Ronald Reagan once famously stated that “The most terrifying words in the English language are: I’m from the government and I’m here to help.” In his worst nightmare, Reagan could not have conceived of the damage that one man—Howard Lutnick—is doing to Rural America all by himself.
In Rural America, we still talk with respect about Franklin Roosevelt and Rural Electrification nearly a century after FDR literally brought light to Rural darkness across the entire United States.
Why did the REA make such a huge impact? Because the utility companies of the day did not believe that there was any money in Rural America, so they did not bother bringing electricity to us. Economists refer to that as a “market failure.” This market failure occurred when there were a lot more of us still living in Rural America.
One of my extended family members lived in the house she was born in during the 1880’s, which started life as a log cabin. She lived to nearly 100 and was able to remain in that house until her mid-90s. She had the largest kerosene lantern I ever saw in one corner of the living room. I asked her one time why she kept that thing around. I will never forget her reply: “I keep it because when the lights go out, that is how I see. Before we had electricity, that was what we used all the time.” She lived without electricity for nearly 50 years.
We find it hard to believe such stories today, but we have a 21st century equivalent in our midst—another market failure of epic proportions in Rural America, the lack of broadband internet.
The major internet providers have made the same argument to us for the last 30 years—there’s no money in rural areas. Broadband deserts exist in the urban cores, too, for the same ‘reason.’
To its credit, the Federal government has tried to help—and failed dismally for a variety of reasons. I covered a lot of this ground in my last screed, “BEAD’s Groundhog Day Moment,” which I wrote 6 months ago. Long story short, the Feds ‘invested’ nearly $100 billion in substandard internet over the last 15 years using idiotic processes that looked good in theory but were disastrous in practice (remember RDOF? Obviously, the Feds do not).
The cherry on top has been the constant lack of mapping resources that the FCC has inflicted on America. That critical lack of maps led to delays as States scrambled to create far more reliable maps on their own to ensure that broadband funding actually went where it was supposed to, since the Feds did not care to exercise meaningful oversight over the billions they frittered away on low-cost, low-quality “solutions” that actually made matters worse.
Enter BEAD, which finally enabled States to determine where the funding should go, with sufficient funding to actually bridge the digital divide once and for all.
Was BEAD perfect? No. Was it a lot better than its predecessor programs? Absolutely. Why? Because States took the lead in broadband deployment.
The BEAD process has been a lengthy one because it is actually thorough. Many states were well into the first and second rounds of the application process and a few states were actually done. Everyone could see that the light at the end of the tunnel was not an oncoming train. If the Feds had sense enough to leave the States alone, we would have been in a position to bring the entire United States into the 21st century. In other words, we would have lived long enough to declare victory over the digital divide that has plagued us for the last 30 years.
Enter Howard Lutnick.
Howard Lutnick made his fortune trading bonds in Manhattan. I do not live in Manhattan, but I am taking a wild guess that the internet service there is pretty good.
Like many of you, I have talked to people in my state who are still on dial-up, who cannot make a Zoom call work to talk to their doctors at home, and people whose wireless service is so bad that they cannot make a 911 call work.
Can Howard Lutnick can say the same thing?
Howard short-circuited the lengthy BEAD process that was showing substantial results in favor of a “90-day” window that is not in statute to provide “The Benefit of the Bargain” to tens of millions of Americans who have been left behind by first the private sector and then government bureaucrats over the last 30 years.
Instead of focusing on what the market is actually paying attention to, the need for ever-increasing speeds driven by AI adoption, Howard is focused on a date certain on the calendar, December 31, 2025.
States that had finished their application rounds were told to do them over. Again, none of this is in statute. “Howard Says” is the order of the day, and AI adoption in Rural America is in the crosshairs because of him.
Howard may have missed the fact that AI is driving much of the US economy at the moment. The first $4 trillion market cap corporations—Nvidia and Microsoft—have seen explosive growth in their share price due to their huge investments in AI. Corporate America is adopting AI at a breathtaking pace, and the rest of America is catching up. Chat GPT, anyone?
But what does AI require of its users?
Speed. Lots of it. So much so that Microsfoft is recommissioning a nuclear reactor to provide power for—you guessed it—dramatically increasing internet speeds.
For such a savvy businessman, Howard is missing out on the best opportunity of all time to position the entire United States in the forefront of AI adoption. The only historical parallel that comes close to the AI race today between the United States, China and Europe was the Space Race between the United States and Soviet Russia. The Soviet command and control economy was no match for American innovations and investments then.
