made lumber, glass, drywall, fiber optic cables.
In theory, enough fiber-optic cable is produced domestically to satisfy the expansion needs of broadband. The Fiber Broadband Association reports that 72 million miles of cable were produced domestically last year. In fact, so much was produced that more than one-third of it was exported.
But another requirement of the “Buy American” mandate is that at least 55 percent of the component parts of a product used in a federal construction project must be sourced domestically. That’s where fiber-optic cables run into a snag because the finished cable includes materials such as aluminum, copper, glass, plastic, and steel, many of which are produced primarily in other countries. (RELATED: The US Should Champion the Rule of Law — Not Blow Up the Global Trade System)
Paul Atkinson, CEO of the Optical Business Network at Sterlite Technologies Ltd., wrote in Telecoms that “while sourcing goods at home is a noble idea, in practice it brings about some serious limitations.”
Both Congress and the Biden administration are focused on a dual purpose when it comes to infrastructure rollout—expanding infrastructure while increasing US manufacturing output—but, particularly when it comes to the rollout of optical fiber connectivity, these dual purposes seem contradictory.
Economic policy reporter Eric Boehm pointed out in Reason that, as currently stipulated in the Build America, Buy America Act (BABA), the situation may only worsen. Biden approved new rules that will gradually increase the domestically manufactured threshold for component parts to 75 percent by 2029.
Also, Bloomberg noted that other equipment, such as routers and switches, is primarily made in other countries, writing that “it’s nearly impossible to bring fast internet to rural communities without electronic components that are made in foreign countries.”
Because BABA also applies to the Broadband Equity, Access, and Deployment Program — which intends to connect some 30 million Americans with broadband through $42.5 billion in funding — the “Buy American” requirements could put that goal at serious risk of failure.
It’s not just the broadband industry that has expressed skepticism at the “Buy American” plan. National Utility Contractors Association CEO Doug Carlson called for Congress to remove regulatory barriers since delays in sourcing parts can delay projects and inflate costs.
“Each project should be covered by a manufacturing standard that fits available project resources and domestic availability,” he said.
Fortunately, there could be some softening of Biden’s stance. The Washington Post reported that senior administration officials said that waivers would likely be granted in certain circumstances.
Congress should go further and ax the BABA requirements. While attempts to bolster American manufacturing and domestic jobs may seem good on their face, broadband providers need assurances that they can buy the materials they will need to expand high-speed internet infrastructure as intended.
Johnny Kampis is director of telecom policy for the Taxpayers Protection Alliance.
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