Will we be able to say the same thing about AI adoption in Rural America after Lutnick is through hamstringing us with substandard speeds at the precise moment we need a quantum leap forward?
No.
We have already literally seen a geometric progression in speed in the last 10 years, from 10/1 to 100/100 symmetrical. Any responsible broadband provider will tell you that we are poised for another geometric leap, thanks to the adoption of AI.
Like it or not, Rural America still accounts for some 20% of the entire population. Evidence of the not so benign neglect that the rest of America shows us is the fact that only 2% of the venture capital in the United States goes to Rural America. The same goes for the multibillion foundations that lavishly fund pet projects and programs. The grand total of 7% of that funding goes to the 20% of us who are rural, and much of that is capital expenditures going toward colleges for buildings that the benefactors slap their names on.
Howard Lutnick’s fetishes for not following statute, blowing up a process that was working, and obsession with a date certain will inflict incalculable harm on millions of Rural Americans who will be once again shackled with substandard speeds and compelled to “wait” another 10-15 years to join the rest of America in the 21st century because Howard Lutnick knows better than any of us in the states who have been working on this issue for decades.
The last time I looked, President Trump was also all in with AI adoption and has vowed that America will lead the world in AI development. Really?
How can we do that if 20% of the American population—the 60 million of us in Rural America—is outside looking in–Again?
Lutnick’s “benefit of the bargain” sounds nice, but is in fact a pennywise, pound-foolish insistence on getting the money out the door as quickly as possible. Initial applications across the country show him getting his wish: fiber applications are down, satellite and wireless applications are up. Right on cue, Satellite providers who did not get their way are challenging entire State plans that were well on their way to providing actually scalable high speed internet to millions of Rural Americans.
How does any of this help Rural America with AI adoption?
It doesn’t.
Results of Howard’s “Benefit of the Bargain” round are coming in. Future-proof fiber is being kicked to the curb in favor of technologies that cannot now and may never provide sufficient speed to accommodate AI.
So much for future-proofing our economy. So much for looking out for Rural America.
The Feds broke broadband. The States fixed it. And Howard Lutnick broke it again—all by himself.
This is a good time to ask the simple question:
What exactly has Howard accomplished?
With apologies to Thomas Jefferson, here is a brief listing:
- He has guaranteed that Rural America is going to be left behind—again—in AI adoption due to his inexplicable focus on the wrong kind of speed. The States are focused on bringing the best internet speeds to millions of us who have been left behind—which only fiber can provide today, tomorrow, and for the foreseeable future. Even the markets tell us that much, with AI adoption and its need for increased speeds front and center on the financial pages. Instead, Howard is focused on the speed of getting the money out the door whether the investment itself makes sense or not.
- He has ensured that bad actors get another bite of the Federal apple. The fiat he should have exercised would have excluded providers who fell flat on their faces and defaulted on previous grant rounds (RDOF default rates are 50% in Missouri, worse in other states).
- He has ignored the advice of States to take into account that satellite technology already had its place in areas where fiber will never make sense financially. Satellites will never match the speeds fiber can bring and are gravitationally challenged. Bury fiber and forget about it for the next 20-30 years. Satellites must be replaced frequently and that process is not exactly free.
- He has ignored the fact that wireless technology will never be able to keep up with the geometric speed demands required by universal adoption of AI.
- He has ignored the stories of millions of Americans whose wireless service is spotty on a good day, and non-existent on bad days.
- He has ignored national security implications of putting so many internet communications eggs in satellite baskets. All AI roads lead through Taiwan. China has threatened to seize Taiwan by force and has built up military assets to do just that. China could vault past the United States in the AI race tomorrow by absorbing Taiwanese AI chip manufacturing capabilities. China has military satellites all over lower earth orbit that have already reportedly been “dogfighting” in space. Why would any rational person invest in an extra-terrestrial “solution” when it could come literally crashing down on a moment’s notice?
- Worst, he has guaranteed that Rural America will become an AI desert next, to go with our healthcare deserts, food deserts, venture capital deserts, foundation funding deserts, and news deserts. We simply cannot afford to be left behind—again–in the greatest revolution in business and industry since the creation of the internet itself.
All this for the sake of a date certain on the 2025 calendar.
What a colossal waste.
Again.
Because Howard says so.
